Three Types Of Legitimacy Theory

Legitimacy Theory
As explained earlier, stakeholders are categorized according to their power, urgency and legitimacy. Therefore it is important to clarify the construct of legitimacy. Suchman defines legitimacy as follows: “Legitimacy is a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs and definitions.” Thus, according to his theory, legitimacy is a socially constructed concept: it is subjectively acquired. However, the possession of legitimacy is objective. A firm may engage in socially unaccepted behaviour, but if that behaviour goes unnoticed, the firm will still have legitimacy. Legitimacy is a consequence of congruence

Each of these types has the same underlying generalization that legitimacy is socially accepted behaviour, however, they each have different underlying types of behaviour.
Pragmatic legitimacy are the self-interested perceptions of an organisation’s direct observers. It is support for an organisation that results from the effects of the organisation’s actions on the well-being of the observers. Or as Suchman defines it: “support for an organisation’s policy on the basis of that policy’s expected value towards particular set of constituents.” This is also known as exchange legitimacy. However, an organisation may also gain legitimacy, not on the basis of direct favourable exchanges, but because the organisation responds to the larger interests of their audience. This is known as influence legitimacy. The last form of pragmatic legitimacy is dispositional legitimacy, which results from audiences associating organisations with personalities, and their tendency to support organisations which share their values. To conclude, pragmatic legitimacy thus rests on judgements about whether the organisation benefits the evaluator, and is based on self-interest and materialistic power-dependence relations. 46 47

Instead, it is a cognition that an organisation is necessary or inevitable. Two major variants can be distinguished, namely: legitimacy based on comprehensiveness and legitimacy based on taken-for-grantedness. Theorists that focus on comprehensibility, view the social world as difficult to comprehend. According to this viewpoint, companies need to provide comprehensive models to explain the organisation and its activities to the public, so that the public understands it. Or put in other words: legitimacy stems from the public’s ability to understand an organisation. The highest legitimacy status that an organisation can achieve is taken-for-grantedness. That is when it is beyond all societal dissent (it is unthinkable for society that things are otherwise). However, in practice this form of legitimacy lies beyond all individual organisations, because although technology and policies can sometimes gain a taken-for-grantedness status, economies and political cultures rarely believe that only one organisation can make a certain product or execute a certain policy. 46