Entry of new organizations, including multinational enterprises from emerging markets, raises the ethical question of will they benefit society. The concept of legitimacy answers this question because it is the overall assessment of the appropriateness of organizational ends and means. Moreover, gaining legitimacy enables EMNEs to succeed in new host countries. Past work examined collective level indicators of the legitimacy of MNEs, but recent research recognizes the importance of individuals’ perceptions as the micro-foundation of legitimacy. This study first uses new (...) pragmatism, deontology, and utilitarianism to demonstrate that legitimacy is fundamentally an ethical concept—a perspective that has been overlooked in management research. Second, this study uses a seven-step procedure to develop and validate a measure of individuals’ perceptions of the legitimacy of Chinese EMNEs operating in The Netherlands, a developed country. Six dimensions of legitimacy were identified. The study also finds support for this legitimacy judgment process linking the dimensions: validating knowledge → propriety judgments → generalized judgment. This work provides additional micro-foundations to research on legitimacy and contributes to the ongoing process of construct validation. Future research could use the validated measure in other settings and use specific ethical theories in depth to refine the concept of legitimacy. (shrink)

We investigate the role of legitimacy in setting organizational goals as a way to address the potential “dark,” unethical side of organizational goal setting. Coupling qualitative and quantitative research methods to better understand legitimacy in goal setting, we first induce novel hypotheses based on observed practice and then provide survey evidence to test the performance implications. Study 1 reports findings based on interviews with twenty-two company executives. We identify attention to goal credibility, prioritization of stakeholders directly involved in the goal’s (...) attainment when setting goals, and communication openness regarding goals, as well as their combination, as being important to organizational performance outcomes. Study 2 determines whether these three practices and their interaction predict performance using a survey conducted with 522 companies across four countries. Among other findings, we contribute to the organizational goal setting literature by showing that higher organizational performance is associated with the amount of priority given to the key actors (typically employees) directly involved with the goal’s attainment. We also find a positive interaction between attention to goal credibility, key actor (employee) importance, and communication openness on financial performance and non-financial goal attainment. Our work takes an initial step toward understanding how organizations can better shape the legitimacy of organizational goals for improved organizational performance and reduced unethical behavior. (shrink)

Increasingly, stories are emerging about businesses that engage in ethical behaviors above and beyond mere compliance with regulations. These positive deviations along the ethical continuum provide an opportunity to explore how some companies’ business philosophy leads them to pursue an array of outcomes beyond the bottom line. This paper presents a case study of Green Mountain Coffee Roasters, the leading ethical company in the United States as rated by Forbes magazine, exploring the company culture and operating philosophy from a perspective (...) of conscientious capitalism. The three underlying assumptions of conscientious capitalism are: (1) interconnectedness between individuals, businesses, and global society; (2) wealth as a holistically understood state rather than solely a financial status; and (3) relevant time spanning multiple generations. Implications are offered for commerce, business practitioners, and educators. (shrink)

Increasingly, stories are emerging about businesses that engage in ethical behaviors above and beyond mere compliance with regulations. These positive deviations along the ethical continuum provide an opportunity to explore how some companies’ business philosophy leads them to pursue an array of outcomes beyond the bottom line. This paper presents a case study of Green Mountain Coffee Roasters, the leading ethical company in the United States as rated by Forbes magazine, exploring the company culture and operating philosophy from a perspective (...) of conscientious capitalism. The three underlying assumptions of conscientious capitalism are: (1) interconnectedness between individuals, businesses, and global society; (2) wealth as a holistically understood state rather than solely a financial status; and (3) relevant time spanning multiple generations. Implications are offered for commerce, business practitioners, and educators. (shrink)