18. Organizational Legitimacy and Stakeholder Trust in the Organization: A Feed-Forward Relationship

The main goal of this study is to enlarge the understanding of the concept of legitimacy. In recent decades, organizational legitimacy has received a great deal of attention from researchers who have tried to establish how organizations acquire, manage, and use it. However, there is still no conceptual agreement on how organizational legitimacy should be understood and how it can be measured. This reflects the complexity in the literature about understanding this phenomenon and suggests research opportunities. This chapter aims to strengthen the understanding of the role legitimacy plays in organizations by reviewing the related literature and analyzing the relationship between legitimacy and trust. Our findings suggest that there is a positive relationship between these two concepts. Moreover, we conclude that legitimacy can be achieved in two different ways: the first via trust and the second via control. In the first instance, we found a double-loop relationship between legitimacy and trust, generating a feed-forward relationship, given that both of these concepts mutually reinforce each other. In the second instance, there is a single-loop relationship because legitimacy based on control improves stakeholders’ trust in the organization. However, there is no reciprocal impact given that the legalistic remedies used are, in fact, the substitutes of trust.