INTRODUCTION
Legitimacy is a fundamental concept of organizational institutionalism. It influences how organizations behave and has been shown to affect their performance and survival (Pollock & Rindova, 2003; Singh, Tucker, & House, 1986). As developed in organizational institutionalism the term has spread widely across the social sciences, and because of this, our current understandings of legitimacy and how it is managed are much more nuanced and elaborate than portrayed in early institutional accounts. In this chapter we seek to bring greater clarity and order to the growing and sometimes confusing literature, focusing on the conceptualization of legitimacy itself and how it changes over time.
This chapter builds from the previous edition (Deephouse & Suchman, 2008, available online at www.sage.org/organizationalinstitutionalism/legitimacy). In updating that chapter we reviewed 1299 publications and conference papers that had the string ‘legitim’ in the title, abstract, or keywords. Reflecting the reach and power of legitimacy, these publications included books and a wide range of journals and across a wide range of disciplines (e.g., communication, political science, public administration, and sociology – not just management). Our goal was to identify broad trends in theory and research, highlight possible theoretical innovations, and suggest important applications for scholars in organizational institutionalism. From this review we identified six central questions around which this chapter is arranged: What is organizational legitimacy? Why does legitimacy matter? Who confers legitimacy, and how? What criteria are used (for making legitimacy evaluations)? and How does legitimacy change over time? These five questions are shown in Figure 1.1. Our final section asks the sixth question, Where do we go from here?, and offers suggestions for future research.
Figure 1.1Overview of organizational legitimacy
We start with the question of ‘What is legitimacy?’ because we are concerned about the concept's ossification in recent years. Our review revealed that a large number of papers simply quote Suchman's (1995: 574) definition verbatim before moving on to discuss whatever particular type of legitimacy was studied in the paper. There has, however, been some noteworthy conceptual movement as well. Several authors have followed Deephouse and Suchman's (2008) recommendation that the term ‘desirable’ in Suchman's (1995) original definition be removed or bracketed to avoid potential confusion with status or reputation, especially if legitimacy is being examined alongside one or more of these other forms of social evaluation. More recently, there have been excellent recent elaborations of the definition of legitimacy (especially Bitektine, 2011 and Tost, 2011). Given these trends, the next section reviews and refines the definition of organizational legitimacy.
Having defined legitimacy, the obvious following question is ‘Why does it matter?’ We discuss why legitimacy matters, highlighting its many benefits to organizations. Having done so, we examine who confers legitimacy, and how. The short answer is that legitimacy can be granted by a variety of sources, each using a distinct routine. Whether through conscious deliberation or preconscious heuristics and taken-for-granted schemas, each source perceives and assesses legitimacy-relevant information, evaluates organizations using this information, and then endorses or challenges them based on those evaluations. Early treatments of legitimacy considered society as a whole as the relevant social system and viewed the nation-state as the primary source of legitimacy (Meyer & Scott, 1983; Parsons, 1956, 1960). Other early accounts viewed organizations in an organizational field as sources of legitimacy, and legitimacy was conferred by their endorsements, often in the form of formal inter-organizational relationships (Galaskiewicz, 1985; Singh et al., 1986). Subsequent treatments recognized that the media could be a source for society as a whole and for particular social systems within it (Deephouse, 1996; Dowling & Pfeffer, 1975; Lamin & Zaheer, 2012). More recent research has added to this list of legitimacy sources – which now includes individuals, investors, social movements, and other stakeholders (Schneiberg & Lounsbury, Chapter 11 this Volume; Tost, 2011). Researchers, in other words, are beginning to examine in greater depth which and how particular sources evaluate, both actively and passively, the legitimacy of organizations and how sources interact with each other and with subject organizations (Bitektine, 2011; Tost, 2011).
The fourth question that we address considers the criteria used by different sources as they evaluate the legitimacy of organizations and their actions. There are several types of criteria, and these can be useful for identifying different dimensions of legitimacy (e.g., regulatory, pragmatic, etc.). However, appreciation that legitimacy evaluations come from multiple sources highlights the possibility that legitimacy criteria may emerge interactively, in the interplay between the various sources evaluating a given organization and the organization itself. And, given the complexity and pluralism of the institutional environment it is possible that inconsistent prescriptions may arise and that debates may ensue among organizations and stakeholders, often in the public sphere. The variety of sources and their possibly conflicting evaluations inevitably bring to the foreground underlying debates at the micro- and meso-levels that influence macro-level legitimacy (Bitektine & Haack, 2015). Thus, we propose that the criteria used to assess legitimacy should be considered sep...
