The networked enterprise and legitimacy judgments: why digital platforms need leadership

Abstract

Purpose In recent years, scholars, business practitioners and consultants frequently talk about building the networked enterprise. The purpose of this paper is to examine the connections between networked enterprises, organizational legitimacy and organizational performance.Design/methodology/approach A survey was developed that measured the following aspects of a networked enterprise: employees who network and communicate extensively via internal digital platforms across their organizations; leaders who actively use internal digital platforms to communicate with employees; leaders who actively communicate with stakeholders via external digital platforms; and an innovation culture. The survey measured the following forms of legitimacy judgments: moral; instrumental; and relational. Altogether, 501 executives and managers were surveyed (207 executives, 147 senior managers and 147 managers) in mid-to-large sized (over 500 employees) companies.Findings The analyses showed strong statistical significance for nearly all relationships. Internal communication on digital platforms, networked employee communication and an innovation culture all contributed to moral, instrumental and relational legitimacy. Leadership communication on external digital platforms (social media) was not a significant contributor to moral or relational legitimacy but was a significant contributor to instrumental legitimacy. Higher organization legitimacy was correlated with higher profit growth.Practical implications Leaders and communicators should prioritize a networked enterprise in several ways. They should actively communicate with employees on internal digital platforms. To be absent on internal digital platforms is a significant missed opportunity by leaders to build organizational legitimacy. Further, leaders and communicators should actively promote networked communication among employees as much as possible. Finally, leaders and communicators should communicate, model and reward an innovation culture.Originality/value There are no known scholarly studies that accomplish the following: empirically examine a model of networked enterprises comprised of vertical and horizontal communication and an innovation culture; and make connections between leadership communication on digital platforms in networked enterprises with legitimacy judgments. The large sample of contemporary executives and managers bolsters the strength of the findings.