infonet-economy

Legitimacy can be understood as the social acceptance of actions or institutions and is a vital resource for the sustained survival of companies in competitive environments. Legitimacy is subjectively perceived and ascribed to institutions and activities in processes of social construction. In recent times organizational legitimacy has been maintained primarily by either adapting to the social expectations of the company’s environment or by actively influencing the expectations of relevant stakeholder groups by means of advertising, public relations or strategic manipulation. During the process of globalization, however, companies are facing situations of increased complexity and heterogeneity in their environments so that the legitimacy strategies of adaptation and strategic manipulation may easily fail. In such situations, companies have to build on a third strategy, moral reasoning, in order to (re-)establish their legitimacy. However, moral reasoning cannot completely substitute both the other legitimacy strategies. We suggest that in order to survive in complex and competitive environments companies have to establish the organizational capacity to activate all of the three legitimacy strategies. In the present paper will develop a theoretical framework for three legitimacy strategies and their organizational implementation. We will build upon systems theory and empirical evidence from exemplary case studies.