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.     

Maintaining Moral Legitimacy through Worlds and Words: An Explanation of Firms' Investment in Sustainability Certification

A prominent way for firms to manage their moral legitimacy is to invest in sustainability certifications. However, a significant subset of firms remain reluctant to invest in sustainability certifications even decades after the establishment of such certifications. Our paper seeks to elucidate this variance by exploring how firms in the coffee, tea, and chocolate industries legitimise themselves on moral grounds through external communication to stakeholders. Drawing on insights from French Pragmatist Sociology, we suggest that firms primarily rely on two distinct sets of legitimacy principles that reflect their identity orientation: the ‘civic and green’ world and the ‘domestic’ world. Specifically, our results show that reliance on the domestic world is negatively related to firms' investment in sustainability certifications. Our findings also suggest that the strength of the relationship between these distinct methods of moral legitimising and certification varies depending on whether firms are characterised by first‐ or multi‐generation family control.     

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.