Social enterprises, as typical hybrid organisations, are embedded in a plural institutional environment in which some stakeholders regard achieving social goals as fundamental, while others see economic profit as the priority. A great challenge for social enterprises is dealing with the conflicts resulting from the diverse expectations of stakeholders. Based on the existing works on organisational legitimacy and the social business model, we propose a legitimacy-based social enterprise model composed of three main phases, namely, legitimacy proposition, legitimacy strategy planning, and (...) legitimacy strategy implementation. Our model is meant to serve as an effective legitimacy-building tool for social enterprises of various kinds. (shrink)

We examine over 100 top performing Canadian firms in visibly polluting industries as we seek to answer four research questions: What specific environmental issues are firms addressing? How do these issues differ between industries? Are both symbolic and substantive actions financially beneficial? Does green-washing, measured as the difference between symbolic and substantive action, and/or green-highlighting, measured as the combined effect of symbolic and substantive actions, pay? We find that substantive actions of environmental issues (green walk) neither harm nor benefit firms (...) financially, but symbolic actions (green talk) are negatively related to financial performance. We also find that green-washing (discrepancy between green talk and green walk) has a negative effect on financial performance and green-highlighting (concentrated efforts of the talk and walk) has no effect on financial performance. In this article, we provide explanations of our findings and put forth future research directions. (shrink)

Different theoretical approaches highlight the growing relevance of corporate reputation as strategic factor. Among these approaches the arguments of the Resource-Based View are special worthwhile (Grant, 1991, California Management Review33(3), 114–135; Barney, 1999, Sloan Management Review Spring, 137–145). Nevertheless, this topic poses several methodological problems (Barney et al., 2001), as the unavailability to identify and measure this organizational factor, that is “socially complex” and intangible in its nature. In this work, using the findings of our empirical research on Spanish biotechnology (...) firms, we carry out an identification and measurement of corporate reputation, highlighting its two key components: “business reputation” and “social reputation”. (shrink)

Do firms gain environmental legitimacy when they conform to external expectations regarding the natural environment? Drawing on institutional logic and signaling theory, we investigate sources of heterogeneity in the impacts of environmental actions on environmental legitimacy. Longitudinal data about 325 publicly traded U.S. firms in polluting industries support the notion that environmental actions help firms gain environmental legitimacy. However, some actions instead can harm this legitimacy if environmental performance deteriorates and the firm is subject to intense scrutiny from nongovernmental organizations. (...) Thus, an important contribution of this research is to identify conditions under which greenwashing can backfire. (shrink)

Management scholars have paid close attention to the construct of organizational or corporate reputation, particularly in the applied business ethics and corporate social responsibility fields. Extant research demonstrates that CR is one of the key mediators between CSR and important organizational outcomes, which ultimately improve organizational performance. Yet, hitherto the research focused on CR construct has been plagued by multiple definitions, conflicting conceptualizations, and unclear operationalizations. The purpose of this article is to provide theoretical ground for positioning of CR as (...) an assessment construct that is modeled as a second-order factor affecting individual first-order dimensions, and to provide methodological and empirical support toward such conceptualization. We assert that intangible, socially complex, and causally ambiguous CR can be accurately estimated through its individual measurable dimensions. Using survey data from Peru, we empirically test the hypothesized second-order reflective model within a hierarchy of nested and non-nested models, and compare its model fit and predictive power with alternative conceptualizations. Modeling CR as a second-order reflective construct relies on a set of theoretical propositions and yields several methodological advantages, including strong conceptual interpretability and parsimony when tested within a nomological context. We explicitly demonstrate positive organizational outcomes of CR: customer trust, corporate identification, in-role behavior, and extra-role behavior. Then, we demonstrate that the shorter scales of CR can be used as a good proxy for the full construct measure. The paper concludes by highlighting theoretical insights, and methodological and managerial implications of the findings. (shrink)

Several researchers have suggested that a talented, quality workforce will become a more important source of competitive advantage for firms in the future. Drawing on social identity theory and signaling theory, the authors hypothesize that firms can use their corporate social performance (CSP) activities to attract job applicants. Specifically, signaling theory suggests that a firm’s CSP sends signals to prospective job applicants about what it would be like to work for a firm. Social identity theory suggests that job applicants have (...) higher self-images whenworking for socially responsive firms over their less responsive counterparts. The authors conducted an experiment in which they manipulated CSP and found that prospective job applicants are more likely to pursue jobs from socially responsible firms than from firms with poor social performance reputations. The implications of these findings for academicians and practitioners alike are discussed. (shrink)

The relationship between business and society changes over time, and periodically there is a ‘legitimization crisis’. The paper will briefly explore some important questions about company legitimacy: why is company legitimacy important; why do legitimacy crises occur; and finally, are we in a crisis at the moment, and if so how can it be solved? The legal institutionalization of business firms prescribes narrow accountabilities and limited responsibilities: the challenge for business in the new millennium is to open these up and (...) to broaden our understanding of the social significance of business activity without destroying its wealth creating processes. This will require a rethinking of the relationship to the shareholder and a new definition of the relationship with stakeholders. (shrink)

Recent years have witnessed an escalation in corporate social reporting (CSR) by UK companies (Gray, Kouhy and Lavers 1995). Whilst some elements of CSR reporting are required by law, much of it represents voluntary reporting. By investigating the non‐mandatory reporting of two aspects of social responsibility, corporate community involvement (CCI) and environmental impact, this paper seeks to explore why companies choose to make such disclosures. It specifically asks whether companies are primarily motivated by the strategic need to manage their reputation (...) and legitimacy rather than by the recognition of their ethical accountability, which is the stated purpose of reports produced by cutting edge companies (Clarke 1998). (shrink)

The academic debate why and how companies are dealing with sustainability is dominated by two main arguments—the profit-seeking and the legitimacy-seeking view. While the first argues that companies establish sustainability management measures if this helps to increase their economic success, others emphasize that companies predominantly react on societal pressure dealing with sustainability to secure legitimacy. Whereas both lines of argument have gained a lot of attention in academia, little is known about their relative importance in shaping corporate practice. This papers (...) aims to fill this gap with an empirical analysis of corporate practices of large companies in ten countries worldwide. To capture the organizations’ rationale in sustainability management practice, we systematically applied various measures related to actors and operational activities focusing on the companies’ intention to pursue sustainability management, the integration of sustainability management to the core business, and the actual implementation of related measures. Overall the findings indicate that seeking legitimacy dominates corporate sustainability management practices. (shrink)

This study investigates whether the market valuation of the two summary accounting measures, book value of equity and net income, is higher for firms with reputation for sustainability leadership, when compared to firms that do not enjoy such reputation. The results are interpreted through the lens of a framework combining signalling theory and resource-based theory, according to which firms signal their commitment to sustainability to influence the external perception of reputation. A firm’s reputation for being committed to sustainability is an (...) intangible resource that can increase the value of a firm’s expected cash flows and/or reduce the variability of its cash flows. Our findings are according to expectations and show that the net income of firms with good sustainability reputation has a higher valuation by the market, when compared to their counterparts. (shrink)

Even though the link between perceived corporate social responsibility fit and corporate reputation has received much attention from scholars, this tradition has ignored that the underpinnings of this association vary depending on the particular characteristics of each industry under study. To delve into this matter, we investigate in the increasingly relevant context of controversial industries how PCSR-fit could enhance corporate reputation and which are the mediating mechanisms of this association. Our academic contribution is twofold. First, we find that controversial sectors (...) indeed can increase corporate reputation through CSR activities. However, we find that to achieve this goal, the nature of PCSR-fit should be different than what extant literature indicates, because companies in these settings should directly focus on avoiding or reducing their inherent controversial harm or impact. Second, we evidence that “CSR initiatives' legitimacy” and “situational skepticism” mediate the PCSR-fit and corporate reputation relationship in CIs. Therefore, we further unravel the underpinnings of this association to advance what we know on the matter and aid practitioners in this particular context. (shrink)

Environmental damage is often an unseen byproduct of other activities. Disclosing environmental impact privately to consumers can reduce the costs and/or increase the moral benefits of conservation behaviors, while publicly disclosing such information can provide an additional motivation for conservation - cultivating a green reputation. In a unique field experiment in the residence halls at the University of California - Los Angeles, we test the efficacy of detailed private and public information on electricity conservation. Private information was given through real-time (...) appliance level feedback and social norms over usage, and public information was given through a publicly visible conservation rating. Our analysis is based on 7,120 daily observations about energy use from heating and cooling, lights and plug load for 66 rooms collected over an academic year. Our results suggest that while private information alone was ineffective, public information combined with private information motivated a 20 percent reduction in electricity consumption achieved through lower use of heating and cooling. Public information was particularly effective for above median energy users. © 2014 Elsevier Inc. (shrink)

In this paper, we develop an argument to show why we expect that multinational companies will ensure that they communicate credibly about their environmental responsibility, across all their subsidiaries. Credible environmental communication helps to increase the firm’s legitimacy and reduce its liability of foreignness on an issue that is globally relevant. We develop a measure to test if there is a standardized level of environmental communication credibility on the country-specific web sites of MNC subsidiaries around the world and find, in (...) fact, that there is considerable variation across countries, among subsidiaries of different firms and among subsidiaries of the same multinational. We discuss the reasons for this and the implications for firm legitimacy. (shrink)

Recent years have witnessed an escalation in corporate social reporting (CSR) by UK companies (Gray, Kouhy and Lavers 1995). Whilst some elements of CSR reporting are required by law, much of it represents voluntary reporting. By investigating the non‐mandatory reporting of two aspects of social responsibility, corporate community involvement (CCI) and environmental impact, this paper seeks to explore why companies choose to make such disclosures. It specifically asks whether companies are primarily motivated by the strategic need to manage their reputation (...) and legitimacy rather than by the recognition of their ethical accountability, which is the stated purpose of reports produced by cutting edge companies (Clarke 1998). (shrink)

Although there is increasing use of eco-labeling, conditions under which eco-labels can command price premiums are not fully understood. In this article, we demonstrate that the certification of environmental practices by a third party should be analyzed as a strategy distinct from—although related to—the disclosure of the eco-certification through a label posted on the product. By assessing eco-labeling and eco-certification strategies separately, researchers can identify benefits associated with the certification process, such as improved reputation in the industry or increased product (...) quality, independently from those associated with the actual label. In the context of the wine industry, we show that eco-certification leads to a price premium while the use of the eco-label does not. (shrink)

Different theoretical approaches highlight the growing relevance of corporate reputation as strategic factor. Among these approaches the arguments of the Resource-Based View are special worthwhile (Grant, 1991, California Management Review 33(3), 114–135; Barney, 1999, Sloan Management Review Spring, 137–145). Nevertheless, this topic poses several methodological problems (Barney et al., 2001), as the unavailability to identify and measure this organizational factor, that is “socially complex” and intangible in its nature. In this work, using the findings of our empirical research on Spanish (...) biotechnology firms, we carry out an identification and measurement of corporate reputation, highlighting its two key components: “business reputation” and “social reputation”. (shrink)

As a result of the increasing public attention to environmental crises, corporate environmental actions and their effects are a current research hotspot. This study examines how two types of corporate environmental actions influence consumers’ perceptions of environmental legitimacy and subsequent purchase intentions. Using experimental method, this study finds that substantial environmental action induces significantly higher perceptions of environmental legitimacy than symbolic environmental action, this effect can be attenuated by corporate environmental reputation, and consumer-based environmental legitimacy has a significantly positive effect (...) on consumers’ purchase intentions. These findings have interesting implications for both researchers and practitioners involved in green marketing. (shrink)

There is theoretical and empirical evidence that firms’ environmental performance has ramifications for their appeal to various stakeholders. Yet, we know little about how this plays out in the context of strategic alliance formation. Stated differently, research is lacking on how ‘green’ prospective alliance partners are estimated by the initiating firm. This article employs strong environmental reputation as a proxy for high environmental performance and explores implications for the well-established alliance formation trust-based mechanism, under the strategic cognition perspective. The ensuing (...) hypotheses are subjected to empirical scrutiny through an experimental method. A random sample of 138 CEOs and top managers of Norwegian manufacturing firms completed a scenario-based questionnaire. The results show that two out of three trust dimensions are affected and, moreover, that two out of three—but not the same—trust dimensions influence partner attractiveness. Several theoretical and managerial implications, and future research opportunities, are derived from the findings. (shrink)

This paper discusses the issue of legitimacy and, in particular the processes of building, losing, and repairing environmental legitimacy in the context of the Deepwater Horizon case. Following the Deepwater Horizon catastrophe in 2010, BP plc. was accused of having set new records in the degree of divergence between its actual operations and what it had been communicating with regard to corporate responsibility. Its legitimacy crisis is here to be appraised as a case study in the discrepancy between symbolic and (...) substantive strategies in corporate greening and its communication. A narrative analysis of BP’s “beyond petroleum”-rebranding and the “making this right”-campaign issued in response to the Gulf of Mexico disaster discusses their respective implications for corporate change. Further, the question is addressed why BP’s green image endeavors were so widely accepted at first, only to find themselves dismissed as corporate greenwashing now. The study concludes that where a corporation’s “green narrative” consistently evokes established narratives, its legitimacy will be judged against narrative, rather than empirical truth. Thus, the narrative will be more willingly accepted as speaking for the issuing company’s legitimacy, irrespective of whether it reflects substantive greening or not. (shrink)

Grounded in institutional theory, this study provides an overview of the corporate social responsibility initiatives of Turkey's 30 largest corporations through a thematic content analysis. The study focuses on the G-20 member Turkey and investigates the influence of isomorphism mechanisms on the adoption of CSR initiatives in a developing country context. The aim of this study is to integrate Carroll's CSR dimensions, the type of CSR engagement and coercive, mimetic and normative isomorphism mechanisms proposed by institutional theory. Through this integration (...) the study makes a unique contribution to the literature by providing a different perspective. Findings reveal industry characteristics do not influence the selection of CSR initiatives. While business-to-business companies focus on CSR activities linked to their core business functions, business-to-consumer companies focus on CSR initiatives that are more discretionary, varied and philanthropic. In addition, findings show that multinational corporations implement CSR initiatives at the global level rather than focusing on local needs. (shrink)