8. Legitimacy as Competitive Advantage: A US Airline Case Study

This study seeks to achieve a better understanding of how legitimacy-gaining initiatives become a source of competitive advantage through the mediation of customer satisfaction. Through a case study of five major US airlines (American Airlines, Delta Air Lines, Southwest Airlines, United Continental, and US Airways), the authors analyze the links between legitimacy and customer satisfaction along with the effect of corporate abilities on these variables. Results suggest that more legitimate organizations provide more satisfaction to their customers. Simultaneously, the results show that corporate abilities can also influence this relationship. There was a positive relationship between corporate abilities and legitimacy-building initiatives, as well as between corporate abilities and customer satisfaction. Finally, firm performance is also positively related to the three previous variables: legitimacy, customer satisfaction, and corporate abilities. The primary managerial implication of this study is that not managing legitimacy is putting oneself at risk of losing it. Secondly is that legitimacy could also be used as a leading indicator of customer satisfaction. The present work’s contribution in the nascent field of legitimacy management is to link legitimacy to customer satisfaction, a key variable for firm performance. This begins to fill in the gaps in understanding how legitimacy leads to business results. Furthermore, it also provides a confirmation of previous studies that propose that organizations are not passive receivers of legitimacy but can actively manage it.