In order to examine the role of corporate diplomacy in building organizational legitimacy, the current research builds on a theoretical and conceptual framework consisting of sociological neo-institutionalism, legitimacy and media frames, and public relations theory. In this chapter, the theoretical approaches and central constructs will be introduced, defined, and discussed.

2.1 The Value of Sociological Neo-Institutionalism for Analyzing Corporate Diplomacy

Existing research suggests that corporate diplomacy can be regarded as international public relations efforts (White, 2015) aimed at building legitimacy (Mogensen, 2017). Organizational legitimacy is a state attributed to an organization by groups in society. These groups evaluate organizational behavior’s appropriateness by assessing it against their norms and values resulting from social constructions (Elsbach, 1994, 2006; Suchman, 1995). Consequently, the formation of organizational legitimacy judgments results from social constructions, and organizational legitimacy itself can be regarded as socially constructed. For this reason, a research perspective must be chosen that considers organizations and their behavior as principally socially constructed, modeling society as a condition of organizations, i.e., organizations are viewed from the societal environment’s perspective. Moreover, organizational legitimacy building is significantly affected by the cultural and political factors surrounding an organization (Kostova & Zaheer, 1999) since these factors are inherently related to societal norms and values, which form the basis for assessing whether organizations are considered legitimate (Suchman, 1995). As this thesis examines the corporate diplomacy efforts of MNCs operating in the UAE, which has significant differences compared to the Western hemisphere, cultural and political conditions are highly relevant. For these reasons, the theoretical foundation of the current research needs to consider these macro-level factors. Finally, due to the increasing penetration of society by the media, i.e., medialization, the media play a critical central role in forming the perception of organizations in general (Deephouse, 2000; Eisenegger, 2005) and organizational legitimacy (Bansal & Clelland, 2004; Deephouse, 1996). For this reason, a theoretical approach has to be chosen that allows for analyzing the expectations and evaluations of organizations and their behavior conveyed by the media.

Although scholars have frequently promoted organizational legitimacy as a major concern of public relations (e.g., Merkelsen, 2011; Metzler, 2000; Sandhu, 2012, 2015; Van Ruler & Verčič, 2005), it has not thus far been sufficiently investigated as to how legitimacy can be built, and which role public relations plays in an organization’s legitimation process. Instead, previous public relations research has been dominated by functional approachesFootnote 1 that mostly take an inside-out perspective to explain organizational behavior, i.e., the relationship between organizations and their environments is considered from an organization-centered perspective (see Eisenegger, 2018). These include business management approaches such as public relations as communication management (e.g., Mast, 2002; Zerfass, 2004, 2008) and system-theoretical perspectives that view public relations as a subsystem of organizations (e.g., Hoffjann, 2001) or as a societal function (e.g., Holmström, 2008). Since functional public relations approaches mostly investigate public relations from an organizational perspective, they often neglect or ignore macro-level factors outside of the organization, including cultural and political influences, the mass media, and the role of the organization’s social environment (Eisenegger, 2018; Sandhu, 2012, 2015). However, these factors are highly relevant for the examination of corporate diplomacy in the UAE and organizational legitimacy, as argued at the beginning of this chapter.

In contrast to functional, often organization-centered approaches to public relations, interpretive, more society-oriented approaches to public relations exist, including reflective public relations (Van Ruler & Verčič, 2005) and social constructivist perspectives on public relations (e.g., Tsetsura, 2010). These approaches emphasize the role of public relations in subjective reality construction to gain acceptance within and outside the organization (see Heide, 2009). In some perspectives, social factors influencing the organization and public relations are considered as well as the legitimizing function of public relations (e.g., Van Ruler & Verčič, 2005). Interpretative approaches often emphasize the agency and control of individual actors or organizations and assume that those actors always act rationally (see Sandhu, 2012). At the macro level, however, it can be observed that a large part of public relations and organizational communication is outside the control of organizations or the individual actors in an organization (Eisenegger, 2018; Schöneborn & Wehmeier, 2014). The absence of control also applies to the building of legitimacy, a central construct in this thesis and considered the core goal of corporate diplomacy.

In response to the lack of approaches taking a closer look at the uncontrollability of the organizational environment and its perception of companies and their actions, especially related to media coverage or scandals, organizational sociological perspectives are increasingly applied to public relations and organizational communication (see Eisenegger, 2018; Friedrichsmeier & Fürst, 2013; Ingenhoff & Bachmann, 2014). These views include institutional or neo-institutional approaches applied to public relations (Wehmeier, 2006; Sandhu, 2012, 2015). Especially the latter seems to be fruitful and useful for this research, which will be explained in the following.

The sociological neo-institutional approach (DiMaggio & Powell, 1983; Meyer & Rowan, 1977) is an organizational theory that allows for taking the basic assumptions mentioned at the beginning of this chapter and viewing organizational behavior as fundamentally dependent on society to gain legitimacy. In this way, the sociological neo-institutional approach enables reinterpreting contextual conditions and explanations for (strategic) public relations since it considers organizations’ agency and thus strategic organizational actions as limited and regards them as a reaction to social patterns (see Sandhu, 2012). Applying a sociological neo-institutional approach to public relations offers a counter-concept to most functional and rationalist public relations approaches that often view rationality as solely constructed by the organization. According to neo-institutional approaches, organizational legitimacy results from integrating societal expectations, structures, and unquestioned assumptions into the organization’s formal structures (see Deephouse et al., 2017; Meyer & Rowan, 1977). Therein lies the role of public relations and communication. Therefore, the organization and social conditions become the focus of research in the neo-institutional approach, building a bridge between the organizational and macro levels to examine organizations’ legitimation processes. This is what makes the application of sociological neo-institutional approaches to public relations as the foundation for corporate diplomacy fruitful for this thesis.

2.2 Principles and Key Concepts of Neo-Institutional Approaches

The following subchapter will briefly introduce the emergence of neo-institutional approaches and the concept of institutions. Moreover, the chapter will present and discuss the core assumptions and constructs of sociological neo-institutional approaches, including organizational fields, rationalized myths, decoupling, and ceremonial practices.

2.2.1 Neo-Institutional Approaches and the Concept of Institution

Neo-institutionalism is not a specific approach or a clearly delineated theoretical concept but a subsumption of various approaches. The heterogeneity of neo-institutional approaches is primarily related to the different origins and further developments in different scientific disciplines. Neo-institutionalism has been developed and applied in organizational and management studies, sociology, and political sciences for many decades (see Senge, 2011). In recent years, neo-institutional approaches have also been adopted in public relations research (e.g., Frandsen & Johansen, 2013; Fredriksson & Pallas, 2014; Fredriksson et al., 2013; Sandhu, 2009).

Different phases and theoretical developments characterize the history of neo-institutionalism. Three phases can be distinguished: the foundation phase, the consolidation phase, and the expansion phase (see Sandhu, 2012). The last phase includes numerous reinterpretations of neo-institutional approaches and their core constructs, which vary according to discipline and research field. The current research applies sociological neo-institutional approaches, whose origins lie in U.S. organizational studies and can be particularly dated back to the work of John Meyer and Brian Rowan (1977), Paul DiMaggio and Walter Powell (1983, Powell & DiMaggio, 1991), and Richard Scott (1994, 1995; Scott & Meyer, 1983). Since the 1990 s, sociological neo-institutionalism has also been intensely discussed in German-language organizational studies (e.g., Hasse & Krücken, 2009; Türk, 2004; Walgenbach, 2006). According to Powell and DiMaggio (1991), the “new” institutionalismFootnote 2 is primarily interested in the societal context, i.e., cognitive and cultural beliefs that are the foundation for explaining organizational structures and actions: the

new institutionalism in organization theory and sociology comprises a rejection of rational-actor models, an interest in institutions as independent variables, a turn toward cognitive and cultural explanations […]. The new institutionalism in organization theory tends to focus on a broad but finite slice of sociology’s institutional cornucopia: organizational structures and processes that are industrywide, national or international. (Powell & DiMaggio, 1991, pp. 8–9)

The premise of most sociological neo-institutional approaches is that individual and collective actions, including organizational behavior, can only be explained by superordinate rules, i.e., institutions, and thus are not the result of autonomous choices by individual actors. Following this, institutions are at the heart of neo-institutional research and can be understood as generalized societal expectational structures that determine appropriate behavior (Scott, 2008). In line with that, other scholars have regarded institutions as social patterns, rules, and conventions that lead to a particular behavior (Meyer & Rowan, 1977; Scott, 2001). Organizational decisions and actions follow institutions as organizations assume that they are more likely to be accepted and perceived as legitimate by their environment when conforming to institutions (Dowling & Pfeffer, 1975; Powell & DiMaggio, 1991). Following this, organizational actions can only be understood in the context of generally binding institutional frameworks and only emerge when these superordinate societal structures of expectations exist as the foundation for individual and collective actors. Institutions emerge through social interactions and communication and, thus, can be regarded as socially constructedFootnote 3 (Meyer & Rowan, 1977). Since institutions occur over time and are reproduced repeatedly, they are perceived as objective and internalized. Institutions do not predefine a specific behavior but certain possibilities of how to act and, therefore, limit individuals in their actions (Scott, 2008). Friedland and Alford (1991) have conceived institutions as “supraorganizational patterns of activity through which humans conduct their material life […], and symbolic systems through which they categorize that activity and infuse it with meaning” (p. 232). Following this, ideologies and cultural concepts can be regarded as institutions if they have meaning for the social order (Friedland & Alford, 1991). Furthermore, institutions can exist within an organization and are reflected in elements, structures, responsibilities, or actions that are self-evident (Sandhu, 2012). Following these assumptions, institutions are conceived as widely accepted societal patterns reflected in societal expectational structures and determining organizational actions.

Institutions appear on different levels, including the regulative, moral, and cognitive levels (Scott, 1995, 2001). First, institutions can generate patterns of action building on binding regulations, including policies and laws. These are referred to as regulative institutions, such as the state or governmental authorities (Scott, 1995). Second, in addition to specific regulations, institutions are reflected in moral concepts, including social values and norms, which become social standards and express “the right thing to do.” In this regard, moral institutions appear less as actors and more as conventional patterns of behavior or desirable and inappropriate actions (Scott, 1995, 2001). Moral institutions build on normative expectations or internalization that exist in society. Lastly, Scott (2001, p. 57) has referred to cognitive institutions as “shared conceptions that constitute the nature of social reality and the frames through which meaning is made,” including cultural frames and shared beliefs. This level of institutions is reflected in behavioral patterns or actors that are not questioned (anymore) because they exist permanently and are taken for granted. Scott’s institution’s model provides a valuable descriptive conceptualization of the construct. However, the framework was criticized for its strict separation of the different levels of institutions (Hasse & Krücken, 2015; Senge, 2011). For instance, laws as a form of regulative institutions are followed because it is the right thing to do (in terms of moral institutions). Moreover, some institutions are considered traditional or conventional principles rather than fixed rules and will not be sanctioned if disregarded. Instead of sanctions, these actions are likely to irritate and cause organizations or individuals to justify their environment (Senge, 2011).

Overall, institutions understood as widely accepted and unquestioned societal patterns and rules significantly influence organizational behavior as they determine what is right and appropriate and, in this way, affect organizational legitimacy perceptions. The following subchapter will elaborate more on the core assumptions of sociological neo-institutional approaches by presenting the major constructs and their conceptualizations.

2.2.2 Core Concepts and Key Assumptions

The previous section addressed the central relations between different constructs to understand the basic theoretical assumptions of sociological neo-institutionalism. The following section takes a closer look at the major premises and, describes and explains the most relevant terms of this theoretical approach, i.e., organizational fields, rationalized myths, decoupling, and ceremonial practices.

The Role of the Organizational Environment and the Concept of Organizational Fields

A fundamental assumption of the sociological neo-institutional approach is that organizations follow the societal expectations within their environment (DiMaggio & Powell, 1983). These expectations are, for instance, held by institutions and the stakeholders of a company, including consumers and governments. The actors that constitute the environment of an organization, in their aggregate, are referred to as the organizational field (DiMaggio & Powell, 1983). An organizational field comprises organizations and actors that observe each other or interact and collaborate, and may they differ in their power within the field (DiMaggio & Powell, 1983; Scott, 1994). Organizations and actors in an organizational field mutually evaluate their decisions and actions (DiMaggio & Powell, 1983). The positive evaluation of an organization and its structures and activities, i.e., regarding the organization as acting appropriately within a set of shared social patterns and rules, allows for achieving organizational legitimacy (Meyer & Rowan, 1977). Hence, organizational fields consist of different organizations and actors in society and can be understood as the societal environment of an organization (Wooten & Hoffman, 2017). Usually, for mutual evaluation, organizations and actors in an organizational field share collective rationality, i.e., they have similar cultural and cognitive thoughts and concepts to evaluate the appropriateness of each other’s activities and structures. This collective rationality is developed through the interactions between the constituents of one field (Scott, 1994).

However, an organizational field is dynamic, meaning that actors and cognitive-cultural beliefs can change. Within an organizational field, diverse structures exist that can influence organizations and political and economic structures. Simultaneously, “soft factors,” including values, ideologies, and interactional patterns, are the foundation of the societal demands toward organizations and individual actors (Stinchcombe, 1965). Organizations adapt to institutional or institutionalized structures in society because they are considered socially binding elements, and adjusting to them ensures an organization’s existence (Meyer & Rowan, 1977). As a result, actors within one organizational field, for example, organizations in the same industry sector, show similar behavior since organizations within the same field face the same institutional structures and demands and react correspondingly (Scott, 1994). As neo-institutional approaches follow the social constructivist view of reality,Footnote 4 these institutional structures and demands are often the assumptions and perceptions of individuals or organizations concerning what is right or wrong rather than obligatory rules. However, external expectations exist on different levels, including regulative ones that build on legally binding rules. As outlined in the previous section, societal rules and standards, i.e., institutions or institutional structures, occur on the regulative, normative, and cognitive levels and are essential for social order because they determine appropriate social actions. Therefore, members of society, including organizations, orient their decisions and activities toward these expectations (Scott, 1994).

Collective Rationality, Rationalized Myths, and Institutional Logics

Another central assumption of the sociological neo-institutional approach is its understanding of rationality and so-called rationalized myths, representing the main difference from most institutionalist approaches. While institutionalists have argued that organizations are mainly driven by economic goals and efficiency and, therefore, create economic rationality to interact with their environment, neo-institutionalism regards rationality from the social constructivist perspective (see Hasse & Krücken, 2015; Senge, 2011). In this regard, rationality is conceived as a utilitarian concept guiding organizations and actors and is essential for societal order (DiMaggio & Powell, 1983; Meyer & Rowan, 1977). Rational-intended organizational goals build on (often unconscious) societal and institutional structures and demands formed in the multiple contexts of politics, culture, and economics. As such, the rationality guiding organizations is not objective but socially constructed and emerges from different actors and elements that constitute society:

In modern societies, the elements of rationalized formal structure are deeply ingrained in, and reflect, widespread understandings of social reality. Many of the positions, policies, programs, and procedures of modern organizations are enforced by public opinion, by the views of important constituents, by knowledge legitimated through the educational system, by social prestige, by the laws, and by the definitions of negligence and prudence used by the courts. (Meyer & Rowan, 1977, p. 343)

Therefore, instead of referring to objective reality, Meyer and Rowan (1977) introduced the concept of rationalized myths. Rationalized myths are cultural-cognitive assumptions regarding proper organizational structures and behavior (Meyer & Rowan, 1977). As collectively shared assumptions, rationalized myths determine which procedures and actions for achieving organizational objectives can be considered appropriate (Sandhu, 2012). By reflecting on external and internal demands, organizations make sense of rational actions and create rationalized myths expressed through the formal organizational structures. The formal structures of an organization are directed outward and aim to meet socially institutionalized expectations. The organization’s purpose is to ensure that it meets the societal expectations of rationality via its formal structures, mainly externally visible communication (Meyer & Rowan, 1977). In other words, organizations are constantly striving to demonstrate conformity with societal expectations, such as about the sustainability of the company, through their formal structures as this guarantees society’s acceptance of the organization and organizational legitimacy.

Rationalized myths multiply because, in the sense of field logic, organizations orient themselves toward each other and demonstrate similar formal cultures. Rationalized myths spread particularly strongly through complex relational networks and the influence of well-established organizations or government regulations because it is assumed that by adapting behavior to such actors, the organization and its decisions are less scrutinized (Meyer & Rowan, 1977). In other words, if established and possibly legitimized actors express rationalized myths about their behavior through their formal structures, other organizations will adopt these myths to be considered equally legitimate. This phenomenon can be observed, for example, in the implementation of quality management systems, organizational governance charts, and the certification of organizational standards (see Barley, 2011; Sandhu, 2012). In these examples, the external presentation of these, i.e., the formal organizational structures, is supposed to guarantee legitimacy (see Barley, 2011).

According to Meyer and Rowan (1977), the organization’s formal structures and the actual activities are only loosely connected to show compliance with expectations toward the external environment and establish legitimacy. Sometimes, institutional structures (e.g., laws or social norms) and societal demands (e.g., sustainability and efficiency) conflict. In this case, organizations may externally demonstrate that they are following the institutional structures and societal expectations considered essential for their long-term acceptance because of high pressure emerging from powerful institutions or the potential consequences of not following specific rules (DiMaggio & Powell, 1983; Meyer & Rowan, 1977). However, their actual activities, i.e., what organizations truly do, may differ from the formal structures, referred to as “decoupling” (see the following section).

The potential conflict between the diverse societal expectations faced by organizations was also noted by Friedland and Alford (1991) and discussed under the term “institutional logic.” Accordingly, the causes of different societal expectations of organizations are the various interests of individual social actors or groups (e.g., legislature, community members, NGOs), expressed through institutional logic (Friedland & Alford, 1991). From an organizational perspective, institutional logic can be conceived as socially constructed historical patterns or assumptions, values, and rules that serve as an orientation for organizations and their actions and structures (Thornton & Ocasio, 1999, 2008). Since institutional logic is socially constructed, they represent organizations’ interpretations concerning the demands of their societal environment. In this way, institutional logic appears as a framework for organizations, setting conditions for their actions and processes, which are reproduced (not necessarily one to one) by the organizations. As institutionalized structures can lead to different institutional logic, organizational decisions can be potentially contradictory and stand in conflict with each other (Greenwood et al., 2011).

In summary, institutional logic and rationalized myths, emerging from the interaction between the organization and its environment, determine or influence the basic options for organizations’ decisions and actions in an organizational field. Hence, institutional logics and rationalized myths connect the societal and organizational levels. According to Sandhu (2012), the goal of organizational public relations and communication would be to reinterpret institutional logic to change the framework for legitimating explanatory patterns. It can be assumed that this stated goal of public relations is also applicable to rationalized myths. However, it must be critically noted that the agency of organizations, such as in the form of public relations, would be considered significantly limited to non-existent according to the classical conceptualizations of sociological neo-institutionalism (Meyer and Rowan, 1977; DiMaggio & Powell, 1983).

To consider a possible more active role of organizations, and thus a more active role of public relations and organizational communication, the concept of “institutional strategy” or “institutional work” is useful (see Fredriksson et al., 2013). As such, in contrast to early sociological neo-institutional approaches (Meyer & Rowan, 1977; DiMaggio & Powell, 1983), more recent developments (i.e., Lawrence, 1999; Lawrence & Suddaby, 2006) have emphasized that organizations can take an active role in legitimation and institutionalization, referring to institutional strategy (Lawrence, 1999). The institutional strategy includes any effort through which organizations proactively seek to increase legitimacy perceptions, such as creating memberships and developing technical and informal rules that become standards within or across an organizational field (Lawrence, 1999). Lawrence and Suddaby (2006) later refined the concept of “institutional strategy,” referring to “institutional work” as the “purposive action of individuals and organizations aimed at creating, maintaining, and disrupting institutions” (p. 215). As scholars have highlighted, the purposive action of organizations significantly builds on the communicative resources and public appearance of organizations (Fredriksson et al., 2013; Lawrence & Suddaby, 2006).

Decoupling and Ceremonial Practices

Organizations face societal expectations and have to meet technical and financial efficiency requirements. In the case of private corporations, profit maximization is a fundamental goal. However, social demands and organizational, instrumental efficiency requirements can conflict with each other, as Meyer and Rowan (1977) emphasized: “organizations often face the dilemma that activities celebrating institutionalized rules, although they count as virtuous ceremonial expenditures, are pure costs from the point of view of efficiency” (p. 355). In addition to the potential conflict between organizational efficiency demands and societal expectations or institutionalized elements, such as values and norms or regulations, organizations may face demands from their institutional environment that contradict with each other. An organizational environment is pluralistic, resulting in multiple, partly conflicting self-interests, leading to heterogeneous expectations of organizations. Therefore, as Meyer and Rowan (1977) highlighted, organizations need to find ways to “link the requirements of ceremonial elements to technical activities and to link inconsistent ceremonial elements to each other” (p. 356). To resolve these inconsistencies, organizations have four options: The first is resisting to ceremonial requirements, which would entail a critical examination of an organization’s actual efficiency. Second, organizations can terminate external relationships to maintain conformity to certain institutionalized rules. However, such relationships are often the basis for successful exchanges. The third option is the (cynical) disclosure of organizational inconsistencies, but this would again call into question the validity of rationalized myths and thus pose a threat to the organization’s legitimacy. The fourth option entails decoupling and ceremonial practices (Meyer & Rowan, 1977). The two concepts underlying the last option will be considered in more detail subsequently as they allow (theoretically) an entity to meet organizational demands and at the same time to display conformity with social expectation structures.

Firstly, in an attempt to close the gap between social expectations and instrumental efficiency requirements, organizations develop a double-sided structure consisting of actional and formal structures, which are not necessarily related to each other (Meyer & Rowan, 1977). Accordingly, organizations split their activities from their formal structures visible to the outside to reflect the rationalized myths of their environment. Organizations externally demonstrate that they conform with the assumed societal expectations but, on the inside, continue to operate in an efficiency-increasing manner, which may stand in conflict with the rationalized myths. This phenomenon is called “decoupling”—organizational actions are decoupled from their formal structures to create the perception of acting appropriately and secure legitimacy (Meyer & Rowan, 1977). Following this, formal structures can be different from the actual organizations’ daily work activities, and formal rules, decisions, or procedures may differ from the actual implementations or consequences (Meyer & Rowan, 1977). However, the decoupling concept has been criticized, mostly because it is argued that an enduring decoupling of the formal structures and actual actions is hard to realize (Tolbert & Zucker, 1996; Walgenbach & Meyer, 2008). This might be even more valid in digital and social media times, where divergences in an organization’s formal structures and actual activities can be made public easily and quickly.

Secondly, to be perceived as legitimate, organizations demonstrate certain activities as so-called ceremonial conformity (Meyer & Rowan, 1977). Ceremonial conformity is conceived as organizational self-presentation, through which organizational behavior is demonstrated as reflecting institutional structures and social rules and, in this way, show an organization’s conformity with societal expectations (Meyer & Rowan, 1977). The perceived societal expectations are integrated into the formal organizational structures, such as through communication and public relations. Organizations often invest in self-presentational means to demonstrate innovation and excellence, including employing external corporate consultants or investing in renowned persons as testimonials, although these means often do not increase profit but are perceived as legitimate (Sandhu, 2012). In this sense, ceremonial acts include the presentation of rationalized myths, or, in other words, assumptions of rationality become rationalized myths through the ceremonial acts. Even if the rationalized myths are not logical or efficient, organizations follow them to demonstrate a certain ritual image (Theis, 1994) and to be perceived as acting appropriately and meeting societal expectations, which, in turn, leads to organizational legitimacy (DiMaggio & Powell, 1983). Whether or not an organization demonstrates a specific behavior depends on the assumed benefits and outcomes of this behavior, which again builds on organizational reflections of its environment rather than on logical explanations (Powell & DiMaggio, 1991).

2.3 Organizational Legitimacy and the Process of Legitimation

Legitimacy is the essential basis of organizations and critical for any organization (Suchman, 1995). Organizational legitimacy allows the enforcement of organizational decisions toward other actors and access to financial and social resources (Meyer & Zucker, 1989) and secures an organization’s acceptance in the long term (Bitekine, 2011; Rindova et al., 2006). This subchapter gives an overview of legitimacy research across academic disciplines, thereby reviewing previous definitions and conceptualizations to formulate the definition of organizational legitimacy guiding this research. Subsequently, this chapter portrays the different organizational legitimacy types and presents how legitimacy perceptions and judgments are constructed. In particular, the role of the mass media in constructing organizational legitimacy is outlined and explained by introducing relevant theoretical approaches to media effects on the perception of organizations and their legitimacy. This is followed by a presentation of organizational legitimation strategies derived from previous research following neo-institutional approaches.

2.3.1 The Foundations of Legitimacy Research and the Relevance of Gaining Legitimacy

Organizational legitimacy has been discussed in different research disciplines for many decades. Building on Weber (1922), Parsons (1956) had already described the concept of legitimacy in 1956 and defined it later as the “[a]ppraisal of action in terms of shared or common values in the context of the involvement of the action in the social system” (Parsons, 1960, p. 175). His elaborations on legitimacy have significantly shaped research since then. Research on organizational legitimacy has evolved greatly since the end of the 1970s, related to the increasing relevance of organizations that stimulated the expansion of organizational studies and the emergence of neo-institutional approaches. As outlined in section 2.1, one central assumption of the sociological neo-institutional approach is that organizations respond to expectations from their environment, the organizational field, in different ways to gain and maintain legitimacy (Meyer & Rowan, 1977). Therefore, organizational legitimacy has been studied on the organizational level to investigate how organizations can achieve legitimacy depending on their environment (e.g., Deephouse, 1996; Meyer & Rowan, 1977; Meyer & Scott, 1983). Organizational legitimacy has mainly been the scope of organizational and management studies and sociological research, but increasingly communication and public relations scholars are interested in examining organizational legitimacy and related processes (Christensen & Cornelissen, 2011; Fredriksson et al., 2013; Sandhu, 2009).

Early research outlined that the importance of organizational legitimacy is related to the enhanced access to significant economic resources, essential for organizational survival (Parsons, 1956; Thompson, 1967). Building on system theory, Parsons (1956) has understood organizations as social systems, which are goal-oriented and contribute to the superordinate system(s), such as society. Accordingly, systems interact with and depend on each other, and within these interrelations, each system is evaluated by the other, including its legitimacy (Parsons, 1956). As Parsons (1956) has further emphasized, organizations have different economic, political, and integrative purposes, guaranteeing the organization’s survival. Social systems only offer other social systems the use of their resources if the demanding social system is perceived as legitimate (Parsons, 1956). Likewise, institutionalists and neo-institutionalists, focusing on companies’ economic role, have argued that organizational legitimacy is the foundation of organizational survival (Baum & Oliver, 1991; Meyer & Rowan, 1977; Ruef & Scott, 1998). In this regard, scholars have suggested that being perceived as legitimate prevents organizations from being questioned or criticized by their environment to a great extent, which would limit their scope for action (Meyer & Rowan, 1977; Meyer & Scott, 1983). However, it must be noted that legitimacy does not necessarily guarantee access to relevant resources: “There are illegitimate organizations that engage in successful interorganizational transactions and there are legitimate organizations which are not able to obtain adequate resources through voluntary transaction mechanisms” (Dowling & Pfeffer, 1975, p. 124).

Today, private organizations need to comply with legal regulations or meet economic demands, while being confronted with societal expectations emerging from public debates (Van Ruler & Verčič, 2005) and the increasing demands concerning the moral behavior and political responsibilities of corporations (Lock et al., 2016; Scherer & Palazzo, 2011). Therefore, instead of focusing on the role of legitimacy for economic success and survival, more recent research has highlighted the importance of legitimacy for gaining access to social resources, including trustworthiness and credibility (Scherer & Palazzo, 2007; Van Ruler & Verčič, 2005). Likewise, legitimacy is related to gaining organizational support (Choi & Shepherd, 2005; Scherer & Palazzo, 2007) and the social license to operate, regarded as the social approval or even psychological identification with an organization (Boutilier & Thomson, 2011). As Holmström et al. (2009) have summarized, “legitimating notions define the boundaries for decisions, which are perceived as socially acceptable within a given time, context and perspective” (p. 2). Hence, whether an organization is perceived as illegitimate or legitimate determines whether the organization and its decisions and activities are supported by society or a specific social group within the organizational environment.

However, it is essential to note that different social groups can judge the company differently and that legitimacy evaluations can differ from time to time (Holmström et al., 2009). Some organizations face other legitimation demands than others due to their nature or public visibility (Dowling & Pfeffer, 1975; Sandhu, 2012). For instance, harmful companies or companies in specific sectors are generally more scrutinized than others and, therefore, are more prone to legitimacy evaluations. Moreover, some companies depend more on social and political support than others, which similarly increases their need for legitimacy (Dowling & Pfeffer, 1975).

In summary, it can be concluded that organizational legitimacy is a central resource for organizations. In particular, the deprivation of this valuable resource, such as through scandals or crises, poses risks for an organization. Thus, a withdrawal of legitimacy can be accompanied by more difficult access to other economic and social resources (such as trust), more critical observation of the organization’s decisions and actions, and even a withdrawal of the right to exist, i.e., the organization’s license to operate. For these reasons, the continuous establishment and maintenance of legitimacy is a central challenge for organizations. The following section explains how legitimacy is defined and conceptualized.

2.3.2 Conceptualizations and Types of Organizational Legitimacy

Early conceptions of organizational legitimacy built the foundation for how we conceive the construct from a neo-institutional and sociological perspective and go back to Weber (1947) and Parsons (1956, 1960). Both scholars discussed organizational legitimacy as an evaluation of the conformity of actions with social norms, values and regulations (Weber, 1947; Parsons, 1956, 1960). Neo-institutional approaches further built on that, pointing to institutionalized patterns, rationalized myths, and social norms and values as the foundation of organizational legitimacy assessments (Meyer & Rowan, 1977; Scott, 1995). With the development of neo-institutional approaches and research in organizational sociology, the number of legitimacy definitions increased significantly; however, they still vary broadly. A few researchers have extensively reviewed the legitimacy literature to compare and systematize definitions and conceptualizations of organizational legitimacy (Bitekine, 2011; Deephouse et al., 2017).

Deephouse et al. (2017) provide an overview of the emergence of legitimacy conceptions, particularly in the realm of early neo-institutional and institutional approaches. The authors have highlighted the publication of Scott’s book “Institutions and Organizations” (1995) and Suchman’s article “Managing Legitimacy: Strategic and Institutional Approaches” (1995) as pivotal points for legitimacy theory because they significantly “raised the visibility of legitimacy, especially among management researchers studying for-profit organization” (p. 31). Scott (1995) has conceived legitimacy as “a condition reflecting cultural alignment, normative support, or consonance with relevant rules or laws” (p. 45). Suchman (1995) has considered organizational legitimacy as a strategic resource and defined it as “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate” (p. 574). Suchman’s definition has become one of the most prominent and cited definitions of the construct (Deephouse et al., 2017).

A more extensive systematization of legitimacy was presented by Bitekine (2011), who distinguished legitimacy conceptions according to three views on legitimacy from the legitimacy evaluator’s perspective—perception, judgment, and behavioral consequence. Accordingly, scholars have conceived organizational legitimacy as a perception that builds on evaluations (Suchman, 1995; Rindova et al., 2006). From this perspective, Rindova et al. (2006) have defined organizational legitimacy as “[t]he degree to which broader publics view a company’s activities as socially acceptable and desirable because its practices comply with industry norms and broader societal expectations” (p. 55). This definition is one of the very few particularly highlighting that complying with societal expectations is essential for gaining organizational legitimacy. Second, some scholars have regarded legitimacy as a judgment (e.g., Meyer & Scott, 1983; Oliver, 1991; Parsons, 1960; Zimmerman & Zeitz, 2002). In this respect, legitimacy is conceived as the external justification of an organization’s right to exist (Maurer, 1971; Meyer & Scott, 1983). Lastly, previous legitimacy definitions have focused on behavioral consequences (Bitekine, 2011). In this view, Kostova and Zaheer (1999) have defined organizational legitimacy as the “[a]cceptance of the organization by its environment” (p. 64). Building on the reviewed and systematized conceptions of organizational legitimacy, Bitekine (2011) has developed an enumerative definition that accounts for different levels, evaluators, salient antecedents, and potential (behavioral) consequences, as well as the value of the institutional linkages of organizational legitimacy:

The concept of organizational legitimacy covers perceptions of an organization or entire class of organizations, judgment/evaluation based on these perceptions, and behavioral response based on these judgments rendered by media, regulators, and other industry actors (advocacy groups, employees, etc.), who perceive an organization’s processes, structures, and outcomes of its activity, its leaders, and its linkages with other social actors and judge the organization […] into a preexisting (positively evaluated) cognitive category/class or by subjecting it to a thorough sociopolitical evaluation, which is based on the assessment of the overall value of the organization to the individual evaluator (pragmatic legitimacy), his or her social group, or the whole society (moral legitimacy), and through the pattern of interactions with the organization and other social actors, the evaluating actor supports, remains neutral, or sanctions the organization depending on whether the organization provides the benefit(s) prescribed by the prevailing norms and regulations. (Bitekine, 2011, p. 159)

Even though Bitekine’s (2011) definition is extensive and comprehensive, it is rather complex, making it difficult to operationalize coherently and replicate (see also Deephouse et al., 2017). This dissertation focuses on legitimacy in the host country context and builds on the assumptions that, firstly, the media play a particular role in constructing organizational legitimacy perceptions and judgments on the societal level (Bitekine, 2011; Deephouse, 1996). Secondly, this dissertation seeks to emphasize and explore the role of expectations in gaining legitimacy (Rindova et al., 2006). Therefore, this dissertation defines the construct as follows: Organizational legitimacy is the perceived appropriateness of an organization and its activities, building on the extent to which the organization meets individual, societal, and governmental expectations and desires.

As Bitekine’s (2011) definition shows, legitimacy perceptions build on different criteria and occur on different levels,Footnote 5 including the pragmatic, moral, and cognitive levels of legitimacy (e.g., Suchman, 1995) as well as the regulative legitimacy level (Scott, 1995; Zimmerman & Zeitz, 2002). Pragmatic legitimacy is related to individual interests and personal needs and refers to the expectations of individuals or specific social groups (Bitekine & Haack, 2015; Diez-Martin et al., 2019). In line with that, Bitekine (2011) has conceived pragmatic legitimacy as “captur[ing] the degree to which an organization represents its constituents’ self-interests or provides them with favorable exchanges, relative to alternative forms or structures” (p. 158). Within this legitimacy type, support from an organization’s environment does not result from achieving specific organizational goals, such as profit maximization. Instead, it emerges from the perception that an organization is receptive to particular interests from an individual point of view or the perspective of one specific group, such as another organization with expectations concerning the benefit for the single organization (Deephouse & Carter, 2005).

In contrast, moral legitimacy is related to the normative appropriateness of an organization and its activities (Suchman, 1995). Therefore, it captures the interests of society. Moral legitimacy judgments “reflect beliefs about whether the activity effectively promotes societal welfare, as defined by the audience’s socially constructed value system” (Suchman, 1995, p. 579). Hence, the evaluator reflects the extent to which the organization and its actions consider normative values and contribute to the society at large rather than pursuing individual interests (Barron, 1998; Rindova et al., 2006; Suchman, 1995). Regulative legitimacy is associated with governmental expectations, regulations, and standards (Deephouse, 1996; Diez-Martin et al., 2019; Scott, 1995). This legitimacy type builds on the assumption that organizations become accepted because they are regulated by local governments and international regulatory organizations setting specific rules, policies, and laws forcing organizations to act accordingly (Diez-Martin et al., 2019; Zimmerman & Zeitz, 2002). Lastly, cognitive legitimacy builds on a “taken-for-grantedness” (Foreman & Whetten, 2002; Scott, 1995; Suchman, 1995). This level can be achieved when the organization and its actions meet distinct, unquestionable expectations of society that mostly result from cultural beliefs (Scott, 1995; Suchman, 1995). In this respect, several factors are considered in cognitive legitimacy judgments, including the history (Ashforth & Gibbs, 1990) and the knowledge of the organization (Aldrich & Fiol, 1994), and its organizational form (Hannan & Freeman, 1989). All these factors enable the categorizing of an organization. The easier the (positively evaluated) categorization is, and the more understandable the organizational actions are, the more likely cognitive legitimacy evaluations will occur (see Bitekine, 2011; Diez-Martin et al., 2019). See Table 2.1 for an overview of legitimacy types.

However, it is essential to remark that, firstly, the legitimacy levels are interdependent and cannot be fully separated since individuals may consider different legitimacy types simultaneously (Deephouse et al., 2017). For instance, moral legitimacy building on values may drive cognitive legitimacy, affecting or being affected by regulations and, in this sense, regulative legitimacy (Kostova & Zaheer, 1999). Secondly, legitimacy judgments should be regarded on a continuum and are subject to change due to circumstances in which organizations are observed more critically. Thirdly, since values and norms differ among cultures and can change over time, legitimacy judgments can vary across countries or generations. Lastly, though legitimacy types forming organizational legitimacy are interrelated, they might somewhat contradict each other. For instance, individual interests are not necessarily congruent with normative assumptions. For this reason, pragmatic, regulative, moral, and cognitive legitimacy judgments concerning an organization and its behavior may differ (Deephouse et al., 2017).

Table 2.1 Dimensions of organizational legitimacy (author’s presentation, following Bitekine 2011; Sandhu, 2012; Scott, 2001; Suchman, 1995)
Full size table

Table 2.1 shows that the different legitimacy types are related to varying actors or groups in society assessing an organization and its actions. Overall, the following four critical kinds of evaluators can be distinguished that apply to most organizations: the media, the state, partners, and the community (including social movements and employees). Previous research has examined the role of the media in constructing organizational legitimacy (e.g., Deephouse, 1996; Lamertz & Baum, 1998; Pollock & Rindova, 2003) and the role of governmental actors in the legitimation process of organizations (e.g., Baum & Oliver, 1991; de Souza, 2010; Kostova & Zaheer, 1999; Pfeffer & Salancik, 1978). Occasionally, organizational legitimacy constructions have been explored from the perspective of social movements (Rao et al., 2000), public institutions (Baum & Oliver, 1991), employees (Kostova & Roth, 2002), and corporate partners (Rao et al., 2001). For MNCs, legitimacy is evaluated by numerous groups, including national and international news media and the host country’s society, comprising the citizens, the local government, and the employees working for the MNC in the host country. At the same time, MNCs face expectations from their home countries and other host countries (Kostova & Zaheer, 1999). These conditions pose challenges for the organization since each country has its own regulatory, cultural, and moral beliefs (Kostova, 1996; Westney, 1993). However, this dissertation focuses on the host country environment only, particularly on the role of the local media in expressing and shaping organizational legitimacy judgments. For this reason, the following section looks in more detail at the role of the media in constructing organizational legitimacy.

2.3.3 Organizational Legitimacy and the Role of the Mass Media

The mass media are regarded as one of the most relevant sources of organizational legitimacy (Bansal & Clelland, 2004; Bitekine, 2011; Deephouse, 1996; Pollock & Rindova, 2003), which can be explained by the role of the media in setting public agendas (McCombs & Shaw, 1972) and the effects of media frames (Scheufele, 1999). Particularly in the case of corporations, individuals mostly learn about corporate activities and decisions from the news media (Caroll & McCombs, 2003). Therefore, the media significantly affect individuals’ sense-making processes concerning organizations and shapes individuals’ perceptions of organizations (Kennedy, 2008). In the context of organizational legitimation, Lamertz and Baum (1998) have highlighted the role of media coverage as being “an intermediary between organizations and the public, and act[ing] as a negotiator and creator of meaning” (p. 95), influencing what and how audiences perceive and judge organizations and their behavior.

One of the most prominent theories in media effects research is the agenda-setting theory (McCombs & Shaw, 1972). Since its development, agenda-setting has been explored and tested in numerous studies in mass communication research, particularly in political communication, across different national and international contexts (for an overview, see, e.g., Maurer, 2010). According to agenda-setting theory, the salience of the elements on the media agenda influences the salience of these elements on the public agenda. The concept of salience “means making a piece of information more noticeable, meaningful, or memorable to audiences” (Entman, 1993, p. 53). By paying attention to particular objects, including topics and individual or collective actors, and leaving out others, mass media firstly influence what individuals get to know about an object (McCombs & Shaw, 1972; McCombs & Ghanem, 2001). This process is referred to as first-level agenda setting. Newspaper articles have different cues demonstrating the relative salience of objects, including the position and the length of an article or the frequency of presenting certain objects (Carrol & McCombs, 2003). The audiences use these cues to evaluate which issues, organizations, or other subjects are more important than others. In this way, the public agenda becomes, to a certain degree, the media agenda. Following this, it is assumed that the mass media are significantly involved in forming public opinion (McCombs & Ghanem, 2001; McCombs & Shaw, 1972), including perceptions of corporations (Carroll & McCombs, 2003). In addition to first-level agenda setting, focusing on the object’s salience, the mass media affect audiences’ agenda on a second level concerned with the salience of the object’s attributes (McCombs et al., 1997). This phenomenon is often referred to as second-level agenda-setting. Accordingly, media coverage affects what the public gets to know about objects and, thus, what individuals think about and how individuals think about objects by attributing and evaluating these objects. In this way, the mass media influence cognitive and affective levels toward an object, for instance, by providing information about the competence of an organization or actor (cognitive level) and a positive or negative tone, influencing the assessment of an organization on the affective level (Carroll & McCombs, 2003).

Similar to agenda-setting theory and the assumed media effects on the second level,Footnote 6 framing theory presumes that through communication, some elements are made more salient than others, thereby influencing what issues people think about and how they evaluate them (Entman, 1993). Although there is a broad application of the framing concept in communication and media research, there is no consistent use of the term “framing” (de Vreese, 2005). Framing is used to refer to certain (mostly media-induced) effects, to communication texts (e.g., media frames), or to a process that includes the production, content, and perception level (e.g., de Vreese, 2005; Scheufele, 1999). The latter perspective often distinguishes between frame-building, frame-setting, and the consequences on the individual and societal levels (de Vreese, 2002; Scheufele, 2000). Frame-building includes all factors that affect media frames’ structural qualities, including internal and external factors to journalism (Shoemaker & Reese, 1996; Snow & Benford, 1992). Frame-setting describes the interaction between frames on a content level (e.g., media frames) and the individuals. Accordingly, frames influence how people interpret and evaluate what they read, depending on their prior knowledge, experiences, and predispositions (McCombs et al., 1997). Lastly, the consequences of framing in terms of framing effects refer to the attitudinal and behavioral effects on individuals or the societal level (de Vreese, 2005; Scheufele, 1999). Given that frames can be considered schemata for presenting and comprehending information and evaluations, the framing concept can be distinguished in media (or news) frames and audience (or individual) frames (Scheufele, 1999).

In this thesis, the focus is on the frame-setting, considering the framing concept on the content level, i.e., media frames. A media frame can be conceived as a “central organizing idea or story line that provides meaning to an unfolding strip of events” (Gamson & Modigliani, 1987, p. 143). One of the most widely cited descriptions originates from Entman (1993), who explained how media frames affect the audience’s processing of information and interpretation. Frames determine which issues individuals think about (problem definition), what or who is responsible for the issue (causal interpretation), how this is evaluated in moral terms (moral judgment), and how the issue might be treated (suggestion). Thus, frames encourage audiences to make associative links between an object and its notions to its definitions, causes, evaluation, and treatment (Entman, 1993). As Entman (1993, p. 52) has explained, frames are schemata “which are manifested by the presence or absence of certain key-words, stock phrases, stereotyped images, sources of information, and sentences that provide thematically reinforcing clusters of facts or judgments.” By selecting and highlighting particular objects or elements of the object, an argument about an organization or an issue is constructed, including an evaluation (Entman, 1993). Following this, media frames highlight an organization’s information, thereby increasing the salience of this information and the organization. The higher the salience of information (as an element of the object highlighted through the frame), the more likely the audience will perceive and process the information and remember it whenever it comes up again (see Fiske & Taylor, 1991). Thus, the more frequently certain information about and attributions of an organization or an issue are presented, the more salient the information and attributions become, and the more probable individuals will keep an organization related to the presented attributions in mind.

However, media frames are not the only source influencing what audiences think about an object. Individuals may perceive and process information differently, depending on various factors, including culture; individual experiences, such as with an organization; their involvement in a specific issue; or word of mouth with friends or family members. What is perceived as salient depends on the frequency or the placement of information and the existing schemata in an individual’s system of beliefs (Entman, 1993; Gamson & Modigliani, 1987). Moreover, media frames are not necessarily the same as audience frames. Thus, overall, media frames may influence what individuals think about and how, but they do not have a universal effect.

Applying agenda-setting and framing theory to corporate diplomacy and organizational legitimacy, it can be argued that by providing news about corporate diplomacy and attributing and evaluating corporate diplomacy activities and the corporations themselves, the news media affect how the MNCs are perceived and judged and the extent to which they are perceived as legitimate. Recently, Deephouse et al. (2017) have noted that “to be considered a source of legitimacy, the stakeholder must not only make an assessment about the legitimacy of the subject, but that assessment must generalize into a broader view of the overall appropriateness of the organization in its social system” (p. 36). Due to the role of the news media in providing and framing corporate-related information (see Carroll & McCombs, 2003; Scheufele, 1999), the media can be considered an essential source with a crucial role in gaining, maintaining, and losing organizational legitimacy (Deephouse, 1996; Deephouse & Suchman, 2008; Kennedy, 2008).

According to the literature, media coverage can contribute to organizational legitimacy in several ways. First, the organization gains recognition and visibility by increasing public awareness (Aldrich & Fiol, 1994) while co-creating categories in which organizations fit (McKendrick et al., 2003). Media coverage contributes to organizations’ cognitive legitimacy in the media (Aldrich & Fiol, 1994). In the context of companies, the selection of topics can contribute to cognitive legitimacy. By frequently associating a company with the same subject or similar ones, such as corporate diplomacy initiatives, individuals create an awareness of the company concerning the given topic (Marberg et al., 2016). This process may contribute to a company’s comprehensibility as part of cognitive legitimacy (Suchman, 1995). In addition, other cues increase the organization’s salience, including the position of the corporate-related news article, the frequency of articles on the organization, and titles that include the organization’s name (see Carroll & McCombs, 2003). The increased salience of an organization can contribute to cognitive organizational legitimacy (see Kennedy, 2008; Lamertz & Baum, 1998).

Second, by evaluating the organization and its activities as right or wrong and appropriate or not, in terms of framing, the mass media form legitimacy judgments on a socio-political level, including moral, pragmatic, and regulative legitimacy levels (see Deephouse, 2000; Vergne, 2011). Applying this to corporate diplomacy, media coverage may contribute to organizational legitimacy on a moral level by presenting corporate diplomacy as in line with social values and norms and going beyond individual interests (see Deephouse & Suchman, 2008). For instance, media coverage depicting corporate diplomacy as contributing to societal welfare may increase the organization’s moral legitimacy in the media. Furthermore, when media presentations refer to the value of corporate diplomacy for individual interests, this may increase pragmatic legitimacy perceptions (see Suchman, 1995). For example, when corporate diplomacy is portrayed as benefitting the particular interests of specific social groups or individuals, it may add to the company’s pragmatic legitimacy in the media. Lastly, media coverage displaying corporate diplomacy as complying with governmental expectations can contribute to organizational legitimacy on a regulative level in the media (see Diez-Martin et al., 2019). As such, regulative legitimacy in the media might be attributed when media texts illustrate corporate diplomacy as committing to the government’s agenda.

In summary, media coverage and media frames play an essential role in the perception of companies as legitimate. Media frames can affect different types of organizational legitimacy (moral, pragmatic, regulative, and/or cognitive), depending on what information concerning the organization is presented and how. One consequence of conceiving the media as one of the most critical legitimacy evaluators is that some organizations might enjoy easier access to the media and dominate the news more than others (Yoon, 2005). For instance, an organization’s long history and large size (Deephouse, 1996; Singh et al., 1986) give it with more power, representativeness and an advantage in gaining and maintaining organizational legitimacy compared to others (Hall et al., 1978). However, since media coverage is, to a certain extent, organization-induced  and organizations present their decisions and actions to the outside world via formal structures, i.e., external communication, organizations can contribute to the organizational legitimacy building. Therefore, organizational legitimation strategies are examined and discussed in the following.

2.3.4 Organizational Legitimation Strategies

According to the sociological neo-institutional approach, the legitimation process of organizations predominantly or solely depends on the organizational environment, and organizational behavior is interpreted as a response to the expectational structures of the organizational environment (Meyer & Rowan, 1977). However, newer developments have highlighted that organizations could take a (pro)active role in the legitimation process (Lawrence, 1999; Lawrence & Suddaby, 2006). The legitimation strategies of organizations can be distinguished between two groups of legitimacy, cognitive legitimacy and socio-political legitimacy, including moral, pragmatic, and regulative legitimacy (Sandhu, 2012). Cognitive legitimacy judgments build merely on categorizing an organization based on a set of visible characteristics (Meyer & Rowan, 1977; Scott, 1995; Suchman, 1995). Instead, socio-political legitimacy judgments emerge from organizational features, attributes, procedures, and outcomes related to and compared with (the socially constructed) values and norms (Aldrich & Fiol, 1994; Bitekine, 2011). When these features, attributes, procedures, and outcomes are perceived as appropriate and in line with social values and norms, an organization is perceived as legitimate on a socio-political level (Suchman, 1995).

The cognitive legitimacy type is regarded as organizations’ most relevant legitimacy level. When an organization is judged as legitimate on a cognitive level and taken for granted, it is significantly less likely to be observed critically (Meyer & Rowan, 1977; Scott, 1995; Suchman, 1995). As Bitekine (2011) has noted, “cognitive legitimacy can play a ‘prophylactic’ role, allowing the organization to avoid at least some of the scrutiny of its activities, which is required for the sociopolitical legitimacy judgment” (p. 157). However, cognitive legitimacy is considered the most challenging legitimacy type to be actively influenced by organizations since it is typically built through a long-term process (Ashforth & Gibbs, 1990; Suchman, 1995).

Concerning socio-political legitimacy levels, organizations have several options to affect these. First, organizations can demonstrate the adaptation of their activities and goals in a way that shows conformity with the societal expectations (Deephouse et al., 2017; Dowling & Pfeffer, 1975; Suchman, 1995). Within this legitimacy-building strategy, organizations can select a specific group in the environment to support organizational activities (Suchman, 1995). Focusing on one social group is easier than addressing the whole community or society at large. Moreover, in some case, it makes more sense for an organization to follow a particular institutional logic (Friedland & Alford, 1991). Second, organizations can demonstrate their associations with specific values, symbols, or other legitimate organizations (Dowling & Pfeffer, 1975). Third, organizations can seek to modify how legitimacy is understood while simultaneously showing that their organizational behavior is congruent with this legitimacy understanding (Dowling & Pfeffer, 1975; Suchman, 1995). For all three points, communication is essential (Sandhu, 2012; Suchman, 1995), ranging from “passive conformity to relatively active manipulation” (Suchman, 1995, p. 587). However, since legitimacy is a perception, organizations do not necessarily have to adapt to social values and norms. Instead, they can create the impression that they are engaging in specific actions to meet societal demands while simultaneously avoiding that their environment notices the actual incongruence with societal values (Suchman, 1995). This premise builds on the institutional assumption of decoupling (Meyer & Rowan, 1977; see section 2.2.2). Accordingly, formal structures can be different from the actual activities of organizations. In this way, organizations demonstrate their alignment to certain societal expectations or values and norms but act differently (Meyer & Rowan, 1977). However, once the organizational environment detects this discrepancy, a decrease in or even loss of organizational legitimacy is likely.

The easiest way for organizations to seek legitimacy is to conform to their environment since they do not have to change anything within their institutional environment (Suchman, 1995). Instead, organizations follow institutional logic or signal organizational alignment to the cultural order (Meyer & Rowan, 1991). However, first, they need to identify the cultural beliefs and societal expectations they face in their environment. These beliefs and expectations vary regarding the social, cultural, economic, and political context in which organizations operate and whom they seek to address. Second, and following this, organizations need to identify the specific demands the chosen group has. Finally, organizations must demonstrate their alignment with the specific demands frequently.

When it comes to demonstrating congruence with (specific) social values, organizations can build on institutional linkages (Baum & Oliver, 1991) or symbolic responses (Suchman, 1995). Regarding the first, organizations can establish relational ties to established organizations, for instance, governments (Baum & Oliver, 1991). The latter suggests organizations should demonstrate the similarity between specific organizational procedures, outputs, goals, or personnel and those of established actors and institutions—even if that is more symbolic than effectively wide-ranging (see Suchman, 1995). For example, organizations engage with charity organizations since these are commonly perceived as performing altruistic behavior and in line with moral values and norms (see Dowling & Pfeffer, 1975). These strategies refer to ceremonial demonstrations of rationalized myths or the self-presentation of organizations (DiMaggio & Powell, 1983; Meyer & Rowan, 1977; see section 2.2.2).

Changing or modifying social values and the understanding of legitimacy is the most uncommon and difficult legitimation strategy for organizations (Dowling & Pfeffer, 1975; Suchman, 1995). Organizations actively construct a social reality different from the present cognitive and cultural beliefs and actively propagate new explanations of what is right and appropriate (Aldrich & Fiol, 1994). As Suchman (1995) has emphasized, this strategy is significantly less controllable and “far less understood than either conformity or environment selection” (p. 591). Since pragmatic legitimacy reflects individual interests concerning the benefit of organizational actions, organizations can manipulate assumptions and values concerning this legitimacy level comparatively easily, for instance, through strategic communication that influences assumptions on pragmatic demands (Suchman, 1995). In contrast, moral legitimacy is hard to achieve by manipulating or modifying social values and norms because it builds on cultural beliefs occurring on a macro level and usually emerging through a long-term process. Similarly, regulative legitimacy perceptions are comparatively challenging to influence since the regulatory framework is created in the long term, mostly involving numerous decision-makers and public opinion (see Scott, 1995).

Since organizational legitimacy is socially constructed, the legitimation process is influenced by social, cultural, economic, and political factors, and media coverage in addition to the organizational actions (see section 2.3.3). However, such external factors in a society cannot be influenced by organizations (see Suchman, 1995). For  this reason, organizational legitimation strategies are always limited, particularly regarding culture and time (Metzler, 1995). Consequently, no matter which legitimacy level or evaluator organizations seek to address, the societal expectations of the different groups within the organizational environment need to be identified and monitored continuously. By doing so, organizations can notice and react to changes in the beliefs and demands of particular groups or the society at large. This strategy can secure the relationship between the organization and its environment in the long term (Sandhu, 2012). However, it is essential to remark that focusing on one particular legitimacy type or evaluator might create challenges concerning the relationship to specific social actors and groups whose values and demands are not addressed. Prioritizing certain collective actors and issues becomes relevant in legitimation strategies and is at the heart of public relations (see Sandhu, 2012). Subsequently, public relations, engagement as a major concept of recent public relations approaches, and the link between public relations and organizational legitimacy are presented and explained.

2.4 Public Relations, Engagement, and Organizational Legitimacy

Corporate diplomacy has been discussed across different research fields, including general management, business ethics, public diplomacy, and public relations (Ingenhoff & Marschlich, 2019; Mogensen, 2019). This thesis links corporate diplomacy with public relations, assuming that corporate diplomacy is concerned with cultivating relationships between an MNC and actors within foreign audiences (Wang, 2005; White, 2015) and gaining legitimacy (Mogensen, 2017, 2019). This chapter gives an overview of previous conceptualizations of public relations, outlining the role of public relations in society and discussing the notion of engagement within the public relations literature and its link to organizational legitimacy. Subsequently, this section presents the relationship between public relations and the media since the media play an essential role in the legitimation process of MNCs (see section 2.3.3). Lastly, this subchapter brings together public relations and the sociological neo-institutional approach, presenting the main assumptions of neo-institutional public relations and developing a concise definition of the construct.

2.4.1 Public Relations and Engagement

The term “public relations” has mostly been used to describe the management of relationships between an organization and its publics through related public communication (Cutlip et al., 2000; Grunig & Hunt, 1984). Ferguson (1984) is often considered the first scholar explicating public relations as relationship management, which different scholars later further developed (Broom et al., 1997; Ledingham, 2003; Ledingham & Bruning, 1998; Kent & Taylor, 2002). Relationships can be defined as “the state which exists between an organization and its key publics in which the actions of either entity impact the economic, social, political, and/or cultural well-being of the other entity” (Ledingham & Bruning, 1998, p. 62).

In earlier research, a rational-functional perspective on the role of public relations was dominant, which viewed public relations as a strategy that pursues organizational goals, particularly through strategic organizational messaging (for an overview of public relations approaches, see Botan & Taylor, 2004). However, approaches to public relations as functional relationship management often focus on organizational goals only and miss seeing the organization as part of the society (Van Ruler & Verčič, 2005). Therefore, scholars have attempted to redefine public relations to appreciate an organization’s role within society in recent years, increasingly applying sociological theories to public relations (e.g., Ihlen & Van Ruler, 2009). Such approaches emphasize the embeddedness of organizations within their social environment, stating that public relations efforts should be reflective (Holmström, 2005; Van Ruler & Verčič, 2005) and co-creational (e.g., Taylor & Kent, 2014). Accordingly, public relations aims to enhance collective meaning-making by involving different perspectives from the organizational environment, mainly building on dialogic approaches (Taylor, 2018; Taylor & Kent, 2014).

Building on that, several scholars have discussed public relations in the context of engagement between an organization and its environment (e.g., Avidar, 2017; Botan & Taylor, 2004; Dodd et al., 2015; Everett, 2018; Johnston, 2018; Johnston & Lane, 2018; Taylor & Kent, 2014). In this respect, Everett (2018) has conceived engagement as a connection between an organization and its environment, defining it as “processes of social interaction that link essential and significant ‘stakeholders’ in the social environment of the organization to the organization” (p. 92). Applying a more relational view on engagement, Johnston (2018) has defined engagement as “a dynamic multidimensional relational concept featuring psychological and behavioral attributes of connection, interaction, participation, and involvement, designed to achieve or elicit an outcome at individual, community, organization, or civic levels” (p.18). Accordingly, engagement affects society and the organization in various ways (Johnston, 2018; Johnston & Lane, 2018; Taylor & Kent, 2014). From a societal perspective, engagement allows society members to gain access to information related to organizational decisions and actions and interact with an organization to become involved in societal issues together with the organization. This process can have a positive social impact and contribute to societal prosperity (Johnston, 2018; Johnston & Lane, 2018).

From a public relations perspective, engagement involves ongoing communication between an organization and its environment about issues of mutual interests to create social resources such as trust and loyalty (Johnston & Lane, 2018; Johnston et al., 2018) and organizational legitimacy (Devin & Lane, 2014). Therefore, the organization needs to be open to feedback and responsive to understand societal issues relevant to its environment and cultivate good relationships (Johnston, 2018). According to Devin and Lane (2014), a collective decision-making process in which the organization, together with multiple actors within its environment, negotiates societal issues, allows the organization to build positive relationships and demonstrate its alignment with societal expectations. This process can result in organizational legitimacy (Devin & Lane, 2014). However, it is important to note that engagement is influenced by the social setting in which it takes place (Johnston et al., 2018). Hence, the UAE’s social, cultural, and political context, explored in this research, may play a particular role.

Previously, scholars have only occasionally discussed legitimacy in the context of engagement, e.g., in the context of CSR (Devin & Lane, 2014) or sustainability projects (Collins et al., 2005). However, following previous literature on corporate diplomacy (Kochhar, 2018; Mogensen, 2017), it can be assumed that corporate diplomacy can notably contribute to organizational legitimacy through an engagement process with its host country environment, in which societal actors on different levels are involved. Following the reviewed literature, engagement is conceived as a process involving different actors of an organization’s environment and their views to identify and negotiate mutual interests, facilitating the cultivation of relationships between an organization and its environment.

2.4.2 Public Relations and the Media: The Importance of Media Frames

The success of MNCs’ public relations efforts is linked to media coverage, particularly of the news media, since the news media are often the primary source of information about MNCs, their decisions, and activities (Carroll & McCombs, 2003). Therefore, they are a significant source for forming individuals’ legitimacy judgments (Deephouse, 1996; Deephouse et al., 2017). Moreover, mass media provide access to a broader audience. On the one hand, media outlets are, to some extent, dependent on the information provided by companies about their decisions and actions, primarily through information subsidies such as press releases and events. Public relations practitioners use information subsidies to generate news stories (Diggs-Brown, 2012). However, news media outlets have their logic concerning what to include, which information to ignore, and how to portray issues and subjects (see, for instance, news value theory, Galtung & Ruge, 1965). For this reason, the impact of public relations on media is limited. However, due to the media’s relevance in influencing audiences’ perceptions of organizational behavior, public relations practitioners seek to increase the likelihood of being covered in the news media (Holladay & Coombs, 2013). From a public relations perspective, media coverage can be regarded as “a means to an end” (Holladay & Coombs, 2013, p. 103). As Nicolini and Hansen (2018) has emphasized, “organizations use strategic communication techniques to inform journalists and facilitate the flow of accurate and impactful information about organizational goals and issues” (p. 2).

In section 2.3.3, it was explained that the news media significantly influence individuals’ perceptions of organizations by framing objects, including issues and organizations. According to Entman (1993), by selecting certain aspects of (the socially constructed) reality, frames make these aspects more salient than other elements. Applied to media content, framing points to the media’s power to define how the organizational environment gains information about organizations, offering a range of interpretations rather than objective facts only (Entman, 1993; Gamson & Modigliani, 1987). A media frame serves as a filter, allowing some information to gain visibility, including favorable or unfavorable views, while obstructing other aspects. In this way, media frames help reduce the complexity of issues (Entman, 1993). The fundamental relevance of framing for public relations practitioners was already outlined more than 20 years ago by Hallahan (1999): “public relations practitioners are extricably involved in the framing of the news […] as suppliers of nearly half of the content found in the news media” (p. 228). Despite the significant role of media frames in public relations, only a few scholars have studied media framing through the lens of public relations (e.g., Bowen & Zheng, 2015; Nicolini & Hansen, 2018; Wigley, 2011).

2.4.3 Neo-Institutional Public Relations

The previous subchapter demonstrated that research has increasingly discussed public relations’ societal role rather than focusing on functional perspectives (see, e.g., Edwards, 2012; Ihlen et al., 2009). This research embeds public relations within the sociological neo-institutional approach to investigate the role of relationships between organizations and their institutional environment, consisting of societal expectations, norms, and values. Applying a sociological neo-institutional approach to public relations and related fields such as communication management and strategic communication is not new. However, previous studies have been mostly conceptual and used neo-institutional approaches as an analytical framework rather than explicitly connecting public relations to the theoretical origins of neo-institutional approaches (Fredriksson et al., 2013). In the following, previous conceptions of neo-institutional public relations are presented. Subsequently, this section derives a precise definition of neo-institutional public relations guiding this research.

Building on the sociological neo-institutional approach (Meyer & Rowan, 1977; Meyer & Zucker, 1989), Wehmeier (2006) has examined the concept of rationalized myths, outlining that the regulation of and in the organization act as rationalized myths instead of reflecting economic rationality. Wehmeier (2006) has highlighted that the role of communication management is creating and establishing congruence between organizational behavior and rationalized myths to gain legitimacy. Likewise, Zerfass et al. (2016) have applied a neo-institutional approach to communication management to analyze the institutionalization of strategic communication practices. Zerfass et al. (2016) have suggested that strategic communication allows for creating, altering, and performing the relationships between an organization and its environment, aiming to legitimize organizational behavior in the public discourse.

Moreover, Hou and Zhu (2012) have discussed the concept of institutional work (see Lawrence & Suddaby, 2006) in the realm of public relations. In line with Wehmeier’s (2006) conclusion, Hou and Zhu (2012) have shown that public relations practitioners need to respond reflectively to institutional pressures. However, Hou and Zhu (2012) have emphasized the need for public relations to incorporate cultural aspects, which, following a neo-institutional approach, are the foundation for organizational decisions and practices (Scott, 1995). Building on their results, Hou and Zhu (2012) have conceptualized public relations as a process in which public relations practitioners interpret, negotiate, and shape the cultural contexts to build favorable conditions for institutionalizing organizations’ practices. By doing so, public relations can be regarded as institutional work (Hou & Zhu, 2012). Later, Hou (2016) has considered public relations itself a socially constructed field, which is dynamic and the result of interactions between an organization and institutional actors.

Furthermore, Sandhu has embedded strategic communication (Sandhu, 2009) and public relations (Sandhu, 2012, 2013) within neo-institutional approaches. In his dissertation, Sandhu (2012) has offered an extensive overview and discussion of the central assumptions of neo-institutional approaches and legitimacy and their link to public relations research and practice. Applying Scott’s institutions model (2001) and Suchman’s (1995) conceptualization of organizational legitimacy, Sandhu (2012) has developed a synopsis of public relations strategies to respond to institutional pressure arising on cognitive-cultural, moral, instrumental-pragmatic, and regulative levels. In a shorter overview of neo-institutional approaches in the realm of public relations, Sandhu (2013) has described public relations practices as an “outside-in” approach, which is influenced by cultural and cognitive assumptions and seeks to identify and reflect on the conditions for gaining legitimacy (see also Theis, 1994).

Similarly, Frandsen and Johansen (2013) and Fredriksson et al. (2013) have provided an intriguing outline of public relations and neo-institutional approaches by discussing how public relations contributes to institutionalization processes and how it became institutionalized. They have pointed to the inherent role of communication in the diffusion and translation of institutional norms (Frandsen & Johansen, 2013). In particular, Frandsen and Johansen (2013) have emphasized that the active role of organizations in the institutionalization process stems from the interpretation and reformulation of institutional expectations and norms within the organization’s context. Likewise, Fredriksson et al. (2013) have stressed that the public relations function involves forming, interpreting, and diffusing of institutional elements; that is, public relations acts “as a carrier and translator of these institutional elements [norms, rules, values, and practices] as well as their maintainer and creator” (p. 169). Table 2.2 presents an overview of how previous studies have conceptualized public relations and related fields embedded in neo-institutional approaches.

Table 2.2 Previous applications of neo-institutional approaches to public relations and related constructs
Full size table

As prior studies on neo-institutional approaches and public relations have shown, most of the current work is conceptual. Scholars have rarely attempted to develop a precise and comprehensive definition of neo-institutional public relations. Building on the literature review on neo-institutional approaches (see section 2.1) and public relations (see section 2.3) and on the previously discussed contributions, this dissertation aims to conceptualize and define neo-institutional public relations distinctively. Therefore, the following assumptions emerging from neo-institutional approaches and public relations are guiding the conceptualization of neo-institutional public relations:

  1. 1)

    The neo-institutional approach is conceived as a theoretical project that views the relationships between an organization and its environment within the organizational field, emphasizing the institutionalized societal expectations that affect organizational behavior.

  2. 2)

    The organizational field (in this dissertation referred to as organizational environment) consists of different actors that construct assumptions about appropriate organizational behavior, forming societal expectations for the short and medium-term, which may result in long-term patterns, so-called institutional logic.

  3. 3)

    The foundation of societal expectations and institutional logic are values and norms constructed within a specific social system.

  4. 4)

    The ultimate goal of organizations is gaining organizational legitimacy, conceived as the congruence between organizational behavior and societal expectations on the moral, regulative, pragmatic, and cognitive levels.

  5. 5)

    Public relations is regarded as a social engagement process that enhances the relationship cultivation between an organization and its environment.

  6. 6)

    Engagement is a collective process in which organizations aim to identify and reflect on the interests and expectations of all actors, ultimately resulting in a collective decision-making process.

  7. 7)

    Public relations aims to relate organizational behavior to societal expectations to gain organizational legitimacy. This is reflected in the organization’s active role, in which public relations seeks to shape and (re-)formulate societal demands, or in a relatively passive role, in which the organization adapts to and, in this sense, “formulates” its congruence with societal expectations.

Building on these assumptions, neo-institutional public relations is defined as follows:

Neo-institutional public relations is a continuous and dynamic engagement process in which an organization involves individual or collective actors within the organization’s environment and identifies, reflects, and (re-)formulates societal expectations that affect organizational behavior to finally demonstrate the congruence between organizational behavior and societal expectations, resulting in organizational legitimacy. These societal expectations are based on a set of moral, pragmatic, regulative, and cognitive beliefs and can vary across socio-cultural contexts and among particular groups within the societal environment.