Organizational legitimacy as a social evaluation

Alex Bitektine,HEC Montreal

2012-08-04 1Pecha Kucha Presentation

The Institutional World

• Myriads of isomorphic organizations comply, conform, and acquiesce, driven by fear and uncertainty…

• But it is not all doom-and-gloom, because from time to time institutional entrepreneurs defy the status quo and change the social norms– Deinstitutionalize existing structures and practices– Institutionalize the new ones

…And the new organizations, structures and practices will survive and persist for years or even centuries if…

2012-08-04 2Pecha Kucha Presentation

Legitimacy

2012-08-04 3Pecha Kucha Presentation

What’s inside?Where can you get it?

(Can I buy it?)

How much of it do you need?

How long does it last?

Is it good for everyone?

Are there any side effects?

Overdose symptoms? Interactions?

Are there different recipes?

Can I use somethingelse instead?

?…they can get

Legitimacy• The most popular definition:

– “… a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions” (Suchman, 1995)

• The longest definition (enumerative):

2012-08-04 4Pecha Kucha Presentation

What’s inside?

Scope The concept of organizational legitimacy covers perceptions of an organization or entire class of organizations, judgment/evaluation based on these perceptions, and behavioral response based on these judgments …

Evaluating audience

… rendered by media, regulators, and other industry actors (advocacy groups, employees, etc.), who…

Perceived dimensions

… perceive an organization’s processes, structures, outcomes of its activity, its leaders, and its linkages with other social actors and…

Analytical processing

…judge the organization either by classifying it into a preexisting [positively evaluated] cognitive category/class or by subjecting it to a thorough sociopolitical evaluation, which…

Benefit diffusion

… is based on the assessment of the overall value of the organization to the individual evaluator (pragmatic legitimacy), his social group, or the whole society (moral legitimacy) and, …

Compliance mechanism

… through the pattern of interactions with the organization and other social actors, the evaluating actor supports, remains neutral, or sanctions the organization depending on whether the organization provides the benefit(s) prescribed by the prevailing norms and regulations.

(Bitektine, 2011)

2012-08-04 5Pecha Kucha Presentation

1) Cognitive legitimacy 2) Sociopolitical legitimacy

• A set of legitimacy dimensions D(1,2,…i) derived from environmental constraints,

• Organizations’ performance PDi on these dimensions as perceived by the stakeholders,

• A threshold level of acceptable performance TDi on each of these dimensions, and

• The relative importance WDi of each of these dimensions to the stakeholder (WDi values represent weights applied to the respective

legitimacy dimensions such that Σi(WDi)=100%).

The overall sociopolitical legitimacy L of an actor with a given stakeholder: L = Σi WDi x (PDi / TDi - 1)

What’s inside?

(Bitektine, 2008)

(Aldrich & Fiol, 1994)

Sociopolitical legitimacy:

Legitimacy• Isomorphism, conformance, compliance (Meyer &

Rowan, 1977, DiMaggio & Powell, 1983)

• Legitimating ties (Baum & Oliver, 1991)

• Institutional entrepreneurship (DiMaggio, 1988; Eisenstadt, 1980) / work (Lawrence, 2006)– Symbolic acts (Meyer & Rowan, 1977; Fiss, 2006)– Member mobilization (Barnett, 2006; Olson, 1965)– Professionalization (Greenwood & Suddaby, 2006)– Membership strategies (Lawrence, 1999)– Rhetorical strategies (Suddaby, 2005) – Discourse (Maguire, et al., 2004; Golant & Sillince, 2007)– Framing (Benford, 2000; Kaplan, 2008) …

2012-08-04 6Pecha Kucha Presentation

Where can you get it? (Can I buy it?)

Are there different recipes?

Legitimacy

2012-08-04 7Pecha Kucha Presentation

Are there any side effects?

Overdose symptoms? Interactions?

Is it good for everyone?

• Side effects:– Legitimacy gained through isomorphism comes at a cost of

competitive differentiation (Deephouse, 1999; Miller & Chen, 1995)

– Limits the resource acquisition choices (Oliver, 1997)

• Overdose (little evidence):– Organizational sacrilege (Harrison, Ashforth & Corley, 2009)

• Interactions (little evidence):– With identity? (Ruef, 2000; Weber, Heinze & DeSoucey, 2008)– With personality traits and orientations (Tost, 2011)

Legitimacy• To a large extent YES!• Observation: In development of a reflective scale

for measurement of cognitive legitimacy, sociopolitical legitimacy, reputation, and status (Bitektine, Vandenberghe, Hill; in progress):

– Correlation Reputation – Sociopol. Legitimacy = 0.79– Correlation Reputation – Status = 0.66– Correlation Sociopolitical Legitimacy – Status = 0.51– Cognitive legitimacy – fairly distinct from all others

NOTE: Pearson correlations of the means, N = 393. NNFI = 0.97, CFI = 0.98, RMSEA = 0.077.

2012-08-04 8Pecha Kucha Presentation

Can I use somethingelse instead?

So Where Is the Magic?• Judgment aggregation– How do we arrive to the “overall legitimacy”?– Judgments about multiple features– Judgments by multiple actors / audiences– Judgments based on incomplete information

• Outcome attribution– Correlations and regressions do not imply causality

+ left censoring issue (=> we need experiments!)– Are we dealing with outcomes of legitimacy or it is

reputation, status, celebrity, CEO charisma, etc. that cause the outcome? (=> we need to establish the discriminant validity of our constructs!)

2012-08-04 9Pecha Kucha Presentation

Does it actually exist?

Legitimacy: Work Needed• Measurement issues– Validation of proxy measures– Discriminating legitimacy from

reputation, celebrity, status, etc.– How much legitimacy (and of what

kind) do you need to elicit support or to achieve acceptance?

– How low can you go before you trigger sanctions?

• Micro-organizational perspective– Is it legitimacy that causes the outcome?– If so, how does it work in evaluators’

heads? How does it translates into organization-level outcomes?

2012-08-04 10Pecha Kucha Presentation

How much of it do you need?

How long does it last?

Is it legitimacy?