Legitimacy Loss Research Articles

What's emotion got to do with it? Reflections on the buildings of the Portuguese (Family) Courts.

Courthouses, as public edifices, serve as the physical backdrop for the administration of justice. Simultaneously, they are spaces inhabited and visited by a diverse array of court users, ranging from judicial professionals to litigants. This article explores the nuanced interplay between courthouse spaces and the emotional experiences they generate. It starts by surveying existing studies that examine such an intricate relationship. Then, and by drawing from a sample of interviews conducted across two distinct time periods (2010-2011 and 2017-2019) in Portugal, the article delves into the lived experiences of judges, prosecutors, and litigants. Their narratives provide a multifaceted view of the emotional experiences associated with the Portuguese (Family) Court buildings. To analyse these experiences, I turn to Henri Lefebvre's concept of lived space. Lived space refers to the emotions, memories, and interactions within a particular spatial context. Such dimension, in relation to courthouses, directly connects to the lived experience of legitimacy loss and low self-esteem affecting decision-making, on the one hand, and estrangement and rights' exclusion, on the other hand, felt by those subjects. By investigating how the spatial configurations of courthouses shape our emotions, we gain insights into the profound impact of such built environments on our understanding of the justice system, and the physical and symbolic obstacles in accessing it.

The Dark Side of Entrepreneurial Framing: A Process Model of Deception and Legitimacy Loss

The Dark Side of Entrepreneurial Framing: A Process Model of Deception and Legitimacy Loss

Scarce resources or damaged goods? On the legitimacy of laid‐off workers following MNC failure

AbstractResearch SummaryWe contribute to theorizing global human resource strategy by analyzing the mobility of workers laid off due to the failure of a MNC employer. The job opportunities of laid‐off workers are affected by their industry legitimacy. Focusing on scarce specialized workers, we propose that prospective MNC employers share an interest in retaining such workers' legitimacy. However, in the light of organizational failure, they may suffer from cross‐border legitimacy loss conditioned by their former employer's MNC structure—specifically, their former organizational units or geographical locations. We present an illustrative case study of traders laid off by a spectacular bankruptcy in the global bunker industry. This inspires a discussion of how MNC top management can manipulate worker legitimacy following an organizational failure.Managerial SummaryStrategic hiring of globally mobile scarce specialized workers is central to global human resource strategy. We analyze what drives the legitimacy and mobility of such workers after being laid off by a bankruptcy of their former employer. We demonstrate that laid off workers experience comparatively high legitimacy loss when they were previously assigned to an MNC organizational unit or geographical location where other workers were suspected of being responsible for failure. This weakens their bargaining position vis‐a‐vis a prospective employer. We present an illustrative case study of traders laid off by a spectacular bankruptcy in the global bunker oil industry.

Live and (Let) Die – Shifting Legitimacies and Organizational Mortality in American Higher Education, 1944–2018

AbstractSociologists of U.S. higher education have emphasized the sector’s historical expansion, which has limited the attention given to the dynamics of organizational closure. Drawing on an original dataset comprising colleges and universities across all sectors and tiers, we show how general expansion is tempered by 354 organizational closures between 1944 and 2018. Closures cluster in time between 1964 and 1974 and after 2008 reflecting shifting causes of and responses to legitimacy loss. Analyses provide support for hypotheses drawn from institutional theory, and, while controlling for a number of variables, identify two main causes of college mortality. These are demographic exclusivity, i.e., women’s and (historically) Black college status, and accreditation. Mortality of exclusionary institutions is further associated with social activism and the system-wide diffusion of related group-differentiated study programs, particularly in the period 1944–1979. By contrast, accreditation becomes more important in the post-1980 period.

Stakeholder roles in sustainable supply chain management: a literature review

Since ecological deterioration and social discrepancy are intensifying, multiple stakeholders are driving companies to incorporate sustainability in their supply chains. Thus, integrating non-traditional supply chain stakeholders, such as non-governmental organizations and competitors, in supply chain practices is essential for achieving a more sustainable supply chain. Hence, this research aims to show how stakeholders and their roles are related to sustainable supply chain management practices. A systematic literature review including 78 peer-reviewed English journal articles published between 2000 and 2020 was conducted. The results suggest that multiple supply chain external and internal stakeholders drive, facilitate, or inspect the implementation of sustainable supply chain management practices. While governmental and non-governmental organizations are key drivers for implementing sustainable supply chain management practices, they can also support their implementation. Moreover, proactive engagement with external supply chain stakeholders facilitates the organizational learning process through capability development, increasing understanding and awareness of sustainability, and creating knowledge. This study strengthens the value of proactive and collaborative measurements to deal with stakeholder issues before putting pressure on a company, which can result in reputation and legitimacy loss. These insights enrich the theoretical debate while explaining stakeholders’ relevance and roles in the sustainable supply chain management context. However, the study has some limitations regarding the chosen sustainable supply chain management and stakeholder constructs and potential within-study bias, offering possibilities for further research.

Once A Conformist, Always A Conformist? The Discontinued Conformity to Sustainability Norm

Although institutional scholars have well established the value of conformity to institutionalized norms, researchers have paid limited attention to the subsequence of the norm-conforming behaviors. Motivating by the abnormal phenomenon that some organizations deviate from the sustainability norm after their original conformity – which is described as discontinued conformity, we identify institutional immunity as a key mechanism to explain the inconsistent responses. We then introduce the distinction between ascribed and achieved immunity based on their different origins. While ascribed immunity is predetermined by organizations’ structural attributes, achieved immunity can be enhanced by intentional actions. Both types of immunity filter institutional pressures and reduce legitimacy loss, which enable the deviation afterward. We further argue that institutional quality moderates the relationship between institutional immunity and discontinued conformity. We test our hypotheses with 22,949 global observations covering 2012-2017 and find solid support. Our work enriches the conformity literature by adopting a dynamic view and advances the institutional perspective in sustainability and CSR researches.

Corporate Tax Avoidance and Corporate Social Responsibility Disclosure Readability: Evidence from China

AbstractPaying taxes to support the societies in which they operate is both a legal and ethical responsibility of business. Nevertheless, some companies work to avoid taxes, which could cause society to question the legitimacy of the organisation. Many companies provide reports on their corporate social responsibility (CSR) activities; more transparent CSR reports may help to restore the legitimacy loss associated with tax avoidance. We investigate the relationship between tax avoidance and CSR report readability among Chinese companies. We find a positive relationship between corporate tax avoidance and the readability of CSR reports. This relation is weaker among state‐owned enterprises, which may have stronger pre‐existing legitimacy owing to their relationship with the state. The relationship is also weaker among companies in less developed regions of China, which have less developed institutions to monitor organisational legitimacy. Overall, our results are consistent with the notion that CSR reporting represents an attempt to overcome legitimacy concerns arising from tax avoidance. Our findings indicate that tax avoidance and CSR reporting are alternative means of establishing legitimacy, rather than complementary reflections of an organisational culture that values (or devalues) CSR.

When the beacon goes dark: Legitimacy repair work by subsequent actors in an emerging market category

Extant research explains how entrepreneurial ventures can serve as a beacon in emerging market categories, blazing a trail for other ventures and contributing to their successful legitimation. However, what happens when a beacon is unsuccessful? Using a qualitative case study of particularly sensitive interviews and secondary data from the social venture accelerator category, we examine how subsequent entrants overcome recursive legitimacy challenges caused by beacon underperformance and failure. Through our study, we develop a model of legitimacy repair work, which consists of decoupling legitimacy assessments, prioritizing distinctiveness identity claims, and enabling selective generalization. Following legitimacy loss, we highlight how actors prioritize and sequence distinctiveness claims over legitimacy claims, which we refer to as distinctive legitimacy. We also identify a key mechanism of selective generalization, where identity claims are made to direct audience attention toward some (and not other) attributes of the organization and category to acquire resources. Our findings have important implications for new venture legitimacy: mitigating legitimacy loss, the process of optimal distinctiveness, and legitimacy management over time.

Legitimacy Loss Following Data Breach: Examining Government Contract Awards and Firm Lobbying

Seeking and securing government contracts can be a lucrative strategy for legitimate firms. However, firms’ ability to secure such contracts following a transgression that threatens its legitimacy is unclear. Building on previous research about the consequences of and firms’ response strategies following a transgression, we examine the awarding of government contracts following a data breach, unique transgressions that have become increasing salient for both firms and government. We also examine ways in which the firm can manage such consequences through its lobbying activity. Results indicate that firms secure fewer government contracts following a data breach and engaging in inside lobbying worsens the transgressing firm’s consequences. This study provides both practical and theoretical insight into how firms can damage relationships with government and exacerbate the situation by using inept political strategies.

The Process of Repairing Organizational Legitimacy

This paper aims to explain the persistent legitimacy loss of a highly institutionalized organization by analyzing the process of failing legitimacy repair. Therefore, I reconstruct the prominent case of the State Office of Health and Social Affairs (LAGeSo) in Berlin, which became a symbol of authority failure during the ‘German refugee crisis’ in 2015. My findings show that whereas media triggers the organization to take action by attributing a need for change of the legitimacy object, they at the same time perceive the actual effects of these changes as an impediment of legitimacy repair. Using a paradox lens, I argue that these tensions of restructuring, cooperation and communication originate from the duality of legitimacy object and subject and are rendered salient through media’s paradoxical cognition. This contributes to our understanding of legitimacy repair in at least two ways: first, the revelation of a potential paradoxical downward spiral of legitimacy repair challenges the assumption that strategies of legitimacy repair mechanically produce desired outcomes; second, the paper contributes to the process perspective on legitimacy by revealing the fluid nature of the object of legitimacy, demanding for a more complex and dynamic lens when analyzing legitimacy processes.

The effect of CEO incentives on deviations from institutional norms in foreign market expansion decisions: Behavioral agency and cross‐border acquisitions

AbstractCEO incentives have been the subject of great interest for human resource scholars. We explore the institutional context within which the CEO makes sense of their incentives. Our theory suggests that CEO equity incentives interact with institutional norms to influence foreign market entry choices. Specifically, we argue that CEOs will weigh the risk bearing created by equity incentives, along with the consequences of legitimacy loss, when deciding whether to deviate from institutional norms when internationalizing. In doing so, we advance human resource literature by demonstrating that CEO responses to incentives are influenced by institutional norms and that CEOs' decisions to deviate from institutional norms are shaped by their incentives. We find support for our framework in the analysis of the stake taken by acquirers in 4,184 cross‐border acquisitions.

Doing extreme by doing good

Firms adopting deviant strategies are generally subject to impaired legitimacy and heightened risk. Based on the legitimacy literature, we hypothesize that strategically deviant firms are motivated to engage in corporate social responsibility activities as protection from a potential legitimacy loss. Using a sample of Chinese-listed firms during the 2003–2011 period, we find that firms with deviant strategies are more likely to engage in charitable donations. In addition, the positive effect of strategic deviance on donations is alleviated when firms communicate effectively with financial analysts, and when block holders largely own these firms.

The Color of Faults Depends on the Lens: MNCs’ Legitimacy Repair in Response to Framing by Local Governments in China

ABSTRACTConcerns over food safety in China not only direct public attention to negative incidents, but also trigger the government's scrutiny of implicated firms, particularly MNCs. The question of how to repair legitimacy after media coverage of negative incidents has become a critical issue for MNCs. Although the factors for MNCs’ public crises have been identified, how local contexts and mechanisms shape repair approaches remain unclear. To address this research gap, we conducted a study of Walmart China's approaches associated with two negative incidents across two regions. We found that the negative incidents can be framed differently depending on the local environment's unfavorability for MNCs. Specifically, the negative framing gave rise to varying degrees of legitimacy loss and offered different leeway for MNCs to repair their legitimacy. We also identified the varied outcomes of different repair approaches. By revealing the linkages among local context, framing, legitimacy repair, and its outcomes, our study contributes to research on MNCs’ legitimacy management under institutional complexity and underscores the China context for legitimacy maintenance. We also offer insights that advance the institutional approach to legitimacy repair in this context. Last, we reflect on the techniques for conducting qualitative research in China.

MNCs in Varying Local Environments: Legitimacy Repair in Response to Framing by Governments

Repairing legitimacy loss upon intensifying scrutiny by local stakeholders has become salient among MNCs which increasingly face legitimacy risks in emerging economies. Systematic research is lacking, though, on how varying local environments shape MNCs legitimacy repair approaches and their outcomes. We conducted an inductive study of Walmart China's repair of legitimacy losses from two of its most attention-grabbing scandalspork mislabeling incident in Chongqing, 2011 and donkey meat (mixed with fox DNA) incident in Jinan, 2013. In this paper, we show how the changing national environment intensified the legitimacy risk of large MNCs particularly in the food retailing sector. However, the national environmental effects were amplified or downplayed by local governments, depending on varying local political and market conditions. Local governments were powerful frame articulators, which constructed frames varying in number, kind, and salience to identify the issues and the character of the MNC after the occurrence of negative incidents, leaving the MNC different leeway for legitimacy repair. We analyze how the organization subsequently adopted different legitimacy repair approaches, which generated different outcomes. The model that we construct contributes to research on environment-organization relations, framing, and legitimacy management. The paper highlights future research directions and provide implications for practitioners.

Guilty by Association: A Contingency View of Regulative De-legitimation

Legitimacy loss often creates negative spillover for other organizations that are connected with the focal organization. We examine how alliance partners are affected by such negative spillover whe...

Organizational strategies in the context of legitimacy loss: Radical versus gradual responses to disclosed corruption

How do organizations respond to the loss of legitimacy in the context of disclosed corruption, and what drives the particular responses adopted? In this article, we study the organizational strategies of three multinational companies before, during, and after legitimacy loss due to disclosed organizational corruption. We explore why some multinational companies exceed regulatory expectations and choose radical strategies that substantially influence their environment by defining a new benchmark of anti-corruption practices, while others follow a more gradual approach. We build on the concept of legitimacy in institutional theory and focus on three strategies that organizations tend to adopt to regain legitimacy: isomorphic adaptation, moral reasoning, and strategic manipulation. Based on our empirical study, we suggest that when a transgression is accompanied by a strong legitimacy shock, transgressors are likely to see no alternative but to react both radically and instantly. We identify two distinct extremes of strategic manipulation: decoupling and substantial influence.

"Stigma and Legitimacy Loss: Professions, Social Judgments, and Symbols in Crime and Punishment"

In this symposium we present five papers focused on how the judgments of external stakeholders affect the apportionment of the consequences of misconduct. The papers included attack the question in...

External Board Memberships of Surviving CEO Following Financial Restatements

Complementing earlier research that has examined the turnover of CEOs following financial restatements, this paper focuses on surviving CEOs--those CEOs that continue in their positions even after financial restatements. Because CEOs of restating firms are held personally responsible for financial restatements in the wake of Sarbanes Oxley Act of 2002, surviving CEOs face additional pressures from internal and external stakeholders as well as face legitimacy loss. We examine how the surviving CEOs change their external board memberships in reaction to these pressures and potential legitimacy loss. We hypothesized and empirically found that surviving CEOs dropped their membership in corporate boards in the wake of financial restatements at much higher rate than CEOs in non-restatement contexts but added memberships in philanthropic foundations at a significantly higher rate than CEOs in non-restatement contexts. We further explored the moderating effects of CEO incentive pay on these changes following rest...

Organizational Restructuring, Government Control and Loss of Legitimacy following An Organizational Crisis: The Case of Israel's Nonprofit Human Services

The study explores organizational restructuring following the occurrence of a crisis. Restructuring activities following an intervention are considered here to be indicators of an organization's loss of legitimacy because they have lost their independent status, a basic characteristic of nonprofit human settings. the study shows that according to the Resource Based View of organization restructuring – experienced as downsizing, neglecting and abandoning of projects – organizations are affected by (a) government intervention in decision making; (b) higher demands for accountability; and (c) higher evaluations of performance gaps. On the basis of the study of a sample of 138 Nonprofit Human Services in Israel, the results show that the higher the level of restructuring, the higher the level of legitimacy. However, organization location in metropolitan areas moderates the link between restructuring and legitimacy loss. We conclude that Israel's nonprofit human services being overly dependent on government funding are more prone to restructuring and losing legitimacy following organizational crisis.

Consultation Barriers Between Teachers and External Consultants: A Grounded Theory of Change Resistance in School Consultation

The aim of this study, conducted in Sweden, was to investigate the cultural barriers between school personnel (teachers and principals) and nonschool personnel (a resource team), who were external to the school system, regarding consultation about challenging or difficult-to-teach students. Focus groups with teachers, principals, and the resource team as well as interviews with students and parents were conducted. The qualitative analysis resulted in a grounded theory of change resistance in the context of school consultation. Differences in professional assumptions led to conflicting professional main concerns. An intergroup conflict was inevitable in many cases and the professional cultural barriers that remained produced and reinforced professional ethnocentricity. This contributed to a lack of integration between external consultants and school personnel. Lack of integration contributed to the legitimacy loss and the maintenance of professional ethnocentricity. The basic social process of change resistance was centered in the interaction between professional ethnocentricity and lack of integration.