Modern society is challenged by a loss of efficiency in national governance systems values, and lifestyles. Corporate social responsibility (CSR) discourse builds upon a conception of organizational legitimacy that does not appropriately reflect these changes. The problems arise from the a-political role of the corporation in the concepts of cognitive and pragmatic legitimacy, which are based on compliance to national law and on relatively homogeneous and stable societal expectations on the one hand and widely accepted rhetoric assuming (...) that all members of society benefit from capitalist production on the other. We therefore propose a fundamental shift to moral legitimacy, from an output and power oriented approach to an input related and discursive concept of legitimacy. This shift creates a new basis of legitimacy and involves organizations in processes of active justification vis-à-vis society rather than simply responding to the demands of powerful groups. We consider this a step towards the politicization of the corporation and attempt to re-embed the debate on corporate legitimacy into its broader context of political theory, while reflecting the recent turn from a liberal to a deliberative concept of democracy. (shrink)

Corporate Social Responsibility (CSR) is a concept suggesting that good business is about more than maximizing profit. In order to achieve social legitimacy a corporation must pay attention to a complex web of values and relations, and different CSR strategies and policies can be viewed as ways to manage this complexity. The corporate legitimacy matrix introduced in this article represents the strive for social legitimacy as a balancing act along three lines: a) The sustainability dimension: (...) Balancing economic, social and environmental considerations, b) The stakeholder dimension: Balancing considerations of stakeholders at the local, national and global level, and c) The trust dimension: Balancing rational argumentation, credibility and emotional appeal. This article explores these three aspects of corporate legitimacy and how they are related. It is intended as a theoretical contribution towards a better understanding of the relationship between CSR and corporate legitimacy, as well as a practical tool to support the analysis of actual corporate legitimacy challenges. (shrink)

This study provides novel evidence of the impact of corporate social responsibility (CSR) on investment sensitivity to cash flows. We posit that CSR affects investment–cash flow sensitivity (ICFS) through information asymmetry and agency costs, commonly viewed as the two channels through which investment responds to the availability of internal cash flows. We find that CSR performance leads to a decrease in ICFS. We further find that ICFS decreases (increases) when CSR strengths (concerns) increase. Finally, we find that the effect (...) of CSR on ICFS is driven by the areas Community, Diversity, and Human Rights. In sum, the findings of this study stress the relevance of CSR—in particular, of CSR activities that extend beyond compliance behavior and reflect what is desired by society—in reducing market frictions and improving firms’ access to financial capital. (shrink)

This study provides novel evidence of the impact of corporate social responsibility (CSR) on investment sensitivity to cash flows. We posit that CSR affects investment–cash flow sensitivity (ICFS) through information asymmetry and agency costs, commonly viewed as the two channels through which investment responds to the availability of internal cash flows. We find that CSR performance leads to a decrease in ICFS. We further find that ICFS decreases (increases) when CSR strengths (concerns) increase. Finally, we find that the effect (...) of CSR on ICFS is driven by the areas Community, Diversity, and Human Rights. In sum, the findings of this study stress the relevance of CSR—in particular, of CSR activities that extend beyond compliance behavior and reflect what is desired by society—in reducing market frictions and improving firms’ access to financial capital. (shrink)

The article offers a critical assessment of an article on “Corporate Legitimacy as Deliberation” by Guido Palazzo and Andreas Scherer in this journal. We share the concern about the precarious legitimacy of globally active corporations, infringing on the legitimacy of democracy at large. There is no quarrel with Palazzo/Scherer’s diagnosis, which focuses on the consequences of globalization and ensuing challenges for corporate social responsibilities. However, we disagree with the “solutions” offered by them. In a first (...) step we refute the idea of a legitimacy of morals, maintaining that morality is a premodern mode of creating legitimacy. Even worse, moral is becoming a dangerous commodity under conditions of fundamental global disagreements and antagonisms. We secondly refute the concept of the “politicized corporation”, maintaining that Palazzo/Scherer disregard the consequences of functional differentiation of modern societies and, in particular, disregard the wisdom of political restraint and constitutional guarantees for the autonomy of different spheres of society. Finally, we refute a seemingly romantic notion of deliberation, maintaining that deliberation and deliberative democracy is a worthy idea, which, however, has no place in the real world of globalized contexts. On the other hand, we also find enough common ground and common concern with Palazzo/Scherer to validate a fruitful discourse. (shrink)

This contribution provides theoretical insights into a planned dissertation project which discusses the mass media as a stakeholder of a company, suggesting that a complex understanding of the mass media, their public-sphere function and their mode of operation is crucial for analyzing the media’s role in conferring corporate legitimacy. Terms such as ‘corporate citizen’ or ‘stakeholder democracy’ or the notion of corporations as civil or political actors imply a link to the public sphere, which in modern democracies (...) is primarily constituted through the mass media. However, up to now, there has been hardly any discussion about the role of the mass media and the public sphere in the realm of stakeholder theory. (shrink)

The article offers a critical assessment of an article on "Corporate Legitimacy as Deliberation" by Guido Palazzo and Andreas Scherer in this journal. We share the concern about the precarious legitimacy of globally active corporations, infringing on the legitimacy of democracy at large. There is no quarrel with Palazzo/Scherer's diagnosis, which focuses on the consequences of globalization and ensuing challenges for corporate social responsibilities. However, we disagree with the "solutions" offered by them. In a first (...) step we refute the idea of a legitimacy of morals, maintaining that morality is a premodern mode of creating legitimacy. Even worse, moral is becoming a dangerous commodity under conditions of fundamental global disagreements and antagonisms. We secondly refute the concept of the "politicized corporation", maintaining that Palazzo/Scherer disregard the consequences of functional differentiation of modern societies and, in particular, disregard the wisdom of political restraint and constitutional guarantees for the autonomy of different spheres of society. Finally, we refute a seemingly romantic notion of deliberation, maintaining that deliberation and deliberative democracy is a worthy idea, which, however, has no place in the real world of globalized contexts. On the other hand, we also find enough common ground and common concern with Palazzo/Scherer to validate a fruitful discourse. (shrink)

Corporations have increasingly turned to voluntary, multi-stakeholder governance programs to monitor workers’ rights and standards in global supply chains. This article argues that the emphasis of these programs varies significantly depending on stakeholder involvement and issue areas under examination. Corporate-influenced programs are more likely to emphasize detection of violations of minimal standards in the areas of wages, hours, and occupational safety and health because focusing on these issues provides corporations with legitimacy and reduces the risks of uncertainty created (...) by activist campaigns. In contrast, these programs are less likely to emphasize workers’ rights to form democratic and independent unions, bargain, and strike because these rights are perceived as lessening managerial control without providing firms with significant reputational value. This argument is explored by coding 805 factory audits of the Fair Labor Association between 2002 and 2010, followed by case studies of Russell Athletic in Honduras, Apple in China, and worker rights monitoring in Vietnam. (shrink)

Social media platforms have been vested with hope for their potential to enable ‘ordinary citizens’ to make their judgments public and contribute to pluralized discussions about organizations and their perceived legitimacy :60–97, 2018). This raises questions about how ordinary citizens make judgements and voice them in online spaces. This paper addresses these questions by examining how Western citizens ascribe responsibility and action in relation to corporate misconduct. Empirically, it focuses on modern slavery and analyses online debates in Denmark (...) on child slavery in the cocoa industry. Conceptually, it introduces the notion of cosmopolitanism as a general disposition of care and responsibility towards distant others, conceived as a prerequisite for the critical evaluation of corporate responsibility in the Global South. The analysis of online debates shows that citizens debate child slavery in terms of individual consumer responsibility rather than corporate responsibility. Corporations are not considered potential agents of change. As a consequence, online citizen debates did not reflect a legitimacy crisis for the cocoa industry, as debates over responsibility were overwhelmingly concerned with the agency of the Western individual, the individual agency of the speakers themselves. Participants in debates understood their agency strictly as consumer agency. (shrink)

Arguably, the corporate social responsibility practices of multinational enterprises are influenced by a wide range of both internal and external factors. Perhaps, most critical among the exogenous forces operating on MNEs are those exerted by state and other key institutional actors in host countries. Crucially, academic research conducted to date offers little data about how MNEs use their CSR activities to strategically manage their relationship with those actors in order to gain legitimisation advantages in host countries. This paper addresses (...) that gap by exploring interactions between external institutional pressures and firm-level CSR activities, which take the form of community initiatives, to examine how MNEs develop their legitimacy-seeking policies and practices. In focusing on a developing country, Sri Lanka, this paper provides valuable insights into how MNEs instrumentally utilise community initiatives in a country where relationship-building with governmental and other powerful non-governmental actors can be vitally important for the long-term viability of the business. Drawing on neo-institutional theory and CSR literature, this paper examines and contributes to the embryonic but emerging debate about the instrumental and political implications of CSR. The evidence presented and discussed here reveals the extent to which, and the reasons why, MNEs engage in complex legitimacy-seeking relationships with Sri Lankan host institutions. (shrink)

Firms worldwide are increasingly required to disclose their carbon emissions due to the environmental damage associated with climate change. Because there has been no previous literature focusing on the determinants of corporate carbon disclosure integrating environmental legitimacy and green innovation, the present study attempted to develop an original framework to fill the research gap. This study explored the influence of environmental legitimacy on corporate carbon disclosure, and investigated the role of green innovation as a mediator. With (...) the samples of Carbon Disclosure Project in China from 2008 to 2012, the results demonstrate that environmental legitimacy significantly negatively influences the likelihood of corporate carbon disclosure, and that green process innovation mediates the relationship, while green product innovation has no significant mediating effect. It means that environmental legitimacy not only directly affects the likelihood of corporate carbon disclosure, but also indirectly affects it via green process innovation. Hence, companies must increase both informal and formal mechanisms, i.e., external environmental legitimacy and internal green process innovation, to engage in carbon information disclosure and ensure sustainability. (shrink)

This study examines the relation between firms' corporate philanthropic giving and their performance in three other social domains - employee relations, environmental issues, and product safety. Based on a sample of 384 U.S. companies and using data pooled from 1998 through 2000, we find that worse performers in the other social areas are both more likely to make charitable contributions and that the extent of their giving is larger than for better performers. Analyses of each separate area of social (...) performance, however, indicate that the relation between giving and negative social performance only holds for the environmental issues and product safety areas. We find no significant association between corporate philanthropy and employee relations concerns. In general, these findings suggest that corporate philanthropy may be more a tool of legitimization than a measure of corporate social responsibility. (shrink)

How does a company achieve long-term survival? This study starts with the question of why, among companies on the verge of bankruptcy, some survive and some break up. This study argues that the long-term survival of a company is determined by not only its economic performance but also its social performance. It clarifies that sustainable corporate social responsibility practices facilitate long-term survival. Thus, this study analyzed 259 CSR actions performed by eight representative long-lived companies in Korea and how the (...) various CSR actions helped these companies overcome crises and survive. The common CSR actions practiced by all the long-lived companies had a positive influence on forming social capital with primary stakeholders and securing legitimacy from secondary stakeholders, which in turn had a significant influence on maintaining survival. This study provides significant implications for the value of CSR practices that have been controversial, by presenting a model of how CSR actions facilitate corporate longevity. (shrink)

Private firms are uniquely positioned to provide significant relief to the misery that pervades the developing world. Global misery has persisted due to a variety of failures in the provision of relief by nation-states and non-governmental organizations, including corruption and the absence of strong background institutions in the countries in need of aid. In many situations, private firms have a comparative advantage over these entities in the provision of aid. Examples such as Merck and the cure for river blindness show (...) how firms can use their specific competencies and knowledge to relieve misery through Direct Corporate Humanitarian Investment (DCHI). DCHI is legitimized by marketplace morality and is consistent with the role of business within society, including legal dimensions. Shareholders may formally approve a corporation’s DCHI strategy and all stakeholders may act in support of their moral desires with respect to the firm and its DCHI strategy. (shrink)

We ask what type of neutralization techniques corporations apply to allegations of human rights abuses. We proceed by undertaking a Qualitative Content Analysis of 162 responses by ten extractives-sector firms over a period of 14 years. The firms were responding to accusations of human rights impacts documented by the Business and Human Rights Resource Centre. We use Garrett et al.’s :507–520, 1989) framework of neutralization techniques consisting of denial, justification, concession and excuse to examine the responses. During our QCA, we (...) observed emerging themes around self-promotion and evasive tactics. We contribute to existing literature by proposing ‘evasion’ as a novel neutralization technique, particularly in circumstances of corporate responses to accusations of wrongdoing. We argue that evasion occurs when firms refuse to engage in the debate brought forward in an accusation. In addition, we enrich our understanding of neutralization techniques by proposing subneutralization techniques in our analysis to diverge from that of other studies. We conclude by discussing the implications of the predominance of corporate narcissism and evasive neutralization techniques to the business and human rights movement and other international corporate responsibility standards. (shrink)

This study examines the relation between firms’ corporate philanthropic giving and their performance in three other social domains – employee relations, environmental issues, and product safety. Based on a sample of 384 U.S. companies and using data pooled from 1998 through 2000, we find that worse performers in the other social areas are both more likely to make charitable contributions and that the extent of their giving is larger than for better performers. Analyses of each separate area of social (...) performance, however, indicate that the relation between giving and negative social performance (cited concerns) only holds for the environmental issues and product safety areas. We find no significant association between corporate philanthropy and employee relations concerns. In general, these findings suggest that corporate philanthropy may be more a tool of legitimization than a measure of corporate social responsibility. (shrink)

Grounded in institutional theory, this study provides an overview of the corporate social responsibility initiatives of Turkey's 30 largest corporations through a thematic content analysis. The study focuses on the G-20 member Turkey and investigates the influence of isomorphism mechanisms on the adoption of CSR initiatives in a developing country context. The aim of this study is to integrate Carroll's CSR dimensions, the type of CSR engagement and coercive, mimetic and normative isomorphism mechanisms proposed by institutional theory. Through this (...) integration the study makes a unique contribution to the literature by providing a different perspective. Findings reveal industry characteristics do not influence the selection of CSR initiatives. While business-to-business companies focus on CSR activities linked to their core business functions, business-to-consumer companies focus on CSR initiatives that are more discretionary, varied and philanthropic. In addition, findings show that multinational corporations implement CSR initiatives at the global level rather than focusing on local needs. (shrink)

In 2000, Business and Society Review published a Special Issue of the journal to explore scholars’ ideas about how the practice of corporate citizenship would evolve in the 21st century. Contributors to the volume predicted a change in business motives for engaging in social initiatives, suggesting that managers would begin to see corporate citizenship as a strategic necessity to preserve organizational legitimacy in the face of changing social values. This article uses data from a study of (...) class='Hi'>corporate citizenship practices in over 500 Norwegian companies to explore the validity of the Special Issue predictions. We begin by reviewing the foundations of organizational legitimacy theory and examine recent research documenting the growing importance of corporate citizenship for assessments of business legitimacy. We describe our study methods, present our results, and discuss the implications of our findings in this context. (shrink)

Ecological objectives in environmental reports usually promise a high degree of environmental responsibilities in a company’s activities. Several studies have already highlighted that most companies do not keep their promises since stakeholders’ expectations and a company’s capabilities for internal adjustments do not always match. Thus, a company might use strategic reporting in order not to endanger its legitimacy. However, no study so far has demonstrated how companies use different legitimacy strategies in reporting their environmental objectives over time. To (...) achieve this in our study, we focus primarily on findings from legitimacy theory in combination with the legitimacy strategies suggested by Lindblom Social and environmental accounting: developing the field, Sage, Los Angeles, pp 51–63, 2010). To test our theoretical framework empirically, we analyze 260 corporate environmental reports of German DAX companies between the years 2000–2014 by coding all disclosed objectives within these reports. Based on this longitudinal approach, we are able to identify reporting patterns of the different companies that provide insights into those companies’ environmental reporting legitimacy strategies. Overall, this study contributes to research on voluntary disclosure by showing that a comprehensive analysis of the reporting pattern of disclosed objectives allows the identification of certain legitimacy strategies. (shrink)

This article presents results of exploratory research conducted with managers from over 500 Norwegian companies to examine corporate motives for engaging in social initiatives. Three key questions were addressed. First, what do managers in this sample see as the primary reasons their companies engage in activities that benefit society? Second, do motives for such social initiative vary across the industries represented? Third, can further empirical support be provided for the theoretical classifications of social initiative motives outlined in the literature? (...) Previous research on the topic is reviewed, study methods are described, results, are presented, and implications of findings are discussed. The article concludes with the analysis of study limitations and directions for future research. (shrink)

Recent years have witnessed an escalation in corporate social reporting (CSR) by UK companies (Gray, Kouhy and Lavers 1995). Whilst some elements of CSR reporting are required by law, much of it represents voluntary reporting. By investigating the non‐mandatory reporting of two aspects of social responsibility, corporate community involvement (CCI) and environmental impact, this paper seeks to explore why companies choose to make such disclosures. It specifically asks whether companies are primarily motivated by the strategic need to manage (...) their reputation and legitimacy rather than by the recognition of their ethical accountability, which is the stated purpose of reports produced by cutting edge companies (Clarke 1998). (shrink)

In the following article, we propose an analytical framework for the analysis of Corporate Social Responsibility (CSR) Standards based on the paradigmatic nexus of voice and entitlement. We follow the theory of decentration and present the concept of Transnational Norm-Building Networks (TNNs), which — as we argue — comprise a new nexus of voice and entitlement beyond the nation—state level. Furthermore, we apply the analytical framework to the ISO 26000 initiative and the Global Compact. We conclude the article with (...) remarks on the legitimacy and the effectiveness of norms generated by TNNs. Through this, we aim to contribute a new theoretical foundation to the analysis of CSR standards, which enables us to undertake a more differentiated description of TNN structures which have hitherto been ignored in academic literature. Secondly, we will contribute to the practical debate on ISO 26000 and the Global Compact by proposing new perspectives on the conditions of their legitimacy and effectiveness based on the voice-entitlement nexus. (shrink)

Being a controversial industry, oil companies turn to corporate social responsibility (CSR) as a means to obtain legitimacy. Adopting a case study methodology, this research examines the characteristics of CSR strategies and CSR communication tactics of six oil companies by analyzing their 2011–2012 web site content. We found that all six companies engaged in CSR activities addressing the needs of various stakeholders and had cross-sector partnerships. CSR information on these companies’ web sites was easily accessible, often involving the (...) use of multimedia technologies and sometimes social media platforms. Furthermore, to boost the credibility of their CSR messages, these companies utilized a variety of tactics, such as factual arguments and two-sided messages. In sum, this research unveils the interconnectedness among business strategy, CSR practices, and CSR communication in oil companies’ attempt to gain legitimacy in an environment of controversy. The article ends with a discussion of the theoretical and practical implications of the research findings. (shrink)

Robots are now associated with various aspects of our lives. These sophisticated machines have been increasingly used in different manufacturing industries and services sectors for decades. During this time, they have been a factor in causing significant harm to humans, prompting questions of liability. Industrial robots are presently regarded as products for liability purposes. In contrast, some commentators have proposed that robots be granted legal personality, with an overarching aim of exonerating the respective creators and users of these artefacts from (...) liability. This article is concerned mainly with industrial robots that exercise some degree of self-control as programmed, though the creation of fully autonomous robots is still a long way off. The proponents of the robot’s personality compare these machines generally with corporations, and sporadically with, inter alia, animals, and idols, in substantiating their arguments. This article discusses the attributes of legal personhood and the justifications for the separate personality of corporations and idols. It then demonstrates the reasons for refusal of an animal’s personality. It concludes that robots are ineligible to be persons, based on the requirements of personhood. (shrink)

Business ethics, corporate social responsibility, corporate citizenship, values-driven management, corporate governance, and ethical leadership are necessary ...

As a result of the increasing public attention to environmental crises, corporate environmental actions and their effects are a current research hotspot. This study examines how two types of corporate environmental actions influence consumers’ perceptions of environmental legitimacy and subsequent purchase intentions. Using experimental method, this study finds that substantial environmental action induces significantly higher perceptions of environmental legitimacy than symbolic environmental action, this effect can be attenuated by corporate environmental reputation, and consumer-based environmental (...) class='Hi'>legitimacy has a significantly positive effect on consumers’ purchase intentions. These findings have interesting implications for both researchers and practitioners involved in green marketing. (shrink)

ABSTRACT:Partnerships between companies and NGOs have received considerable attention in CSR in the past years. However, the role of NGO legitimacy in such partnerships has thus far been neglected. We argue that NGOs assume a status as special stakeholders of corporations which act on behalf of the common good. This role requires a particular focus on their moral legitimacy. We introduce a conceptual framework for analysing the moral legitimacy of NGOs along three dimensions, building on the theory (...) of deliberative democracy. Against this background we outline three procedural characteristics which are essential for judging the legitimacy of NGOs as potential or actual partners of corporations. (shrink)

Building on literature in political CSR and corporate political activity (CPA) as well as responsible innovation and responsible lobbying, we introduce a framework to assess the legitimacy status of corporate political activity. We focus on the fact that companies frequently face sharp regulatory backlash after penetrating markets with their innovations. In response to regulatory backlash, big tech companies often employ an arsenal of corporate political activities to (re-)shape national and local regulatory environments, which raises the important (...) questions about the legitimacy of CPA tactics that we address. To develop and apply this framework, we briefly survey and then assess Uber’s corporate political activities in its 2015 New York City political campaign. (shrink)

Recent years have witnessed an escalation in corporate social reporting (CSR) by UK companies (Gray, Kouhy and Lavers 1995). Whilst some elements of CSR reporting are required by law, much of it represents voluntary reporting. By investigating the non‐mandatory reporting of two aspects of social responsibility, corporate community involvement (CCI) and environmental impact, this paper seeks to explore why companies choose to make such disclosures. It specifically asks whether companies are primarily motivated by the strategic need to manage (...) their reputation and legitimacy rather than by the recognition of their ethical accountability, which is the stated purpose of reports produced by cutting edge companies (Clarke 1998). (shrink)

The goal of this paper is to provide a general discussion about the legitimacy of corporate social responsibility. Given that social responsibility projects entail costs, it is not always obvious under what precise conditions managers will have a responsibility to engage in activities primarily designed to promote societal goals.In this paper we discuss four distinct criteria for evaluating the legitimacy of corporate projects for institutionalizing social responsibility.

This article looks into the process of searching for new forms of legitimacy among firms through corporate discourse. Through the analysis of annual sustainability reports, we have determined the existence of three types of rhetoric: (1) strategic (embedded in the scientific-economic paradigm); (2) institutional (based on the fundamental constructs of Corporate Social Responsibility theories); and (3) dialectic (which aims at improving the discursive quality between the corporations and their stakeholders). Each one of these refers to a different (...) form of legitimacy and is based on distinct theories of the firm analyzed in this article. We claim that dialectic rhetoric seems to signal a new understanding of the firm's role in society and a search for moral legitimation. However, this new form of rhetoric is still fairly uncommon although its use is growing. Combining theory and business examples, this article may help managers and researchers in the conceptualization of how firms make sense of their role in society and what forms of differentiation they strive for through their rhetoric strategies. (shrink)

Are the current practices of large corporations incompatible with democratic political ideology? Are multinational corporations too powerful to be constrained by democracy in practice? This paper makes a strong case that the answers may be “yes.” For example, large local corporations can constrain the democratic process in small towns on matters such as tax exemption, by threatening to leave the area. also large multinational companies can apply force to national congressional votes on product safety reform by threatening to move home (...) offi ces to other countries (taking their products and tax dollars with them). The author argues that in many cases democracy is not functioning properly due to the power of corporations to constrain the ability of citizens to freely enact laws. (shrink)

This book argues that there is a strong normative argument for using the criminal law as a primary response to corporate crime. In practice, however, corporate crimes are rarely dealt with through criminal sanctioning mechanisms. Rather, the preference – for both prosecutors and corporates – appears to be on negotiating out of the criminal process. Reflecting this emphasis on negotiation, this book examines the use of Civil Recovery Orders and Deferred Prosecution Agreements as responses to corporate crime, (...) and discusses a variety of UK case studies. Drawing upon legal and criminological backgrounds, and with an emphasis on the conceptual frameworks of ‘negotiated justice’ and ‘legitimacy’, the authors examine the law, policy and practice of these enforcement responses. They offer an original, theoretically-informed analysis which is accessible to practitioners and researchers. (shrink)

Corporate social responsibility (CSR) is one of the ways through which companies gain legitimacy. However, CSR actions themselves are subject to public skepticism because of increased public awareness of greenwashing and scandalous corporate behavior. Legitimacy of CSR actions is indeed influenced by the actions of the company but also is rooted in the basic cultural values of a society and in the ideologies of evaluators. This study examines the legitimacy of CSR actions of publicly traded (...) forest products companies as compared to family-owned forest products companies. Results indicate a lower legitimacy for CSR actions of publicly traded companies than for family-owned companies. The study also examines the effect of social responsibility orientation (SRO) of evaluators on the legitimacy accorded to companies' CSR actions. We found that SRO was negatively associated with legitimacy, especially for women. Perceived profitability of companies was negatively associated with legitimacy of CSR actions for publicly traded but not for family-owned companies. (shrink)

Corporations significantly influence the public and political spheres. In light of this corporate power in society, academics have criticized the lack of legitimization (i.e., the legitimacy gap) and highlighted a potential divergence between corporate resource allocation and the needs and preferences of the public (i.e., the social issues gap). To address these problems, democratizing organizations has been proposed as a potential solution. In line with this, the authors argue that an increase in corporate power outside the (...) economic realm should be counterbalanced by more democratic corporate governance (i.e., an internalization of democracy). While important groundwork exists, academic attention to these topics remains limited. The authors provide an overview of the literature linking corporate power and the claim for democratizing organizations, advocate for legitimization, identify research gaps, and develop a research agenda to inspire and guide future research efforts. The paper's findings suggest the importance of conceptual and empirical research on the micro-, meso-, and macro-levels and the cross-level effects, which is needed to advance this incipient research area. Future research must (1) clearly define corporate power and discuss how democratizing organizations can contribute to more legitimate organizational decisions, (2) unveil novel approaches for more democratic corporate governance, and (3) understand the organizational- and individual-level factors necessary for the successful realization of democratic organizations. (shrink)

Multi-stakeholder initiatives are increasingly used as a default mechanism to address human rights challenges in a variety of industries. MSI is a designation that covers a broad range of initiatives from best-practice sharing learning platforms to certification bodies and those targeted at addressing governance gaps. Critics contest the legitimacy of the private governance model offered by MSIs. The objective of this paper is to theoretically develop a typology of MSIs, and to empirically analyze the legitimacy of one specific (...) type of MSI, namely industry-specific MSIs. We argue that industry-specific MSIs that set out to govern corporate behavior have great potential to develop legitimacy. We analyze two industry-specific MSIs—the Fair Labor Association and the Global Network Initiative—to get a better understanding of how these MSIs formed, how they define and enforce standards, and how they seek to ensure accountability. Based on these empirical illustrations, we discuss the value of this specific MSI model and draw implications for the democratic legitimacy of private governance mechanisms. (shrink)

Given the increasing importance attached to both corporate social responsibility (CSR) and corporate governance, this study investigates the association between these two complimentary mechanisms used by companies to enhance relations with stakeholders. Consistent with both legitimacy and stakeholder theory and controlling for industry profile, firm size, stockholder power/dispersion, creditor power/leverage, and economic performance, our analysis of the annual reports for a sample of 222 listed companies suggests that firms providing more CSR information: have better corporate governance (...) ratings; are larger; belong to higher profile industries; and are more highly leveraged. Our findings support the limited prior research suggesting a link between corporate governance quality and CSR disclosure in company annual reports and suggest that, rather than mandating specific disclosures, regulators might be better served focussing on corporate governance quality as a way of increasing CSR disclosures. (shrink)

This paper discusses how Salvadoran companies practice corporate philanthropy in El Salvador, and what might motivate it. First, I briefly discuss three principal theories of corporate philanthropy, and explore some current trends in international corporate philanthropy to highlight some of the motives Salvadoran companies may have to participate in charitable activities. Then, I discuss the history of the Salvadoran private sector to help us understand philanthropic activity today. Next, I suggest that philanthropic acts by Salvadoran firms are (...) driven by altruistic and politically strategic motives, and reflect individualistic and paternalistic attitudes. In the discussion, I include examples of Salvadoran corporate philanthropy as it is practiced today, based on recent field research in El Salvador. (shrink)

Under conditions of growing interconnectedness of the global economy, more and more stakeholders are exposed to risks and costs resulting from business activities that are neither regulated nor compensated for by means of national governance. The changing distribution of risks poses a threat to the legitimacy of business firms that normally derive their legitimacy from operating in compliance with the legal rules of democratic nation states. However, during the process of globalization, the regulatory power of nation states has (...) been weakened and many production processes have been shifted to states with weak regulatory frameworks where businesses operate outside the reach of the democratic nation state. As a result, business firms have to address the various legitimacy challenges of their operations directly and cannot rely upon the legitimacy of their regulatory environment. These developments challenge the dominant approach to corporate governance that regards shareholders as the only stakeholder group in need of special protection due to risks not covered by contracts and legal regulations. On the basis of these considerations, we argue for a democratization of corporate governance structures in order to compensate for the governance deficits in their regulatory environment and to cope with the changing allocation of risks and costs. By way of democratic involvement of various stakeholders, business firms may be able to mitigate the redistribution of individual risk and address the resulting legitimacy deficits even when operating under conditions of regulatory gaps and governance failure. (shrink)

This article tracks Corporate Social Responsibility (CSR) as an emergent organizational process that places the employee at its center. Predominantly, research on CSR tends to focus on external pressures and outcomes leading to a neglect of CSR as a dynamic and developing process that relies on the involvement of the employee as a major stakeholder in its co-creation and implementation. Utilizing case study data drawn from a study of a large multinational energy company, we explore how management relies on (...) employees' interaction with CSR as the process of initiation → implementation → maturation develops. Employee involvement grows from a minor element in the CSR initiation stage to a vital contributory factor in CSR's success in the later stages of the process. The article offers new insights into a processual and interactional approach to CSR that accounts for the actions of different actors involved at each stage. Most unusually, it also recognizes the dual impact this has on broader issues concerning the management and involvement of employees through CSR actions, and gaining legitimacy in the eyes of not only external stakeholders but internal too. (shrink)

The adoption and reporting of CSR policies have important ethical and managerial implications that need scrutiny. This study answers the call of CSR scholars for further studies in controversial sectors by focusing on the voluntary reporting practices of companies that market products or services that generate addiction among consumers. It contributes to the debate on organizational legitimacy and corporate reporting by empirically analyzing whether and how corporations in the tobacco, alcohol and gambling industries disclose their CSR actions and (...) what reactions such disclosures generate in stakeholders. Drawing on legitimacy theory and organizational façades, we apply a consequent mixed-methods design (initiation approach) built on (i) a content analysis of reports prepared by a large set of companies listed on the European, British, US, Canadian, Australian and New Zealand stock exchanges and (ii) an experiment on how different actions taken by the companies (preventive vs. remedial) elicit different perceptions of company hypocrisy and action effectiveness. While previous analyses have focused on “sin” or “harm” industries, this is one of the first to assess how companies account for “addiction”, which is more difficult for them to report and legitimate due to long-term negative consequences. This study contributes to the literature on the instrumental use of CSR reporting by empirically investigating how addiction companies shape their organizational façades and manage organizational legitimacy through disclosure. Moreover, the experimental evidence advances the knowledge of how cognitive mechanisms influence stakeholders in terms of legitimacy assessment and the perceived hypocrisy/effectiveness of CSR disclosure. (shrink)

The private provision of security services has attracted a great deal of recent attention, both professional and popular. Much of that attention suggests the questioned moral legitimacy of the private vs. public provision of security. Linking the literature on moral legitimacy and responsibility from new institutional and stakeholder theories, we examine the relationship between moral legitimacy and responsible behavior by both private security companies (PSCs) and their stakeholders. We ask what the moral-legitimacy-enhancing responsibilities of both might (...) be, and contribute to both literatures and their managerial implications by detailing the content of those responsibilities, emphasizing the reciprocal nature of moral obligations. We suggest that the moral legitimacy of the industry depends upon responsible behavior by both PSCsandtheir stakeholders. (shrink)

Abstract:The new push to move political issue activity from the federal to the state and local levels—a new New Federalism—has implications for the ethical and political legitimacy of business political activity. While business political activity at the federal level may be both less costly and less risky than when action shifts to states or localities, at the state or local level it is likely to be more visible, and individual firms may be perceived to have more power. Increased (...) class='Hi'>corporate power raises questions about the legitimacy of firm involvement in the political process at the state and local levels. The issue of legitimacy is viewed in the context of the literature on political subcultures being used to study state economic development. (shrink)

The corporate social responsibility literature has increasingly explored relationships between civil society and social movements, including non-governmental organizations, and corporations, as well as the role of NGOs in multi-stakeholder governance processes. This paper addresses the challenge of including a plurality of civil society voices and perspectives in business–NGO relations, and in CSR as a process of governance. The paper contributes to CSR scholarship by bringing insights from feminist literature to bear on CSR as a process of governance, and engaging (...) with leaders of women’s NGOs, a group of actors rarely included in CSR research. The issues raised inform contributions to the CSR literature relating to the role of women’s NGOs with regard to the gender equality practices and impacts of corporations, and with respect to defining the meaning and practice of CSR. The paper frames marginalized NGOs as important actors which can contribute to pluralism, inclusion and legitimacy in CSR as a process of governance. It identifies several key barriers to the participation of women’s NGOs in CSR, and concludes by making suggestions for future research, as well as practice. (shrink)

Most business ethicists maintain that corporate actors are subject to a variety of moral obligations. However, there is a persistent and underappreciated concern that the competitive pressures of the market somehow provide corporate actors with a far-reaching excuse from meeting these obligations. Here, we assess this concern. Blending resources from the history of philosophy and strategic management, we demonstrate the assumptions required for and limits of this excuse. Applying the idea of ‘the state of nature’ from Thomas Hobbes, (...) we suggest that corporate actors would be excused from duties if complying with them threatened their vital interests. We show how this excuse is not available for most individuals within firms; instead, it is an excuse perhaps available to firms themselves, but only given substantive assumptions about corporate personhood. For those willing to make these assumptions, we apply the competitive advantage construct to delimit the scope of this excuse. We suggest that firms are excused from fulfilling an obligation when complying leads to a competitive disadvantage, as this imperils the firm’s vital interests. After revealing why this excuse does not generalize, we conclude by considering when we should reform the market to avoid the legitimacy of this excuse. (shrink)

In this article, we outline a unique conceptual framework connecting legitimacy types (Suchman, 1995), theories of corporate responsibility (Brummer, 1991), and levels of organizational moral development based on Kohlberg's (1971) moral development stages. In addition, based on Global Reporting Initiative (GRI) categories, we found empirical support for our framework, by content analyzing Fortune 500 corporate citizenship reports from four different industries (i.e., chemicals, motor vehicle/auto parts, pharmaceutical, and utilities), at three data points (i.e., 2002, 2007, and 2012). (...) Our analysis indicates that motor vehicle/auto parts and chemicals industries are at a higher developmental level, and portray moral legitimacy along with social demandingness corporate responsibility in recent years; while the pharmaceutical and utilities sectors are at a lower developmental level, showing signs of pragmatic legitimacy, alongside classical and stakeholder corporate responsibility strategies. This article contributes to the current organizational moral development literature by developing and finding empirical support of a conceptual framework of organizational moral development, legitimacy, and corporate responsibility. In particular, our findings provide a deeper understanding of the differences in moral development levels across four focal industries over a 10‐year timespan. (shrink)

This paper discusses the issue of legitimacy and, in particular the processes of building, losing, and repairing environmental legitimacy in the context of the Deepwater Horizon case. Following the Deepwater Horizon catastrophe in 2010, BP plc. was accused of having set new records in the degree of divergence between its actual operations and what it had been communicating with regard to corporate responsibility. Its legitimacy crisis is here to be appraised as a case study in the (...) discrepancy between symbolic and substantive strategies in corporate greening and its communication. A narrative analysis of BP’s “beyond petroleum”-rebranding and the “making this right”-campaign issued in response to the Gulf of Mexico disaster discusses their respective implications for corporate change. Further, the question is addressed why BP’s green image endeavors were so widely accepted at first, only to find themselves dismissed as corporate greenwashing now. The study concludes that where a corporation’s “green narrative” consistently evokes established narratives, its legitimacy will be judged against narrative, rather than empirical truth. Thus, the narrative will be more willingly accepted as speaking for the issuing company’s legitimacy, irrespective of whether it reflects substantive greening or not. (shrink)

Corporate behaviour is often regulated through the criminal law by means of reverse onus offences. Such offences are alleged to involve violations of the Presumption of Innocence. Such allegations almost always assume natural persons as defendants. The arguments supporting reverse onus offences are typically instrumental, to do with the importance of the social goals promoted and the ease of proof. The Presumption of Innocence is taken to be an autonomy right of natural persons and so not subject to being (...) sidelined for reasons of law enforcement expediency. Corporations, however, are not natural persons: they have no autonomy right not to be treated as means. It may well be, then, that reverse onus offences are justified in the case of corporate defendants. I argue that the Presumption is not violated by such offences in the case of corporate defendants. I develop a broad concept of the criminal justice system as an allocative system, and argue that reverse onus offences properly allocate the burden of proof for corporations. Specifically, I argue that the normative demand for legal innocence is sufficiently met by the availability of a due diligence defence; that the responsibility of corporations when prohibited harms occur is properly a form of outcome-responsibility; and that taking into account issues of reciprocity, legitimacy and power reverse onus offences justly allocate the burden of proof in the case of corporate defendants. (shrink)