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Criteria for Evaluating the Organizational Legitimacy: A Typology for Legitimacy Jungle Read chapter Read first chapter

2018 | OriginalPaper | Chapter

10. Legitimizing and Delegitimizing Factors of Firms in Society: Is It a Problem of Communication or Strategic? An Approach Based on the Distributed Social Value as the Key Factor for the Organizations’ Social Legitimacy

Authors : Jose Luis Retolaza, Leire San-Jose, José Torres Pruñonosa

Published in: Organizational Legitimacy

Publisher: Springer International Publishing

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Abstract

There is an increasing concern about the value contributed by firms to the society as a whole. Transnational companies are particularly being questioned; therefore, legitimation for this kind of corporations is demanded. This chapter analyses four delegitimizing factors: negative added value, negative equity, tax evasion and moral hazard associated to potential situations of bankruptcy. Three legitimizing factors will also be analysed: added value distributed to stakeholders, value distributed by “non-market” mechanisms and emotional value generated to different stakeholders of the entity. Since the lack of legitimation affects large companies to a greater degree, two hypotheses related to the size of the firms have been tested. The first has to do with a larger presence of delegitimizing factors in large firms. The second analyses a smaller distribution in this sort of firms of value generated to stakeholders that are not shareholders assessed by means of the social efficiency ratio (SER). The obtained results allow for identifying whether the criticism towards large firms is supported by objective factors (confirmed hypothesis) or subjective ones (rejected hypothesis) and consequently whether the transnational companies should base their action plans of social legitimation on strategy or on communication.

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previous chapter Legitimacy and Reputation of Organizations: Their Relationship with Management Systems and Financial Performance
next chapter Relationship Between Legitimacy and Organizational Success
Footnotes
1
In the economy of well-being, there are two essential theorems: the first one declares that any competitive balance (Walsarian) leads to an efficient situation in Pareto’s sense. This theorem is generally considered as the analytic confirmation to Adam Smith hypothesis of the “invisible hand”. The second one, less important in our case, is counter-reciprocal to the first one and declares that any efficient assignation (optimal Paretian) can be obtained by means of a competitive balance.
 
2
Number of companies with negative equity/volume of negative equity (Urionabarrenetxea et al., 2016).
 
3
Taxes/number of companies (Gutierrez-Goiria et al., 2017).
 
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Metadata
Title
Legitimizing and Delegitimizing Factors of Firms in Society: Is It a Problem of Communication or Strategic? An Approach Based on the Distributed Social Value as the Key Factor for the Organizations’ Social Legitimacy
Authors
Jose Luis Retolaza
Leire San-Jose
José Torres Pruñonosa
Copyright Year
2018
Book
Organizational Legitimacy

Print ISBN: 978-3-319-75989-0

Electronic ISBN: 978-3-319-75990-6

Copyright Year: 2018

DOI
https://doi.org/10.1007/978-3-319-75990-6_10