Social Enterprise Legitimacy in a Hostile Market

Abstract

This article explores possible legitimacy-building mechanisms for social enterprises with difficult-to-measure outcomes and hostile contexts. Interviews were developed with managers of enterprises offering complementary and alternative medicine (CAM) services, taken as an example of social enterprises in a hostile context. Our findings indicate that CAM enterprises rely on relationship building and consumer education to establish pragmatic legitimacy; the quest for moral legitimacy is expressed through the hybrid organizational form, human capital and professionalization attempts, formalization of procedures, and strategic alliances. Building on Suchman’s (Academy of Management Review 20:371–610) three levels of legitimacy, we propose a mechanism through which enterprises use pragmatic legitimacy to enhance moral legitimacy and to create a feedback effect between moral and pragmatic legitimacy so that ultimately cognitive legitimacy can be achieved.