Sethi (1975) defined a “legitimacy gap” as an expectancy gap indicating a discrepancy between an organization’s actions and society’s expectations of this organization. Legitimacy gaps can threaten an organization’s image and reputation, and ultimately its existence as a legitimate member of the business community and society (Bridges 2004). Hence, legitimacy theory asserts that organizations avoid conflicts and ensure that they operate within the boundaries and norms of their respective societies, so their activities are perceived as legitimate (Sethi 1977). While legitimacy has been frequently studied in sociology, organizational studies, and political science, Heath (2001) asserts that legitimacy gap theory will play a more important role in organizational communication due to an increased focus on dialogue and relationship management between organizations and their stakeholders.
Legitimacy gap theory is tied to the broader concept of issue management and social contract theory, which posits that organizations are bound by social contracts to conduct socially desired actions in return for approval of their objectives and other rewards. Most notably, legitimacy gap theory is closely related to the concept of corporate social responsibility. Society’s expectations of an organization can address various issues and practices, such as an organization’s recruiting and employment policies, environmental impact, marketing and communication ethics, and accounting practices. Such expectations are grounded in social norms and values that are changing over time (Heath 1997). Organizations that are not able to honor these norms and values and adapt to new expectations from society at large or from specific stakeholder groups are at risk of losing their “license to operate”.
Recent prominent examples exemplifying this risk include the case of Shell, which wanted to dump its oil platform Brent Spar into the Atlantic (1995); the bankruptcy case of Enron – one of the world’s leading electricity, natural gas, pulp and paper, and communications companies – due to accounting fraud (2001); and the financial fraud scandal and bankruptcy of Europe’s biggest dairy and food company, Parmalat (2003).
Since the late 1960s, a growing amount of research addressed the ethical and philanthropic responsibilities of organizations, as companies should no longer just satisfy the needs of their shareholders, but should consider the social needs of other stakeholders (Carroll 1991). By proposing activities that facilitate awareness of potential legitimacy gaps, legitimacy gap theory has contributed to proactive research that seeks to analyze the organization’s perception by its stakeholders in order to prevent organizational crises. Several researchers emphasize that increased social performance can improve employee morale and community trust; and ultimately can have positive effects on the financial performance of organizations (Margolis & Walsh 2001).
Organizations can apply strategic communication in order to establish, maintain, extend, or defend their legitimacy and reputation. Such strategies include: (1) continuous and consistent reports about the organization’s environmental, ethical, and social performance; (2) information from stakeholders about behavioral changes in attempts to adapt to changing social norms; (3) engagement in social causes that affect stakeholder perceptions positively (e.g., cause-related marketing and sponsorship of social causes); (4) engagement in dialogue about expectations and creation of alliances with stakeholder institutions and organizations that possess a strong positive reputation (e.g., NGOs); (5) alteration of existing social definitions of legitimacy without changing behavior; (6) modification of external expectations to concur with current organizational practices; and (7) application of rhetorical response strategies in legitimacy crises. From a communication ethics perspective, all of these strategies can be applied with the intention of either creating more transparency and legitimacy or manipulating stakeholder expectations toward a perception of the legitimacy of an organization.
As social expectations toward the legitimacy of organizations have constantly been increasing over recent decades, it can be expected that legitimacy gap theory will be developed further in the future. Such future development might well receive further inspiration from other disciplines, such as from gap analysis between intended and actual corporate images in corporate branding research or from research on social and environmental accounting.
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