LEGITIMACY THEORY

Legitimacy theory

Legitimacy theory

Introduction

Legitimacy is referred to a common assumption or perception which is related to action of a business or entity as proper, appropriate desirable under socially developed system of values, norms, definitions and beliefs (Suchman, 1995, p. 574).

Legitimacy theory is among the theories that are cited mostly in area of accounting and social environment. Despite this there is huge scepticism between various scholar as it provides and real insight regarding the corporation's voluntary disclosures. It is the organization's central concept regarding institutionalism. This term emerged along with the emergence of organization theory. In addition to this, during past century, the research on legitimacy was emerged slowly and its literature is divided into different aspects of social sciences. The scholar regarding this area increased rapidly since 1995 in various directions and brought new literature that was following the base from previous research. This literature was improved and found more theoretical, bringing legitimacy as more explanatory idea rather than evaluating the concept as empirical property. Most of scholars employed this theory on various cases from explanatory gain or loss. However there are researches that used empirical testing on some cases using it as variable against hypothesis. This paper focuses on explaining legitimacy and its use in real world cases by two renowned fashion chains against incidents happened in Bangladesh.

Discussion

Since its emergence, the explanation of legitimacy has evolved and showed significant changes in it. These changes as a whole brought noticeable and appreciable changes in the theory over time with developing more explanatory theory in nature (Osigweh, 1989, pp. 580-585). Due to such flexibility in the concept, this term provide sufficient information for defining it, measuring, and theoretical propositioning. It is noticeable that most of reviewers of legitimacy theory give more credit to the efforts made by Weber by arguing regarding introduction of legitimacy theory as a part of sociological theory and also it can be used in organization studies (Suchman, 1995, pp. 571-575; Jhonson et al., 2006, pp. 54-58; Ruef & Scott, 1998, pp. 877-882). Weber work regarding investigation of various authority types of legitimacy is well admired by most of organizational theorists. More commonly, in addition to this his study also explained about the importance of social practice outlined by rules and argues that both formal laws and social norms can support legitimacy (Weber, 1978). After him various scholars worked on legitimacy and brought many modifications to the theory, however the main concept was same but with more justification and explanation was included. Year 1995 was found to be important for legitimacy regarding theoretical development. In this year Scott published his review named 'Institutions and Organizations' in which he mentioned that legitimacy cannot be referred as a commodity that is possessed by someone or can be exchanged, but it is a condition that reflects normative support, alignment of culture, or compatibility with relevant law or rule (Scott, 1995, p. 45). In the same year Suchman also published his comprehensive named 'Managing Legitimacy: Strategic and institutional ...