ESIC Market

Esic Market Economics and Business Journal Vol. 53. n.º 1. January-April 2022. e13

Dimensions of organizational legitimacy as a function of gender and consumer status

Virginia Gordo-Molina*

ORCID: https://orcid.org/0000-0003-0644-6751

virginiagm2017@gmail.com

Universidad Rey Juan Carlos

Paseo de los Artilleros S/N, 28032. Madrid, Spain

RCU. Escorial - María Cristina

Paseo de los Alamillos, nº 2. 28200. San Lorenzo de El Escorial, Madrid, Spain

Francisco Diez-Martin

ORCID: https://orcid.org/0000-0002-9888-833X

francisco.diez@urjc.es

Universidad Rey Juan Carlos

Paseo de los Artilleros S/N, 28032. Madrid, Spain

Received: 08-04-2021; Accepted: 23-06-2021; Published: 14-12-2021

Abstract

Objetive: The aim of this paper is to find out which criteria or types are most important for assessing the legitimacy of organizations in terms of gender and status.

Methodology: An online survey was conducted for residents in Spain aged 18 and over. The questionnaire was anonymous and 408 responses were obtained to form the sample. The data obtained was analyzed using the ANOVA statistical method.

Results: The most important organizational legitimacy criteria are regulative, cognitive and moral legitimacy. Differences in types of legitimacy are observed between genders and status. Women attach greater importance to moral, emotional and managerial legitimacy than men. People with medium status give more importance to technical legitimacy.

Limitations: Customer perceptions were analyzed, without taking into account other stakeholders for the organizations, such as management teams and company employees.

Practical implications: The results of this research enable employers and management teams to understand what kind of legitimacy they need to achieve in order to gain greater acceptance from their stakeholders. For academics, this research provides evidence on the configuration of legitimization criteria when assessing the legitimacy of organizations by consumers.

Keywords: Legitimacy; Legitimacy dimensions; stakeholders; companies; entrepreneurs.

JEL Codes: M1. M2. M3

在消费者性别和地位下的不同组织合法性维度

文章摘要

研究目标： 此研究的目的是了解哪些标准有关性别和地位对于评估组织的合法性更为重要。

分析方法： 对在西班牙18岁以上的居民进行了在线问卷调查。问卷为匿名问卷，共获得构成样本的408份回复。对所得数据进行方差分析。

研究结论： 评估合法性的最相关标准是监管、认知和道德。在性别和地位上的差异会构成不同合法性类型。女子比男子更重视道德、情感和管理的合法性。中等地位的人更重视技术合法性。

研究局限： 此研究对客户的看法进行了分析，没有考虑到其他利益相关者，例如公司的管理团队和员工。

实际应用： 此研究的结果使企业家和管理团队知道他们必须达到什么样的合法性才能获得客户更大的接受度。对于专家们来说，这项研究为消费者评估组织合法性时的标准提供了证据。

关键词： 合法性; 合法性维度; 利益相关者; 企业; 企业家.

JEL 分类号: M1. M2. M3

1. Introduction

In today’s business world where competitiveness is high and resources are scarce, organizations struggle to obtain the greatest economic-financial, human, etc. resources that allow their survival (Kawai et al., 2020; Song et al., 2021; Yang et al., 2020). Companies must achieve acceptance by stakeholders, such as customers, suppliers, employees, investors, media, the state and society in general, in order to survive. “Organizational legitimacy is the perceived fit of an organization to a social system in terms of rules, values, norms, and definitions” (Deephouse et al., 2017, p. 32).

Legitimacy has received significant attention from researchers in Institutional Theory (Meyer y Rowan, 1977; Oliver, 1991; Suchman, 1995) for being a crucial element for firm survival and growth. In particular, many studies have been conducted on what legitimacy is (e.g., Deephouse et al., 2017; Deephouse y Suchman, 2008; Suchman, 1995) and its differences with reputation and status (Bitektine, 2011). Also, there are many studies on the importance of gaining legitimacy a firm: legitimacy enables a firm’s market access, increases its survival and contributes to financial performance or access to resources (e.g., Ruef y Scott, 1998; Walker et al., 2014).

Companies can gain legitimacy through multiple pathways. Through opinion management with the use of rhetoric, arguments, analogies or metaphors (e.g., Aldrich y Fiol, 1994; Cornelissen y Clarke, 2010; Garud et al., 2014; van Werven et al., 2015), through the use of symbolic actions such as conveying the personal credibility of the entrepreneur and the organization (Zott y Huy, 2007), through the adaptation of organizational identity to the changing expectations of their audiences (Fisher et al., 2016); also, through the implementation of strategies of conformity, differentiation, manipulation of the environment or optimal differentiation (e.g., McKnight y Zietsma, 2018; Zimmerman y Zeitz, 2002) and the actions or strategies that companies must carry out to gain organizational legitimacy have been analyzed (Gordo-Molina y Diez-Martin, 2020).

The analysis of legitimacy is usually carried out through its dimensions. For example, cognitive legitimacy and sociopolitical legitimacy (Aldrich y Fiol, 1994); Scott (1995) divides sociopolitical legitimacy into regulative, cognitive and normative legitimacy; pragmatic, moral and cognitive legitimacy (Suchman, 1995); media legitimacy (Deephouse, 1996); instrumental legitimacy, relational legitimacy and moral legitimacy (Tost, 2011); Díez-de-Castro et al. (2018) reduce from 37 types of legitimacy existing in the scientific literature to eight: cognitive, regulative, moral, pragmatic, managerial, technical, emotional and industrial legitimacy.

However, there are few studies that analyze which dimension of legitimacy is more important than the others and whether there are differences by gender and status. Since Suchman (1995) brought this to light, this has been one of the less studied questions in the literature. How regulative, practical, moral and cognitive legitimacy influence innovation has been analyzed (Nowacki y Monk, 2020). It has been shown that pragmatic, moral, cognitive and regulative legitimacy in natural resource companies is repeatedly reassessed by stakeholders (Rahman et al., 2019), but it is unknown which of the types of legitimacy is more important. Nagy et al., (2017) indicates that cognitive, managerial and technical legitimacy are the most important for startups to reach the threshold of legitimacy, but this made from the point of view of the entrepreneur, without taking into account other important stakeholders such as customers. Randrianasolo y Arnold (2020) point out the need to pay more attention to the role of the consumer in conferring legitimacy to a firm. It has been examined how regulatory and moral legitimacy influence the dismissal of female executives (Zhang y Yang, 2021), but it remains unknown whether there are differences in legitimacy between men and women or between people belonging to different statuses. The aim of this paper is precisely to find out which criteria are more important in assessing the legitimacy of organizations according to gender and status, by means of consumers’ perceptions.

The paper is organized as follows: first, the theory and hypotheses are presented; in the next section, methodology is presented; then, the results are shown; and, finally, the discussion and conclusion, indicating the limitations of the present work, as well as proposals for future research.

2. Theory and hypotheses

The research question posed is which legitimacy criteria (managerial, technical, pragmatic, regulative, emotional, moral and cognitive) are most important for evaluating a company in terms of socio- demographic variables (gender and status). We consider how gender and status variables influence the types of legitimacy. For example, whether men evaluate the legitimacy of companies differently from women. To this end, this study analyzes the demographic variables of the stakeholders: gender (male/female) and status (job occupation, studies, monthly income and social class to which they belong). Table 1 shows the dimensions of legitimacy analyzed in this study based on Díez-Martín et al. (2021).

Any type of ventures, be they start-ups (Kawai et al., 2020), SMEs (Huang-Horowitz y Evans, 2020), large firms, national or international (e.g. Bolzani et al., 2020; Fenglu, 2009), private or public (e.g. Ren, 2019), wishing to survive in the business world should obtain some or all of the possible types of organizational legitimacy (Table 1), regardless of the sector in which it operates and the legal form it adopts, corporation, limited company, non-profit, etc. (e.g. Carré et al., 2021). An organization can have more than one type of legitimacy (Bitektine, 2011).

“Undertaking legitimacy-building activities reduces the risk of dissolution of the enterprise during its first 30 months of life and building legitimacy with external stakeholders is an important precursor to other organizational activities” (Delmar y Shane, 2004, p. 408). Legitimate organizations have largely unquestioned freedom from stakeholders in exercising and carrying out their activities (Knoke, 1985). Acquired organizational legitimacy can be lost. For example, Chen et al. (2020) show that a crisis in an industrial sector caused by corporate ethical misconduct affects confidence in the sector through the consumer’s judgment of legitimacy. Therefore, legitimacy, business ethics and trust are related. If a company engages in unethical behavior, consumers lose trust in the company (Davies y Olmedo-Cifuentes, 2016).

Not all audiences that grant legitimacy to an organization are equally important (Bitektine, 2011). Therefore, it is necessary to know whether audiences differ according to gender and status in relation to types of legitimacy. Added to this, audience expectations change as a company grows or changes stages in its organizational life cycle (Fisher et al., 2016; Tracey et al., 2018).

Organizational legitimacy can be measured at two levels: through the opinion of individuals (micro level) or through the opinion of society at large (macro level) (Bitektine y Haack, 2015). To know the opinion of individuals, surveys are used (e.g. Chung et al., 2016). To know the opinion of society in general, perceptions or data obtained are used, for example, from news published in the media (López-Balboa et al., 2021).

In relation to gender, previous literature has reported different attitudes and behaviors between men and women. Gender is a variable that has been analyzed in different fields such as consumption and consumer behavior; in psychology; in anatomy (the brain); in labor matters (access to the labor market; the number of female executives and their management that differs from that of men; the search for gender equality; etc.). For example, it has been shown that, in online commerce, women’s satisfaction loyalty is higher than that of male customers and that women’s satisfaction is based on quality reliability, while men’s is based on responsiveness being less patient than women (Wang y Kim, 2019).

In addition, men and women have different behaviors. Women are more empathetic (Morrell y Jayawardhena, 2010), more ethical, sensitive, emotional and less competitive than men (McCabe et al., 2006) Furthermore, it has been shown that women, both being consumers and managers, care more about the environment, social problems, in short, Corporate Social Responsibility or CSR activities (e.g. Eagly et al., 2004; Fernandez-Feijoo et al., 2014; Luchs y Mooradian, 2012). “Women show significantly stronger feelings toward CSR issues than men on all issues except the environment” (Jones et al., 2017, p. 138). Women are also more likely to engage in volunteer activities or be members of such organizations, and rates of charitable giving are higher than men (Rooney et al., 2005; Themudo, 2009).

There are few studies showing that being male or female influences legitimacy judgments and their dimensions. It has been shown that female managers experience a greater decrease in legitimacy as a consequence of unfair situations than male managers (Varty et al., 2020). Arshed et al. (2019) have examined how and when stakeholders evaluate and influence the legitimacy of women’s business policies as opposed to men’s, proposing two processes: legitimacy repair cycle and a delegitimization loop. It has also been studied how CEOs (men and women) employ an empathetic and other-oriented attitude, emphasizing shared power and collective goals (relational femininity) to gain stakeholder support (Byrne et al., 2020).

From the above, it is reasonable to think that gender is a crucial variable when people make legitimacy judgments in evaluating an organization. It seems that there may be differences between genders when evaluating an organization’s performance. Therefore, it is important to take into account the gender variable in this study. In view of the above, the following hypothesis is put forward:

H1: There are differences in evaluation according to gender when assessing the legitimacy of organizations

The status variable has been studied mainly in the fields of sociology and psychology. For example, socioeconomic status has been studied in the effect and legitimacy of income inequality (Buchel et al., 2021). This paper examines how status and legitimacy are related. The relationship between legitimacy and status shows contradictory empirical results in the literature, creating the need to be investigated to have more knowledge of how it influences legitimacy. There are studies that indicate that people with low social status are more supportive and accepting of the system compared to people with higher social status (van der Toorn et al., 2015). Others have shown the opposite of this situation, people with low social status have shown less acceptance of the system (e.g., Yang et al., 2016; Zimmerman y Reyna, 2013).

Brandt et al. (2020) state that “people with higher status see the social system as more legitimate than those with lower status, but there is variation across individuals and countries” (Brandt et al., 2020, p. 923). Li et al. (2020) point out that depending on the objectivity or subjectivity of people’s lower socioeconomic status they relate differently to legitimacy. People with lower subjective socioeconomic status (which is related to maintaining status) increase system justification, while those with lower objective socioeconomic status (which is related to access to information about social reality and criticisms of the system) have lower system justification. Social status negatively influences the adoption of new practices in companies (Chen et al., 2016). Status has also been analyzed when making decisions regarding a partner for the firm. Preference for a high status partner has been observed, which is not only driven by the market, but is because of the demand for legitimacy from the organization’s own participants (Altura, 2020). Low- status employees are more likely to accept a business merger versus high-status employees (Terry y O’Brien, 2001). Therefore, the following hypothesis is put forward:

H2: There are differences in evaluation according to social status when assessing the legitimacy of organizations

3. Methodology

3.1. Data

Legitimacy can be measured, “based on perceptions or on data, exploring individual dimensions or in an aggregate manner” (Díez-Martín et al., 2021, p. 7). “As a general rule, perceptions should be considered the most appropriate approach. Perceptions are measured by asking stakeholders” (Díez-Martín et al., 2021, p. 8). Chung et al. (2016) also relies on consumer perceptions and indicates that there is little empirical research that has attempted to measure legitimacy.

In this study, a completely anonymous online questionnaire was used to collect consumers’ perceptions. The participants of the questionnaire were users residing in Spain over 18 years of age. A total of 408 questionnaire responses were obtained from June 24. 2020 to September 29. 2020.

Table 2 shows the profile of respondents by gender and status. A total of 60.8% of respondents were women compared to 39.2% men. In relation to social status, low status was defined as people with household incomes of less than 1.600 euros per month; medium status was defined as people with household incomes between 1.600 and 4.000 euros per month; and finally, high status was defined as people with incomes of more than 4.000 euros per month.

The questionnaire consists of seven items related to the interviewee’s situation, taking into account socio-demographic variables such as year of birth, gender, province, occupation, education, income and social class to which he/she belonged; and seven items related to the importance of certain dimensions of legitimacy and characteristics of the company for the evaluators, such as trust in the company (cognitive legitimacy), that the company acts morally (moral legitimacy), that it generates benefits and value for stakeholders (pragmatic legitimacy), that it acts with the best professionals, (technical legitimacy), that it is identified with the company considering it part of “my people” (emotional legitimacy), that the management team possesses high management capabilities (managerial legitimacy) and that the company complies with the laws and respects the rules (regulative legitimacy), responding on a Likert scale of 1 to 7 points, with 1 being “not very important” and 7 being “very important”.

3.2. Data Analysis

Tables 3 and 4 show the validity and reliability data of the questionnaire. A Cronbach’s Alpha equal to 0.804 was obtained, suggesting a reliable measurement scale.

ANOVA (Analysis of Variance) with SPSS is used for data analysis. This is a statistical analysis technique used to compare the means of two or more groups determined by an independent variable. Prior checks of normality, homoscedasticity, independence and randomness of the samples were carried out. The statistics, homogeneity of variances test, ANOVA table and robust tests of equality of means were obtained. Analysis of variances has been used by other researchers (Dagiliene et al., 2020; Prado-Román et al., 2018; Richter, 2011).

4. Results

Table 5 shows the response percentages for each of the legitimacy dimensions, without distinguishing between gender and status, with 1 being “not very important” and 7 being “very important”. Regardless of gender and consumer status, the most important organizational legitimacy dimensions are regulative, cognitive and moral legitimacy.

Table 6 shows the ranking of the most important type of legitimacy by gender, obtained from the averages of each of the groups, men and women, in each type of legitimacy. For both men and women, the most important type of legitimacy is regulative legitimacy. For women, cognitive legitimacy is equally important as moral legitimacy. For men, the three least important dimensions of legitimacy would be, in this order: pragmatic legitimacy, followed by managerial legitimacy and, last, emotional legitimacy. Our results show that for women, managerial, emotional, moral and regulative legitimacy are more important than for men. In contrast, men give greater importance in a ranking to the pragmatic legitimacy dimension, although hardly any differences are observed between men and women in relation to the score it receives.

Figure 1 shows the result of the averages obtained between men and women in relation to the total average between the two groups.

Figure 1. Graphical overview of types of legitimacy by gender

Source: Prepared by the authors.

Table 7 shows the data obtained in ANOVA to determine whether or not there are differences according to gender. The value of the “F” statistic is significantly different from 1, therefore, the null hypothesis of equality of means is rejected for all types of legitimacy, except for pragmatic legitimacy. If in the Sig column or the test value is statistically significant (Sig < 0.05) at a confidence level of 95%, the null hypothesis that men and women behave in the same way with respect to the population mean is rejected. There are no significant differences between men and women in relation to the pragmatic, cognitive and technical evaluation criteria. However, we did find differences between men and women in relation to moral, emotional, managerial and regulative legitimacy. Of these, the greatest differences are found in managerial legitimacy. Managerial legitimacy is more important for women than for men.

Table 8 shows the ranking of the types of legitimacy according to social status. The ranking was obtained from the means of each of the groups, low, medium and high status, in each of the questions answered in relation to the type of legitimacy most important to them. Figure 2 shows graphically the means obtained in each of the statuses and the total mean between groups. For people with a high status, cognitive legitimacy is more important than for people with another social status. Moral and technical legitimacy is more important for people with medium status relative to the other two status groups. Managerial legitimacy is more important for people of low and medium status than for people of high status, although the difference is small. For low status people emotional legitimacy is more important compared to the other social statuses. No differences are found in relation to pragmatic and regulative legitimacy as a function of status.

Figure 2. Level of relevance of the type of legitimacy by status

Source: Prepared by the authors.

Table 9 shows the data obtained in ANOVA to determine whether or not there are differences according to status (low, medium and high). As indicated above, the value of the “F” statistic is significantly different from 1, therefore, the null hypothesis of equality of means is rejected. Technical legitimacy (Sig < 0.05) is the only type of legitimacy in which there are significant differences between people belonging to different statuses.

5. Discussion

This research analyzes which are the priority evaluation criteria for consumers when assessing the legitimacy of companies. Throughout the literature, it has been observed that the most studied dimensions of legitimacy have been pragmatic, cognitive and moral. For example, Saenz (2019) reports that among the factors for a mining company to obtain a social license to operate are these three dimensions. However, in our analysis the most important organizational legitimacy dimensions are regulative, cognitive and moral. Our results are consistent with those considered by other authors (Chung et al., 2016; Ruef y Scott, 1998; W. A. Scott, 1995; Zimmerman y Zeitz, 2002). Companies should focus on performing activities related to complying with laws and respecting norms; developing trust with stakeholders and being trustworthy; and acting ethically and morally to gain legitimacy from their audiences, irrespective of gender and the social status of the audiences.

These results are consistent with other consumer behavior research. For example, Randrianasolo y Arnold (2020) show that moral and cognitive legitimacy influence consumers to buy products from a company.

Also, it has been analyzed whether or not there are differences according to the gender of consumers when it comes to granting legitimacy to companies. Firstly, women attach greater importance to moral, emotional and managerial legitimacy than men. Secondly, no significant differences have been found in relation to pragmatic legitimacy between men and women, except for the place it occupies in a ranking, giving it a better position in a ranking made by men (5th place out of 7 dimensions analyzed) compared to women who would put it in last place. Although both genders rank cognitive legitimacy in second place out of seven dimensions analyzed, but surprisingly cognitive legitimacy receives a slightly better score by women than by men.

Zheng et al. (2014) indicate that companies’ commitment to Corporate Social Responsibility and ethical business codes grant greater corporate legitimacy. Knowing that a company’s main consumer is a woman implies, according to the results obtained, that the company should act giving greater importance to moral legitimacy and, therefore, show a commitment to business ethics.

Finally, we analyzed the existence of significant differences in the evaluation of legitimacy according to status. Technical legitimacy is the most important for people with an average status in relation to people belonging to other statuses, although in a ranking of types of legitimacy all status levels would place it in fourth place out of seven types of legitimacy. No differences were found between people with different statuses in relation to regulative and pragmatic legitimacy.

Other studies have indicated that people with low social status are more accepting of the system than other social statuses (e.g. Li et al., 2020; van der Toorn et al., 2015). The reason that may explain these differences is that low-status clients attach more importance to emotional legitimacy than other social status groups. Therefore, low-status customers identify more with the company, considering it as one of “mine”. However, no significant differences were found between customers of different statuses, except for technical legitimacy and small differences in moral and emotional legitimacy.

Entrepreneurs are advised to hire the best professionals, apply the best technology and innovation they can, as well as to act morally when targeting medium-status clients.

Results differ from the study by Nagy et al. (2017) where it indicates that new companies must perform activities related to cognitive, managerial and technical legitimacy to reach the threshold of legitimacy and to technical legitimacy in post-threshold activities. Firms that have succeeded in reaching legitimacy must perform activities aimed at making their performances in the best possible way, with the best professionals, technology and work processes. Specifically, Nagy et al. (2017) indicates that the activities to be performed by the organization are formal job descriptions for its employees, developing a formal information technology system, and having employee manuals and instructions for completing the task. However, it is recommended that employers, based on the gender and social status of their audiences, tailor activities aimed at achieving or maintaining legitimacy. This important difference we found between the results obtained in the present study and that of Nagy et al. (2017) is because of the type of view of the analysis of the results. In this research, the perceptions of customers are analyzed, while the study by Nagy et al. (2017) is conducted from the point of view of the entrepreneur and/or his management team.

6. Conclusion, limitations and future research

A ranking of the most important legitimacy criteria for the consumer was obtained. A total of 68.38% rated regulatory legitimacy as “very important”, 59.07% rated cognitive legitimacy and 58.33% rated moral legitimacy as “very important”. More significant differences were observed by gender than by social status. Managerial legitimacy obtained an average of 6.03 for women compared to an average of 5.52 for men. Technical legitimacy obtained a mean of 6.35 for consumers belonging to medium social status versus high social status with a mean of 6.04 and low social status with a mean of 6.03. Entrepreneurs are advised to adapt their actions to their target audience in order to obtain resources and other benefits for their survival and/or growth.

In this study, company customers (408 respondents) were analyzed as a relevant stakeholder group. However, not all stakeholders have been taken into account. The management teams and employees of these companies could be studied. New researchers could measure the legitimacy of companies in a particular sector by incorporating all relevant stakeholders or, at least, those not taken into account in this study. They could also measure the legitimacy of companies as perceived by customers, but not on the basis of perceptions, but on the basis of data.

Future researchers could carry out a longitudinal study of the present work in order to know whether or not there are differences in the legitimacy criteria obtained. If, over the years, there are differences in the legitimacy criteria, it is important to know the reason for this change in expectation; for example, if it is due to the age of the consumer.

Declaration of conflicts of interest

The authors declare that they have no conflicts of interest in relation to the research, authorship or publication of this work.

Funding

The authors have not received financial support for research, authorship and/or publication of this work.

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