Corporate tax behaviour and environmental disclosure: Strategic trade-offs across elements of CSR?

This study explores strategic trade-offs between corporate tax behaviour and environmental performance disclosure, both important elements of corporate social responsibility (CSR). Tax finances public goods and reduces investor wealth. Corporate strategies may balance such incompatible stakeholder interests through trade-offs across CSR elements. In this empirical study of Norwegian companies, there are no indications of trade-offs between corporate tax aggressiveness (TAG) and mandatory disclosure, in line with stick-to-the-rules/compliant behaviour for both. However, the positive relationship between TAG and voluntary disclosure indicates that strategic trade-offs exist and ensure an acceptable level of legitimacy from different stakeholders overall. Hence, corporate strategies differ for mandatory and voluntary actions, in line with a multidimensional legitimacy risk and legitimation strategy framework.     

Intra-organizational legitimization strategies used by purchasing managers

This paper addresses the issue of how purchasing managers can develop the purchasing department's legitimacy within an organization. A qualitative exploratory approach based on six cases has been used since: (1) there has not yet been a research performed on this topic; and (2) an analysis of internal legitimization strategies must take into consideration the context and the nature of the relationships among departments. Our analysis shows that in order to create, maintain or increase the purchasing department's internal legitimacy, purchasing managers have to do very well about two complementary strategic orientations: (1) identify and attract the best suppliers; (2) identify and implement collaborative processes and coordination mechanisms that cannot be duplicated by competitors. In fact, supply managers actually develop legitimization strategies based internally and externally, since a higher level of internal legitimacy can also be supported partially by external stakeholders, who then influence the other departments' and top management's perceptions.Our study also shows that the strategies used by purchasing managers take different forms depending which legitimacy dimension (cognitive, pragmatic, or moral legitimacy) they are trying to influence. Moreover, a purchasing department's legitimacy strategy is developed based on a few important factors: (1) where the purchasing department stands at a given time in terms of the contribution perceived, similar to a "balance sheet" evaluation; (2) the purchasing personnel's technical and relational competencies; and (3) the extent of their implication in the strategic choices leading to the development of a competitive advantage for the organization they work for. It seems that any effort to take steps based on coherent legitimization strategies could help improve both a purchasing department's legitimacy level and its development level. From this standpoint, this study also shows that the purchasing department's internal legitimacy is a crucial driver of purchasing practices.     

Greenwashing and environmental communication: Effects on stakeholders' perceptions

Since the first Earth Day in the 1970s, corporate environmental performance has increased dramatically, and cases of greenwashing have increased sharply. The term greenwash refers to a variety of different misleading communications that aim to form overly positive beliefs among stakeholders about a company's environmental practices. The growing number of corporate social responsibility claims, whether founded or not, creates difficulties for stakeholders in distinguishing between truly positive business performance and companies that only appear to embrace a model of sustainable development. In this context, through the lens of legitimacy and signalling theory, we intend to understand and assess the different influences that various types of misleading communications about environmental issues have on stakeholders' perceptions of corporate environmental responsibility and greenwashing. Stakeholder responses to an environmental scandal will also be assessed. The hypotheses tested through a four‐for‐two design experiment reveal that different levels of greenwashing have a significantly different influence on stakeholders' perceptions of corporate environmental responsibility and stakeholders' reactions to environmental scandals.     

Corporate Social Performance,Legitimacy, and the Choice of Foreign Partners by State-Controlled Entities in the Global Extractive Industries

We study the outcome of the decision of a state-controlled entity (SCE) to form an international joint venture (IJV) with a foreign partner in the SCE's country. Focusing on the perspective of the host SCE, we propose that in its search for a partner, the SCE will evaluate the sociopolitical legitimacy effect of a candidate partner's corporate social performance (CSP). Thereby, the SCE will consider CSP an important selection criterion because of its legitimacy effect on the selection decision, the SCE, the IJV, and the host state in the eyes of salient local and international stakeholders. Moreover, the legitimacy effect of a candidate partner's CSP will further influence the decision outcome through its interaction with the level of corruption in the candidate partner's home country, the extant sociopolitical legitimacy of the host state, and the number of neighbouring countries of the host country participating in international multi-stakeholder initiatives. We find support for our hypotheses using a novel sample of extractive industries IJVs between SCEs from 48 countries and 203 foreign partners from 22 countries for the period 2000–15.     

Balancing Interests in the Search for Occupational Legitimacy: The HR Professionalization Project in Canada

Despite broad debates surrounding how the human resource management occupation can increase its legitimacy, researchers have yet to examine the collective steps HR practitioners are taking in this regard and the extent to which they have been successful. We conduct a case study of the HR professionalization project in Canada via multisource qualitative and quantitative data, which we analyze using a unique integration of the trait and control models from the sociology of professions, as well as isomorphism from institutional theory. Viewed through the lens of these frameworks, we find that HR practitioners are attempting to emulate traits that define traditional notions of professions, and are aspiring to transcendent values associated with balancing the sometimes conflicting interests of employers and employees. Objective data from external stakeholders and institutions show that these collective strategies have been somewhat successful in garnering greater legitimacy thus far, particularly when comparisons are made with the HR professional project in the United States. We highlight numerous implications for future research and practice surrounding the legitimacy of the HR profession. © 2014 Wiley Periodicals, Inc.     

The Economic Relevance of Environmental Disclosure and its Impact on Corporate Legitimacy: An Empirical Investigation

In determining its environmental disclosure strategy, a firm's management faces a tension between responding to the information needs of financial markets and maintaining its legitimacy within the community. In this paper, relying on information economics and legitimacy theory, we explore how firms resolve this tension. Results show that a firm's environmental disclosure enhances the quality of analysts' information context, which ultimately allows them to make better forecasts. Moreover, financial analysts seem to be able to decipher environmental information, discounting discourses that are inconsistent with a firm's underlying environmental performance. We find also that a firm's environmental disclosure serves another purpose, as it influences how its other stakeholders (beyond financial ones) perceive its legitimacy. Such enhanced legitimacy reduces the information uncertainty faced by financial analysts. Our results suggest also that both economic‐based environmental disclosure and sustainable development and environmental disclosure are useful to analysts in making their forecasts and enhance a firm's legitimacy. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.     

Power of sustainable development: Does environmental management system certification affect a firm's access to finance?

Although prior research generated inconclusive findings between a firm's environmental management system and firm financial performance, attention to resolve this inconsistency by examining the internal channels is limited. Thus, this study focuses on a firm's access to finance and investigates whether a firm's environmental management system certification (EMS) leads to better access to finance. Based on the organizational legitimacy perspective, we hypothesize that this certification will benefit a firm with stakeholder approval and support and consequently alleviate its financial capital constraints. We further posit that the proposed relationship will be moderated by three types of legitimacy environments pertaining to how stakeholders and investors make the judgment on the environmental management system certification. We document that the proposed relationship, that is, the positive relationship between environmental management system certification and access to finance, will be stronger when the government attaches larger importance to environmental protection (regulative legitimacy), better environmental record (moral legitimacy), and better financial position (pragmatic legitimacy). Empirical analyses provide strong corroborating evidence for our predictions. These findings have important theoretical and managerial implications that are well discussed in this study.     

Managing Legitimacy in Complex and Heterogeneous Environments: Sustainable Development in a Globalized World

The sustainability problems with regard to the production, distribution, and consumption of goods and services increasingly challenge the legitimacy of corporations. The literature distinguishes three strategies that corporations commonly employ to respond to legitimacy problems: adapt to external expectations, manipulate the perception of their stakeholders, or engage in a discourse with those who question their legitimacy. We discuss three approaches to determine the appropriate response strategy: one‐best‐way approach, contingency approach, and paradox approach. We argue that in the face of heterogeneous environments with conflicting demands, corporations that follow a paradox approach are likely to be more successful in preserving their legitimacy than those that adopt one of the other two approaches. We develop a theoretical framework for the application of different response strategies and explore the management of paradoxes by way of structural, contextual, or reflective means.     

Telling and selling the value of diversity and inclusion—External consultants' discursive strategies and practices

On the basis of a qualitative study of a subgroup of diversity professionals, external diversity and inclusion (D&I) consultants, we explore D&I consultants' discursive strategies and practices situated within organisational structures, relations, and interactions of power and knowledge. Theoretically, the research reveals how D&I consultants' own discursive strategies interact with existing organisational and societal discourses of diversity, incrementally shaping their continual evolution. A classification is developed, which sets out four approaches taken by consultants with regard to their discursive strategies in relation to clients. The findings suggest that HR practitioners need to work in tandem with external consultants to develop strategies to improve the status and legitimacy of diversity work if the field is to progress the organisational D&I agenda.     

Stakeholder management and sustainability strategies in the French nuclear industry

This paper describes how a nuclear power corporation integrates sustainability into corporate strategies and practices. The case study focuses on one of the world's largest nuclear power generators and describes the corporate capture of sustainable development in its strategic efforts to promote a growth strategy. The paper shows how corporate strategies to address sustainability concerns involve managing different stakeholders, enabling the corporation to sustain its economic growth strategy. Three types of stakeholder management strategy are identified: reinforcement strategies for supportive stakeholders, containment strategies for obstructive stakeholders and stabilization strategies for passive stakeholders. The paper argues that, despite claims of sustainable development in the nuclear industry, there is no significant shift in the ‘business as usual’ approach and that sustainable development is merely reframed as sustainable growth. Copyright © 2010 John Wiley & Sons, Ltd and ERP Environment.     

Have a Go or Lay Low? Predicting Firms’ Rhetorical Commitment versus Avoidance in Response to Polylithic Governmental Pressures

This study extends prior research on corporate political behaviour (CPB) and firms’ pursuit of political legitimacy in response to monolithic government pressures by developing and testing a framework for analysis of CPB in response to polylithic pressures. We suggest that traditional forms of CPB may be ill-suited to polylithic governmental pressures, such as when firms need to navigate between conflicting home- and host-country political worldviews and policies. We posit that in such complex political situations, firms will turn to a more subtle form of CPB (i.e., rhetorical commitment versus avoidance) as a hoped-for solution to their international political legitimacy challenge. Our contingency perspective also highlights how geopolitical factors (i.e., whether governments of home and host countries are clearly aligned versus misaligned) will influence whether firms express their support for a home government’s foreign policy or avoid any such expression of support. We empirically test the predictive power of our framework by analysing how these political factors led Chinese firms to opt for rhetorical commitment versus rhetorical avoidance vis-à-vis the Chinese government’s Belt and Road Initiative (BRI). We conclude with a discussion of how our framework for analysis and our supportive findings can inform and extend research on CPB and political legitimacy.     

Corporate legitimacy in risk society: the case of Brent Spar

The aim of this paper is to understand what lessons on corporate legitimacy can be drawn from the Shell – Greenpeace conflict in 1995 about the dumping of the Brent Spar oil storage platform in the North-East Atlantic. Based on theories of corporate legitimacy and risk society, it is argued that the Brent Spar conflict reflects a new balance between business, government and civil society as well as a radicalization of the requirements for corporate legitimacy. As a part of these new and more demanding requirements, corporations will need to address a much broader scope of responsibilities and a wider circle of stakeholders than suggested so far by theories of stakeholder management. In addition, corporations will need to develop new and trustworthy forms of dialogue with the public. © 1998 John Wiley & Sons, Ltd and ERP Environment.     

Sustainable entrepreneurship and legitimacy building in protected areas: Overcoming distinctive barriers through activism

Sustainable entrepreneurs operating in protected areas face distinctive barriers that place additional emphasis on the need to build legitimacy. To date, how they do this has not been entirely explored. This paper addresses this need through an exploratory study of sustainable entrepreneurs in a transnational protected area. The results indicate that sustainable entrepreneurs in protected areas face barriers that can be broadly classified as cognition spanning, locale and sector-related barriers. The findings highlight that a key way sustainable entrepreneurs overcome these distinctive barriers is by building legitimacy through activism. Activism became instrumental in building legitimacy with varied stakeholders and actors. This is all geared towards overcoming barriers during the sustainable entrepreneurship process. The findings add to existing literature on the role of legitimacy building in sustainable entrepreneurship by detailing the different forms of legitimacy and how they are built through activism. The paper concludes with propositions about the conditions necessary for sustainable entrepreneurs to build legitimacy in fragile socioecological contexts through activism.     

The Wicked Character of Sustainable Supply Chain Management: Evidence from Sustainability Reports

Supply chains are changing their business paradigm as they strive for sustainability and not just for increasing profits. Sustainability, however, is a concept that is open to interpretation since it is based on societal and organizational values. Little is known about what companies actually mean when referring to sustainability, and how this contrasts with the understanding at different echelons of the supply chain. Diverging interpretations and translations of sustainability among stakeholders, termed wicked problems, affect the progress of sustainable supply chain management. This paper aims to contribute to closing the gap between our common sense expectations and the actual evidence from sustainability reports of how sustainability evolves from abstract ideas to operational practices across the supply chain. To this end, this study employs a computer‐aided content analysis of 142 corporate sustainability reports across 12 industries. Building on the findings, and using the lens of wicked problems, this paper provides guidance to practitioners on how to develop strategies that are effective across the whole supply chain. Copyright © 2015 John Wiley & Sons, Ltd and ERP Environment     

The Impact of Business Strategies on Online Sustainability Disclosures

With increasing attention being paid to corporate sustainability, pressure from stakeholders, especially customers, is forcing companies to implement sustainability strategies and practices that express their commitment to sustainable development, and engage with stakeholders through voluntary sustainability disclosure. To better understand the sustainability disclosure mechanisms from a business strategy perspective, this study investigates the influence of business strategy, formulated by customer groups, on online sustainability disclosure. It provides empirical observation of Malaysian public‐listed companies based on the combined lens of stakeholder and legitimacy theory. Despite the comparatively low level of corporate sustainability disclosure in Malaysia, this content analysis of online sustainability information disclosure reveals that the companies with more diversified product lines disclose more sustainability information, and that the corporate sustainability effort is significantly related to brand name. Hence, companies should be encouraged to proactively improve their sustainability performance and disclose more sustainability information in order to strengthen their brand names. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment     

Sustainable procurement: Building legitimacy in the supply network

The challenges introduced by sustainable development deeply affect purchasing and supply management practices and therefore foster a change in the firm's supply network. After a literature review on supply network management, sustainable sourcing and legitimacy, this paper presents the results of an in-depth case study of a gardening distributor which adopted a sustainable strategy. The analysis illustrates how the firm conquers its legitimacy in sustainable development through the evolution of its supply network. The paper highlights three types of legitimacy – product legitimacy, corporate legitimacy and cause legitimacy – and reveals the different roles of business and non-business actors in the firm's extended sustainable supply network.     

The how and why of integrated reporting in a public health care organization: The stakeholders' perspective

Despite the widespread calls for in‐depth case studies on adoption of the International Integrated Reporting Council Framework, in practice, it appears to be underexplored, above all in the public sector. Our aim is to explore how and why a public health care organization (PHO) has chosen to adopt the practice of integrated reporting, and we then delve into whether the PHO's perception of the document's value coincides with that of the stakeholders, who are its recipients. Often, society's perception of value can differ considerably from an organization's. Thus, for our research purposes, a case study was examined, adopting a qualitative approach and action research methodology. Our findings demonstrate the centrality of the value created for patients and of the “normative” scenario that takes place during the implementation of an integrated report in a PHO. Moreover, the concept of legitimacy was found to be virtually synonymous with institutionalization.     

Juggling Legitimacies: Informal Places for Burials and Worship in Hong Kong

The Hong Kong government's neoliberal approach regarding land development and urbanization affects not only the housing market but also burial places, increasing inequality for both the living and the dead. The urgency of tackling the issue of places for burial is all the more pressing given current demographic changes and an existing backlog of public burial places in inner‐city locations. Against this backdrop, this paper focuses on the cultural practices around burial and worship among the inhabitants of Hong Kong, and on their struggle to maintain these practices. It illustrates various forms and means of legitimacy (e.g. pragmatic, normative and cognitive) being applied by all actors, and shows how the continuing practices around worship and burial lead to the production of informality. The main argument is that socially constructed legitimacy can be gained and lost by various actors in a dynamic negotiation process based on belief systems, rules and norms (following Suchman, 1995). Thus, it should be understood as a strategic mode both within and outside the state. This perspective of legitimacy provides a better understanding of how and by what means resources and power are being negotiated in order to draw lessons from informal dynamics.     

Organizational Legitimacy and the Strategic Bridging Ability of Green Alliances

Alliances with environmental non‐governmental organizations may benefit multinational corporations (MNCs) operating in developing countries where uncertain socio‐cultural and institutional conditions present higher investment risks. Such ‘green alliances’ can provide strategic bridging services by interceding between MNCs and distant, yet important, stakeholders. From an institutional perspective, strategic bridging success may depend on stakeholder perceptions of alliance legitimacy. In this study the relationship between alliance legitimacy and strategic bridging ability is explored through the case of the Turtle Village Trust in Trinidad and Tobago. Findings suggest that bridging success occurs when organizational legitimacy peaks; that new alliance partners temporarily weaken legitimacy; and bridging with every new targeted stakeholder requires continued acquisition of legitimacy based on their respective values. MNC decisions to form alliances that bridge targeted stakeholders on their behalf should therefore consider the potential of the alliance to acquire and accumulate organizational legitimacy without which strategic bridging efforts may be futile. Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment.     

Institutions and preferences in settings of causal complexity: foreign institutional investors and corporate restructuring practices in France

In this article, we illustrate how the interaction between institutional arrangements and the presence of different categories of firm stakeholders with specific preferences provides important insights to understand the conditions under which corporate restructuring practices are introduced. Institutions shape the range of actors' strategic options and mediate the translation of the preferences of firm stakeholders into corporate policies. Nonetheless, strategic choice remains possible since firm stakeholders constitute subgroups with different interests and incentives that influence how they operate in an institutional framework. In particular, we examine under what conditions UK/US-based institutional investors and equity-based compensation incentives are associated with the implementation of asset divestitures and employee layoffs in France. We uncover three key findings. First, the presence of hedge funds and equity-based pay influence the likelihood of French companies undertaking asset divestitures. Second, the impact of hedge funds on employee layoffs is contingent on the ownership structure of firms. Third, layoffs in France are driven by inferior performance – a result that contrasts with the American experience whereby employee layoffs are also used as a strategic mechanism to deal with institutional investors in good times. Our findings demonstrate the importance of the institutional constraints of (national level) employment protection and the moderating effects of ownership structure (firm level) on the strategic and employment policies of French companies.