Group 18

Matric no. 171-180

Topics: DISCUSS LEGITIMACY THEORY: History, Propounder, Definition and Assumption and
Application

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LECTURER-IN-CHARGE

DR. ADEGBAYIBI
DEFINITION OF LEGITIMACY THEORY

Legitimacy theory is defined as the concept that firms maintain legitimacy by aligning with
societal values and norms, especially in terms of environmental activities, to fulfill implicit social
contracts with the society in which they operate. who founded legitimacy theory?

John Dowling and Jeffrey Pfeffer, in 1975, came up with legitimacy theory (Guthrie & Ward,
2006) .

HISTORY OF LEGITIMACY THEORY

Legitimacy theory, which posits that organizations need to align their values and actions with
societal norms to maintain public acceptance and operate effectively, has its roots in
sociological and political science research, with key contributions coming from scholars like
John Dowling and Jeffrey Pfeffer, who first formally articulated the theory in 1975. According to
legitimacy theory, companies disclose social responsibility information to present a socially
responsible image so that they can legitimize their behaviours to their stakeholder groups.

PROFOUNDER OF LEGITIMACY THEORY

i) Max Weber (1864-1920)

Weber, a German sociologist, is considered one of the founders of legitimacy theory. He

discussed legitimacy in the context of authority and power, arguing that legitimacy is essential
for maintaining social order.

ii) Talcott Parsons (1902-1979)

Parsons, an American sociologist, developed the concept of legitimacy further. He argued that
legitimacy is a social construct, created through the interactions of individuals and groups.

iii) Jeffrey Pfeffer (1946-present)

Pfeffer, an American organizational theorist, has made significant contributions to legitimacy

theory. He argues that organizations seek to maintain legitimacy by conforming to societal
norms and expectations.

iv) John Dowling (1946-present)

Dowling, an American organizational theorist, has worked closely with Pfeffer on legitimacy
theory. Together, they have developed the concept of organizational legitimacy, highlighting its
importance for organizational survival.
v) John Meyer (1935-present)

Meyer, an American sociologist, has contributed to legitimacy theory through his work on
institutional theory. He argues that organizations respond to institutional pressures to maintain
legitimacy.

vi) W. Richard Scott (1932-present)

Scott, an American organizational theorist, has also contributed to legitimacy theory through his
work on institutional theory. He argues that organizations seek to maintain legitimacy by
conforming to institutional norms and expectations.

vii) Edward Freeman (1951-present)

Freeman, an American philosopher and business ethicist, has developed the concept of
stakeholder theory, which is closely related to legitimacy theory. He argues that organizations
must manage relationships with stakeholders to maintain legitimacy.

ASSUMPTION OF LEGITIMACY THEORY

Legitimacy theory is based on several key assumptions:

1. Organizations are Social Entities

Legitimacy theory assumes that organizations are social entities that exist within a broader
social context. This context influences organizational behavior, goals, and values.

2. Legitimacy is Essential for Survival

Legitimacy theory assumes that legitimacy is essential for organizational survival. Without
legitimacy, organizations risk losing support, resources, and ultimately, their existence.

3. Organizations Seek to Maintain Legitimacy

Legitimacy theory assumes that organizations actively seek to maintain legitimacy by

conforming to societal norms, values, and expectations.

4. Legitimacy is a Social Construct

Legitimacy theory assumes that legitimacy is a social construct, created through the
interactions of individuals and groups. This means that legitimacy is subjective and context-
dependent.

5. Organizations will Adapt to Maintain Legitimacy

Legitimacy theory assumes that organizations will adapt their behavior, strategies, and
reporting practices to maintain legitimacy.

6. Institutional Pressures Influence Organizational Behavior

Legitimacy theory assumes that institutional pressures, such as norms, values, and
expectations, influence organizational behavior and decision-making.

7. Legitimacy is Multi-Dimensional

Legitimacy theory assumes that legitimacy is multi-dimensional, encompassing various aspects,

such as:

i) Pragmatic legitimacy: based on self-interest and practical considerations

ii) Moral legitimacy: based on ethical and moral principles

iii) Cognitive legitimacy: based on taken-for-granted assumptions and beliefs

8. Legitimacy is Dynamic and Context-Dependent

Legitimacy theory assumes that legitimacy is dynamic and context-dependent, meaning that it
can change over time and vary across different contexts.

APPLICATION OF LEGITIMACY THEORY

Legitimacy theory has been applied in various fields, including:

1. Organizational Studies

i)Corporate social responsibility: Legitimacy theory explains how organizations use CSR
initiatives to maintain social legitimacy.

ii) Organizational reputation: Legitimacy theory helps understand how organizations manage
their reputation to maintain legitimacy.

2. Business Ethics

i)Ethical decision-making: Legitimacy theory informs ethical decision-making by considering the

social implications of organizational actions.

ii) Corporate governance: Legitimacy theory examines how corporate governance structures
and practices affect organizational legitimacy.

3. Public Administration

i) Government legitimacy: Legitimacy theory analyzes how governments maintain legitimacy

through policies, programs, and communication.

ii) Public policy: Legitimacy theory informs public policy development by considering the social
acceptability of policy initiatives.

4. Environmental Management

i) Sustainability reporting: Legitimacy theory explains how organizations use sustainability

reporting to demonstrate environmental responsibility and maintain legitimacy.

ii) Environmental governance: Legitimacy theory examines how environmental governance

structures and practices affect organizational legitimacy.

5. International Relations

i) State legitimacy: Legitimacy theory analyzes how states maintain legitimacy in the
international arena.

ii) Global governance: Legitimacy theory informs global governance by considering the social
implications of international institutions and policies.

6. Marketing and Communications

i)Brand legitimacy: Legitimacy theory helps understand how brands maintain legitimacy through
marketing and communications strategies.

ii) Crisis communications: Legitimacy theory informs crisis communications by considering the
social implications of organizational responses to crises.

7. Non-Profit and Social Sector

i) Non-profit legitimacy: Legitimacy theory analyzes how non-profit organizations maintain

legitimacy through their missions, programs, and governance.

ii) Social entrepreneurship: Legitimacy theory informs social entrepreneurship by considering

the social implications of entrepreneurial ventures
 REFERENCES

1 Dowling, J., & Pfeffer, J. (1975). Organizational Legitimacy: Social Values and Organizational
Behavior. Pacific Sociological Review.

2. Meyer, J. W., & Rowan, B. (1977). Institutionalized Organizations: Formal Structure as Myth
and Ceremony. American Journal of Sociology.

3. DiMaggio, P. J., & Powell, W. W. (1983). The Iron Cage Revisited: Institutional Isomorphism
and Collective Rationality in Organizational Fields. American Sociological Review.

4. Suchman, M. C. (1995). Managing Legitimacy: Strategic and Institutional Approaches .

Academy of Management Review.

5. Deephouse, D. L. (1996). Does Isomorphism Legitimate? Academy management theory