However, the most widely used theories to explain companies social reporting practices are legitimacy theory, stakeholder theory, and institutional theory deegan and jeffry 2006 and are discussed below. Analysis of institutional theory and stakeholder theory to ases. This article synthesizes the large but diverse literature on organizational legitimacy, highlighting similarities and disparities among the leading strategic and institutional approaches. This latter focus, emphasizing the persistence of taken for granted rules to conform to, brought on comparisons with population ecology for which environments also dominate or overpower organizations. Institutional theory s claim to be critical rings hollow. Example of institutional theory used in information systems research in particular, such theory used in the hisp project on health information systems strengthening in developing countries the idea is that the second part will make it easier to digest and understand the first part. This study explores the effects of the three pillars of institutional theory in shaping the activities of institutional entrepreneurs and other social actors during international financial reporting standards ifrs implementation in nigeria. This study explores the cost of legitimacy management in the context of corporate giving. However, institutional theory has been criticized e. Institutional theory in organization studies oxford. In what follows we address institutional theory in political analysis.
Institutional theory is considered appropriate when trying to explain both individuals, organisational, administrative, and accounting practices dacin. Legitimacy in the institutional environment helps ensure organizational survival. Therefore organizational internal operations, which are often complex and difficult to identify, may take second place to the issue of external legitimacy. Institutional theory an overview sciencedirect topics. Legitimacy theory has the role of providing an explanation of the disclosure of social, economic, and environmental information.
Institutional theory of green marketing strategies in a. An institutional approach to gender diversity and firm performance. Consistent with the notion of legitimacy theory, companies seek to gain, maintain or repair their legitimacy by using social and environmental reporting. Institutional theory examines ways in which organizational structures, norms. In this dissertation i apply an institutional theory perspective to examine legitimacy and processes of legitimation in the context of transnational governance.
According to scott 2008, institutional theory is a widely accepted theoretical posture that emphasizes rational myths, isomorphism, and legitimacy. Legitimacy and the role of sustainability reporting. Theoretical perspectives on sustainability reporting. May 09, 2020 a prominent body of scholarship views revenue extraction by the state as a catalyst for the creation of representative institutions. Legitimacy theory is one of the most discussed theories to explain the phenomenon of voluntary social and environmental disclosures in corporate communication. Legitimacy in the institutional environment helps ensure organisational survival. Despite the common perceptions of institutional theory and stakeholders theory with relation to environmental accounting. The role and contributions of sociological institutional theory to the. Institutional theory has risen to prominence as a popular and powerful explanation for both individual and organizational action.
Future research directions evaluating institutional environments drawing from our conceptual framework of legitimacy embedded institutional institutional ef. In terms of the future direction of the applicability of the legitimacy theory, there appears to be a number of subject areas or legitimacy. Legitimacy can be defined inclusively as a generalized perception or assumption that the actions of an entity are. The democratic conception establishes a claim right in the democratic assembly to the compliance of every member in the society. Nov 02, 2020 institutional theory has long focused on norms as a crucial part of the broader institutional complex. There is a lack of research into framework of legitimacy theory. The most important of these problems is the generally static nature of institutional explanations. Institutional theory is often used to explain the adoption and spread of formal organizational structures, including written policies, standard practices. It is a vibrant theory that has been synthesized and contrasted with a number of other approaches. Institutional entrepreneurs serve as agents of legitimacy supporting the cre ation of institutions that they deem to he appropri ate and aligned with their interests.
The paper utilises a longitudinal interpretive design and undertakes. Indeed, it is probable that legitimacy theory is the most widely used theory to explain. Thus, institutional arguments have the potential to provide wider explanations for the di. Three mainstream theories, namely legitimacy theory, stakeholder theory and institutional theory all of which have been employed in the csr literature are. Pdf demystifying the link between institutional theory and. The analysis identifies three primary forms of legitimacy. Democratic institutions do not work unless society believes in norms supporting democracy. Politics and theory of global governance international. Institutional theory in political science has made great advances in recent years, but also has a number of significant theoretical and methodological problems. Institutional theory has viewed firms as passive recipients of institutional pressure. This paper draws on the arguments of multiple theoretical frameworks, including legitimacy theory, stakeholders theory, institutional theory, political cost theory. Oct 29, 2014 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. Consistent with zurns endogenous account of change, it is the success of global governance institutions in accumulating authority that has brought about these challenges.
Seeking legitimacy among their peer states, they adopt and maintain the characteristics and forms of a parent, global polity meyer et al. The two theoretical paradigms separate themselves from the point that institutional theory believes that organisation could only gain legitimacy and be shaped by the institutional environment. Legitimacy is an important factor in institutionalization, as the creation, transformation, and diffusion of institutions require legitimacy, a condition whereby other. We view corporate giving as a means by which firms may seek external legitimacy, and propose that, in response to evaluations of external audiences, organizations strategically manage such costs under a tension. Analysis of institutional theory and stakeholder theory to. Not only does the theory lack an emancipatory agenda but most institutional studies privilege agentic power over hegemonic. The three pillars of institutional theory and ifrs.
An institutional theory of corporate giving 12 youngchul jeong concordia university montreal, canada h3g 1m8 youngchul. Legitimacy in institutional theory three essays on social judgments in a globalized world dissertation for the faculty of economics, business administration and. Legitimacy theory and csr disclosure while there is no generally accepted theory for explaining csr disclosure practices, recent research in the csr literature has primarily reli ed on legitimacy theory deegan 2002, p. Indeed, institutional theory has successfully explained how conforming to societal expectations increases legitimacy, reduces uncertainty, and increases standardization. We are grateful to associate editor heli wang and three.
Create an account to watch unlimited course videos. It is a concept that is found in different theories, such as institutional theory, legitimacy theory and stakeholder theory to mention a few see 10, 11 3 12. So it takes culture from inside the organization to outside it. However, these formal structures of legitimacy can reduce efficiency and hinder the organizations competitive position in their technical environment. Three essays on social judgments in a globalized world. I propose that both types moderate the association between gender diversity and firm. I distinguish between normative and regulatory institutions, defining normative legitimacy as the acceptance of a practice as appropriate and desirable based on shared organizational norms and values and regulatory legitimacy as the endorsement of a practice by regulators. States in the developing world, however, extract less revenue from their citizens than states in wealthy countries. Special issue on institutional theory in information systems. Normally the legitimacy theory is used to explain social and environmental reports disclosure. In recent times, stakeholder theory and legitimacy theory have. Institutional innovation, as we see it, is not only new and useful, but also legitimate change. It encompasses a large, diverse body of theoretical and empirical work connected by a common emphasis on cultural understandings and shared expectations.
Even when engaging with grand challenges institutional theorists are inclined to overlook larger. Jan 05, 2019 the legitimacy and legitimation of political institutions is a topic with a long pedigree in comparative politics, political theory, sociology, and psychology, involving classic contributions by weber, arendt, lipset, easton, habermas, tyler, and beetham. Institutional theory is a prominent perspective in contemporary organizational research. Legitimacy in organizational institutionalism university of southern. Feb 20, 2017 institutional theory aids our understanding of the pressures for institutions to become more similar, which decreases institutional diversity. Institutional theory was launched, with legitimacy as the currency for success, and its conferral unidirectional top down. In the current context, the relevant norms are those associated with democracy. Integrating legitimacy theory, stakeholder theory and institutional theory journal of theoretical accounting research, 10 1 2014, pp. Download pdf asian journal of sustainability and social.
Legitimacy theory, stakeholder theory and institutional theory are all systems based theories. Institutional theory and evolution of a legitimate. In addition, neo institutional theory abstracts away from a focal organizations culture to the field level. Using institutional theory and dynamic simulation to. It is a vibrant theory that has heen synthesized and contrasted with a number of other approaches. Institutional theory has, however, been criticized for its disregard of the role of selfinterest, agency and micro practices of strategy in favour of highly deterministic forces embedded in institutional relations dillard et al. In this dissertation i apply an institutional theory perspective to examine legitimacy and. This chapter offers a general theory of institutional legitimacy, the metacoordination view, according to which legitimacy assessments are best understood as being part of a social practice aimed at achieving consensus on whether an institution is worthy of our moral reasonbased supportsupport not dependent solely on the fear of coercion or on a perfect fit between our own interests and. Institutional theory focuses on the roles of social, political and economic systems in which companies operate and gain their legitimacy. Institutional theorists assert that the institutional environment can strongly influence the development of formal structures in an organization, often more profoundly than market pressures. Theoretical introduction within contemporary organizations theory, legitimacy is more often invoked than described, and it is more often described than defined cf. Apr 06, 2017 the aim of this study is to explore the possibility of using the legitimacy theory as a plausible explanation for csr reporting practices by organizations within the context of developing nations. This overview of institutional theory in organization studies begins with a general summary of key ideas and arguments from foundational work in this tradition.
Such a theory, i want to suggest, represents a plausible alternative to. A theory locates the sources of contestation in the legitimacy deficits that have arisen in the wake of growing international authority. Legitimacy in institutional theory three essays on social. Organizations attempt to conform to easily recognizable and acceptable standards within the organizational field, which helps foster the organizations legitimacy. One reason for this discrepancy is the presence of foreign aid. Pdf legitimacy in organizational institutionalism researchgate. These contributions are varied, with many studies using institutionalist concepts as a lens to interpret and analyse data, and. They tend to argue that nationlevel political institutions mediate the influence of domestic organized political actors and global processes. New institutional theory emerged in 1977 with articles by meyer and rowan 1977. Perhaps because of this heavy skew toward theory development versus theory testing, the legitimacy concept has exhibited substantial plasticity as it has evolved. Challenging institutional theorys critical credentials. They have an impact on the decisionmaking process in giving indications of what would be. This section addresses these issues in the reverse order. Although its scope has certainly heen expanded, institutional theory has often been criticized as largely being used to.
Concepts, evidence and implications by thomas donaldson and preston lee. Legitimacy theory stakeholder theory and institutional theories are. In the past decade, the is field has seen a growing interest in institutional theory. The paper is mainly concerned with a bringing some coherence to the framework of legitimacy theory and corporate environmental practices. Although its scope has certainly been expanded, institutional theory has often been criticized as largely being used to. But the legitimacy theory can be used in corporate report, suggested by woodward et al. One underlying assumption of institutional theory is that isomorphism leads to legitimacy meyer and rowan, 1977. An institutional approach to gender diversity and firm. Lecture 21 institutions and organizational legitimacy.
I shall label the theory of legitimacy grounded on the defence of the idea of the dictatorship of the proletariat. Social processes are affected by the socialization practices. He says that the structural institutionalized elements play a symbolic role for organizational legitimacy. Organizational theory and its theoretical contributions help us to.
Specifically, how much does an organization spend in order to manage external legitimacy. But neo institutional theory places much more emphasis on taken for granted norms or ways of doing business instead of formalized rules and codebooks for behavior. This special issue explores both theoretically and empirically how foreign aid. Institutional theory, technology enactment framework, system dynamics, mexico.
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