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Three Elements of Stakeholder Legitimacy

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Abstract

This paper focuses attention on the stakeholder attribute of legitimacy. Drawing upon institutional and stakeholder theories, I develop a framework of stakeholder legitimacy based on its three aspects—legitimacy of the stakeholder as an entity, legitimacy of the stakeholder’s claim, and legitimacy of the stakeholder’s behavior. I assume that stakeholder legitimacy is socially constructed by management and that each of its three aspects exists in degree in the manager’s perception. I discuss how these aspects interact and change over time, and propose an agenda for future research on stakeholder legitimacy.

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Notes

  1. According to Mitchell et al. (1997), definitive stakeholders are those which “all three of the stakeholder attributes – power, legitimacy, and urgency – are perceived by managers to be present” and thus managers will “give priority to that stakeholder’s claim” (p. 878). Dangerous stakeholders are those perceived by managers of the focal company as having urgency and power, by lacking legitimacy, in which case “that stakeholder will be coercive and possibly violent, making the stakeholder “dangerous”, literally, to the firm” (Mitchell et al. 1997, p. 877).

  2. For a different approach, see Eesley and Lenox (2006).

  3. Salient stakeholders are those that are the focus of attention of management of the focal organization at a certain point in time. In order to be considered a stakeholder, an entity has to present at least one out of three stakeholder attributes: power, legitimacy and urgency (Mitchell et al. 1997).

  4. In contrast, Eesley and Lenox (2006) account to the perception of the general public and use the term ‘request legitimacy’.

  5. ‘Derivative stakeholders’ are defined by Phillips as “groups whose actions and claims must be accounted for by managers due to their potential effects upon the organization and its normative stakeholders” (2003, p. 31).

  6. Freeman et al. (1983), referring to an attribute of new organizations first proposed by Stinchcombe (1965), define liability of newness as “a greater risk of failure than older organizations, because they depend on the cooperation of strangers, have low levels of legitimacy, and are unable to compete effectively against established organizations” (p. 692).

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Acknowledgments

The first versions of this paper were written for Barry Mitnick's seminar Managing Environments at the University of Pittsburgh. I thank Barry for many reviews of the early versions, and Adam Lindgreen and Leonardo Becchetti for thoughtful suggestions and comments. I am also thankful to Jean Logsdon, Jim Mattingly, Donna Wood, Brad Agle, and Ron Mitchell for comments and support.

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  1. College of Business Administration, University of Northern Iowa, 246 Curris Building, Cedar Falls, IA, 50613, USA

    Adele Santana

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Santana, A. Three Elements of Stakeholder Legitimacy. J Bus Ethics 105, 257–265 (2012). https://doi.org/10.1007/s10551-011-0966-y

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