This literature review sets out to highlight the need to further explore arguments contained in corporate political action as a means of deepening our understanding of how inter-field rhetoric is used to defend the legitimacy of an institutional field. First, the concept of legitimacy is introduced and defined. Second, the implications of the concept’s roots in institutional theory are considered. Third, the emergence of rhetorical legitimation is outlined, the value of rhetorical theory is examined, and the relationship between rhetoric and institutional logics is considered. Fourth, corporate political action is presented as a means of rhetorical legitimation.
What is legitimacy? Legitimacy is a pivotal concept within organisational theory, with deep theoretical roots in institutional theory (Suchman, 1995; & Suddaby, Bitektine, & Haack, 2015). The concept is well-travelled (Haack, 2012; & Osigweh, 1989). It has been employed to understand many organisational phenomenon including organisational survival (Ruef & Scott, 1998; & Sonpar, Pazzaglia, & Kornijenko, 2010) and the performance of new market entrants (Kostova & Zaheer, 1999; & Zimmerman & Zeitz, 2002); corporate social responsibility practices (Castelló & Lozano, 2011; Richards, Zellweger, & Gond, 2017; & Zhao, 2012) and controversial business activities like gambling (Miller & Michelson, 2013).
Corporate legitimacy can be understood as the social acceptance of corporations and their activities (Schembera & Scherer, 2017) based on social judgements about the degree to which corporate practices conform to collective norms, values and beliefs (Bitektine, 2011; Johnson, Dowd, & Ridgeway, 2006; & Suchman, 1995). Corporations need legitimacy to be able to survive and perform over time (Richards, Zellweger, & Gond, 2017; Melé & Armengou, 2016; & Suchman, 1995). Yet, corporate legitimacy is “under withering fire” (Castelló & Lozano, 2011: p11) with rising perceptions that corporate conduct is increasingly incongruent with changing and diverging societal norms, values and expectations (Scherer et al., 2013; & Schembera & Scherer, 2017).
Modern societies are complex, characterised by competing and contradictory interests, a plurality of values and beliefs, and discontinuous change; all of which make it more difficult for corporations to maintain their legitimacy as the criteria for assessing legitimacy fragment (Baumann-Pauly, Scherer, & Palazzo, 2016; & Castelló, Etter, & Årup Nielsen, 2016). Despite legitimacy’s ubiquity in the extant literature, numerous scholars have lamented its conceptual fuzziness and empirical elusiveness (Bitektine, 2011; Deephouse, Bundy, Suchman & Tost, 2017; & Suddaby et al., 2015). This is problematic and presents an obstacle to theory-building and robust empirical research (Osigweh, 1989; & Suddaby, 2010).
The literature is fragmented, replete with definitions, propositions and measures (Deephouse & Suchman, 1995; & Haack, 2012), generating increased confusion and ambiguity over time (Suddaby et al., 2015). Legitimacy has been variously conceptualised as a strategic resource (Ruef & Scott, 1998; & Suchman, 1995); a social judgement & evaluation (Bitektine & Haack, 2015; & Tost, 2011); a feeling (Haack, Pfarrer, & Scherer, 2014); and a discursive and rhetorical process (Barros, 2014; Hoefer & Green, 2016; Murray et al., 2016; & Zhu & McKenna, 2012).The operationalisation of legitimacy has evolved over time from the sustained flow of resources to organisations (Ashforth & Gibbs, 1990; & Hybels, 1984), to director interlocks, and the award of regulatory approvals, licences, and certifications (Vergne, 2011), and more recently media sentiment and public opinion (Chung, Berger, & DeCoster, 2016; Etter, Colleoni, Illia, Meggiorin, & D’Eugenio, 2018; & Vergne, 2011).
Scholars have tended to ‘pick-and-mix’ from the numerous approaches in their research resulting a mismatch between theoretical and operational definitions (Haack, 2012).Alternate legitimacy theories reflect the differing research paradigms of legitimacy scholars (Suddaby et al., 2016) and as such differ in their ontological understandings of what is legitimacy qua legitimacy. This produces in different answers to questions such as: who and what confers legitimacy; how legitimacy is acquired, maintained, or lost; what criteria are used to adjudge legitimacy; and who and what are the subjects of legitimacy judgments (Bitektine, 2011; Deephouse et al., 2017; & Suchman, 1995).
Those adopting a functionalist perspective have an objectivist definition of legitimacy which regards it as an objectively and independently real entity; a property, asset or resource that corporations need to acquire and manage to succeed (Suddaby, et al., 2016). In contrast, a social constructionist perspective regards legitimacy as socially-constructed by multiple actors, each pursuing their own interests, through ongoing deliberation and contestation (Suddaby et al., 2016). This approach acknowledges the ability of actors to exercise their agency to influence legitimacy, but has been criticised for downplaying the role of institutional forces to constrain this agency as well as inadequately acknowledging that legitimacy can be uncontested and secure.
Legitimacy as a perception is a third ontological perspective which regards legitimacy more as an ontologically individual phenomenon emphasising the cognitive processes by which legitimacy is appraised (Bitektine & Haack, 2015; & Tost, 2011). Notwithstanding the scholarly discord around legitimacy, there are also clear common elements within the literature revealing some coherence around the concept’s essential aspects. Foremost, legitimacy is “a phenomenon of social approval” (Suddaby, 2005: p54) that operates across individual and social levels (Bitektine, 2011; Bitektine & Haack, 2015; Deephouse et al., 2017; & Tost, 2011) and which rests on the alignment of an organisation with the shared norms, values, belief, understandings, rules and laws within the institutional field and wider social system within which it is situated (Bitektine, 2011; Deephouse et al., 2017; Suchman, 1995; & Tost, 2011).
Legitimacy in institutional theoryInstitutional theory is the foundation for most theorising about legitimacy (Deephouse, 1996; & Deephouse & Suchman, 1995). Institutional theory is a leading approach in organisational studies (Heugens & Lander, 2009; & Suddaby, 2013) which posits that organisations can best be explained by social pressures that emanate from the external environment within in which organisations exist (Heugens & Lander, 2009). Institutional theory highlights the role of societal forces in understanding organisations in contrast to more individualistic and technicist accounts in neo-classical economics and rational choice theory (Heugens & Lander, 2009; & Scott, 2008).
A central mechanism through which social forces impact on organisations is isomorphism which is a process by which organisations become similar in their structures, behaviour, and strategies (Deephouse, 1996; Dimaggio & Powell, 1983; & Heugens & Lander, 2009). Similar pressures constrain organisations’ choices by imposing ‘rules’ about what it and what is not legitimate (Dimaggio & Powell, 1983; & Heugens & Lander, 2009). The pressures can be “coercive” such as regulation, “normative” such as prevailing social values, and “mimetic” whereby in uncertain conditions, organisations mimic the choices of other organisations (Dimaggio & Powell, 1983, p150).
Organisations conform to these ‘rules’ to attract the required material resources and technology needed to operate, and to obtain legitimacy, allowing them to succeed (Scott, 2008). While the concept of legitimacy is ubiquitous in the extant literature, much less is known about legitimation (Harmon, Green, & Goodnight, 2015; & Schembera & Scherer, 2017) – the mechanisms through which legitimacy is constructed. This neglect of legitimation is a legacy of legitimacy’s deep theoretical roots in institutional scholarship with a commensurate downplaying of the agency of social actors to actively manage their legitimacy (Suchman, 1995). A foremost criticism of institutional theory is its depiction of corporations at the mercy of powerful institutional forces (Dacin, Goodstein & Scott, 2002; Heugens & Launder, 2009; & Scott, 2009).
However, evolving theories of institutional entrepreneurship suggest that the metaphorical ‘institutional iron cage’ of institutional forces is rather malleable and that social actors can, and do, shape and transform institutions (Abdelnour, Hasselbladh, & Kallinikos, 2017; & Battilana, Leca, & Boxenbaum, 2009). Applying this more recent turn in institutional theory, it becomes clearer that legitimacy is the socially-constructed product of both agentic and isomorphic forces. As such corporations are not powerless in the face of legitimacy challenges and are capable of strategic responses thereto (Deephouse et al., 2017).
However, this does not render isomorphic forces impotent in shaping legitimacy, as some scholars have implied, mirroring debates within institutional scholarship (Haack, 2012; & Heugens & Lander, 2009). Indeed, attempts to fully understand legitimacy and legitimation suffer when agentic and institutional accounts of the phenomena are regarded as mutually exclusive (Golant & Sillince, 2007), rather than mutually constitutive and dialectical (Vaara & Tienari, 2008).Hence the value of the definition of legitimacy put forward by Kostova & Zaheer (1999): legitimacy is a product of the social system which generates isomorphic pressures on organisations; the characteristics of organisations that generate legitimacy perceptions; and the processes by which legitimacy is produced and managed. Understanding legitimacy in this way is helpful for two reasons.
Firstly, it is relevant to exploring legitimacy in modern, heterogenous social systems that are characterized by a pluralisation of interests, norms and values, and which generate multiple, contradictory criteria of legitimacy (Palazzo & Scherer, 2006, p77), as it does not rest on one specific legitimacy paradigm. Secondly, it accounts for the role of legitimation, thereby acknowledging legitimacy as dynamic and as the outcome of contestations between different macro-level forces and micro-level actions (Bitektine & Haack, 2015).
Corporations construct their legitimacy through engagement with various social actors – investors, customers, employees, regulators – who apply various, often contradictory, legitimacy standards (Vermeulen, Zietsma, Greenwood, & Langley, 2016). These social actors evaluate legitimacy claims using different criteria (Bitektine & Haack, 2015; Tost, 2011) depending on the institutional fields in which they are embedded (Suddaby & Greenwood, 2005). Institutional fields are dominated by institutional logics which are the sets of values, definitions, and normative prescriptions that characterise specific institutional fields (Bertels & Lawrence, 2016; & Richards et al., 2017) and generate the dominant legitimacy criteria (Green, Babb, & Alpaslan, 2008; Harmon et al., 2015; & Ocasio et al., 2015).