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legitimacy theory explained

Normally the legitimacy theory is used to explain social and environmental reports disclosure. An aspect of legitimacy theory, investigated in this research, is that in order to continue to exist a corporation will act to remain legitimate in the eyes of whom it considers is able to affect its legitimacy. Legitimacy Theory specifies a social contract between the organisation and society. Legitimacy may be based on law, constitution or statute. Shareholder Theory Economist Milton Friedman, whose work shaped much of 20th-century corporate America, was a believer in the free-market system and no government intervention. All rulers have an explanation for their superiority, an explanation that is commonly accepted but during a crisis can be questioned. If legitimacy is interpreted descriptively, it refers topeople’s beliefs about political authority and, sometimes,political obligations. The main aim of this thesis was to refine and develop legitimacy theory as an explanation for voluntary corporate envirormiental disclosures in the armual report. Second, it demonstrates that the centrality of political legitimacy presumes an understanding and analysis of politics as community. The accounting theories are stakeholder theory, social contract theory, legitimacy theory and signalling theory. Legitimacy gap acknowledges the discrepancy between social norms and organizational behavior. This belief helped shape his shareholder theory of capitalism: that a company’s sole responsibility is to make money for its shareholders. Copyright © 2014 CRICOS Provider No.00124K (Melbourne) and CRICOS Provider No. A theoretical stance that predicts companies’ behaviour towards managing and maintain the perspectives of key stakeholders though company disclosure. which democracy and legitimacy of power are in crisis, it is essential to know the meaning on the concept of legitimacy, which is best explained in the social contract theory. One way corporations act to remain legitimate to these By applying Expectation Violation Theory (EVT), which also acknowledges the gap between an individual’s expectation towards non-verbal behavior and actual behavior, the legitimacy gap can be theoretically explained. 5 legitimacy theory. Therefore it is important to clarify the construct of legitimacy. In other words, legitimacy theory discusses the engagement of companies in social reporting to affect the public’s perception of the company (Brown and Deegan, 1998; Neu et al., 1998). Nevertheless, it is argued that the theory … Legitimacy theory defined that organizations are bounded by social contract in which organization agrees to do social activities and in return they get authority to meet their objectives without any interference. Legitimacy Theory As explained earlier, stakeholders are categorized according to their power, urgency and legitimacy. Citing Literature. This paper argues that these theoretical perspectives may provide greater insights into managerial motivation for disclosure if they are linked more explicitly to (PhD thesis), Disclosure of information, professional ethics, environmental auditing, accounting, legitimacy theory, annual reports, environmental disclosures. Copyright © 1988-2020, IGI Global - All Rights Reserved, Additionally, Enjoy an Additional 5% Pre-Publication Discount on all Forthcoming Reference Books, Learn more in: Analysing the State of Sector-Specific CSR Reporting: Evidence From Pakistan, Learn more in: Corporate Social Responsibility and Financial Information: Theoretical Approaches and Recent Developments, Learn more in: Social Responsibility Reporting in Higher Education Institutions: A Systematic Literature Review, Learn more in: Sustainability Reporting in Transitional Economies. But the legitimacy theory can be used in corporate report, suggested by Woodward et al. Legitimacy theory, on the other hand, suggests voluntary disclosures are part of a process of legitimation. The Legitimacy theory, according to Ness & Mirza (1991), argues that the voluntary disclosure of interpersonal responsibility information can be perceived as a strategy to lessen political costs. Global Perspectives on Achieving Success in... Servant Leadership: Research and Practice. Distrust of police has serious consequences. Much of this investigation was concerned with exploring new areas and attempting to establish relationships between variables identified as important to the development of legitimacy theory. Legitimacy theory as an explanation for corporate environmental disclosures. O'Donovan, Gary It highlights the extent to which corporate social and environmental disclosures are influenced by the boundaries established by the society in order to be appreciated and avoid being penalized by the community in which the company operates. PhD thesis, Victoria University of Technology. Deegan (2002) explained that both the term “legitimacy” and “legitimating” are different. In his sociology, Max Weber put forward a veryinfluential account of legitimacy that excludes any recourse tonormative criteria (Mommsen 1989: 20). To Support Customers in Easily and Affordably Obtaining the Latest Peer-Reviewed Research. In order to best describe and analyze the theory of social contract and its relevance in the world we are living, we The main assumption of legitimacy theory is fulfilling the organization’s social contract, which enables the recognition of its objectives. (Dowling & Pfeffer, 1975). The articles chosen for this essay paper were “Corporate Environmental Reporting: A test of legitimacy theory” by Trevor D. Wilmshurst and Geoffrey R. Frost and “The Stakeholder Theory: Concepts, Evidence and Implications” by Thomas Donaldson and Preston Lee. “A school succeeds if everyone agrees it is a school; it fails if no one believes that it is a school regardless of its success in instruction or socialization” (Meyer, Scott, & Deal, 1981, p. 59). Racial and ethnic minority perceptions that the police lack lawfulness and legitimacy, based largely on their interactions with the police, can lead to distrust of the police. Legitimacy is linked to the public's belief about the police and its willingness to recognize police authority. important' conferring publics', is to voluntarily disclose social and environmental information in the corporate annual report. Legitimacy Theory: A Case Study For an organization to survive, it must have a clear understanding and ability to negotiate the numerous environmental factors that affect its operations. Critical race theory offers a way of seeing the world that helps people recognize the effects of historical racism in modern American life. It was decided that a field study approach, using mainly interview-based qualitative data, was the optimal research methodology to achieve the objectives of this investigation. ... two concepts that could be explained independently. According to Weber, beliefs in the legitimacy of a political system go beyond philosophy and they directly contribute to the state system stability and authority. These theories were explained and discussed from a corporate social responsibility point of view, this was done by identifying the conditions that best suits these theories. theory (Pfeffer and Salancik 1978), legitimacy theory suggests that whenever managers consider the supply of the particular resource is vital to organisational survival, they will pursue strategies to ensure the continued supply of that resource. Contribution The first meaning refers to political philosophy and deals with questions … Institutional theorists contend that an organization’s legitimacy explains survival. Looking for research materials? An aspect of legitimacy theory, investigated in this research, is that in order to continue to exist a corporation will act to remain legitimate in the eyes of whom it considers is able to affect its legitimacy. Legitimacy theory posits that for a corporation to continue to exist it must act in congruence with society's values and norms Legitimacy is defined by Lindblom (1992) as: "...a condition or status which exists when an entity's value system is congruent with the value system of the larger social system of which the social system of which the entity is a part. Legitimacy, popular acceptance of a government, political regime, or system of governance. Legitimacy theory is based on the idea that a social contract exists between business and society. According to Weber, that apolitical regime is legitimate means that its participants havecertain beliefs or faith (“Legitimitätsglaube”) inregard to it: “the basis of every system of authority, andcorrespondingly of ever… Search our database for more, Full text search our database of 146,100 titles for. It would also be expected that disclosures would fall off again after the initial reaction suggesting a pragmatic approach to legitimacy theory. A number of senior management personnel from three large Australian-based companies were the primary source of data in relation to corporate environmental disclosure decision processes. “The legitimacy of the modern state is founded predominantly on legal authority that is commitment to a code of legal regulations”. According to legitimacy theory, companies disclose social responsibility information to present a socially responsible image so that they can legitimize their behaviours to their stakeholder groups. Further, this study explored changing disclosure levels in the context of a number of categories of social and environmental disclosures developed later in this paper. Whereas authority denotes a specific position in an established government, the term legitimacy denotes a system of government—wherein government denotes "sphere of influence". An authority viewed as legitimate often has the right and justification to exercise power. Number of times cited according to CrossRef: 33. In our conception, legitimacy theory has the role of explaining the behavior of organizations in implementing and developing voluntary social and environmental disclosure of information in order to fulfill their social contract that enables the recognition of their objectives and the survival in a jumpy and turbulent environment. In simple terms, (political) legitimacy is the belief that whoever leads has the right to do so and that his/her actions are just. The word legitimacy can be interpreted in either a normative way or a “positive” (see positivism) way. legitimacy theory relates to behaviour where companies respond to the demands of divergent interest groups, and act to legitimize their actions. Organizational survival is dependent on its technical efficiency though institutional theory stresses that organization’s legitimacy is also an important factor (Powell & DiMaggio, 1991). Stakeholder Theory vs. Search inside this book for more research materials. Derived from EVT, the present paper His theory of political liberalism delineates the legitimate use of political power in a democracy, and envisions how civic unity might endure despite … The role of legitimacy theory in explaining managers’ decisions is then discussed and it is emphasised that legitimacy theory, as it is currently used, must still be considered to be a relatively under‐developed theory of managerial behaviour. Patten Since symbols influence citizens in ways that reinforce the legitimacy of courts, the connection between institutional attitudes and acquiescence posited by Legitimacy Theory is both supported and explained. Legitimacy theory posits that for a corporation to continue to exist it must act in congruence with society's values and norms (Dowling & Pfeffer, 1975). (1996), as one possible legitimacy/accountability reporting framework, to communicate with the shareholders and clarify the importance of this relationship. This occurs when the authority of the state assumes power through democratic or constitutional means. Legitimacy theory explained the relationship between corporate social disclosure and communities as company are bound by the social contract to meet the communities’ expectations and … 02475D (Sydney), Victoria University | Melbourne Australia, 1501 Accounting, Auditing and Accountability, Faculty/School/Research Centre/Department, Thesis (2000) 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. … In political science, legitimacy is the right and acceptance of an authority, usually a governing law or a regime. As legitimacy theory asserts that the objective of the organisation is to obtain legitimacy; entities will aim to operate within area, ‘X,’ and to keep this area as large as possible in order to reduce, ‘the legitimacy gap,’ (O’Donovan, 2002, p. 347). First, it shows that in terms of epistemology and methodology, addressing the question of political legitimacy calls for being mindful of the specificity of social reality, as contrasted with physical reality. Reaction suggesting a pragmatic approach to legitimacy theory is fulfilling the organization’s contract..., popular acceptance of a process of legitimation used to explain social and environmental disclosure! This relationship legitimacy/accountability reporting framework, to communicate with the shareholders and clarify the of. Theory and signalling theory descriptively, it is argued that the theory … Institutional theorists that... 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