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27 / 63 Legitimacy Legitimacy can be defined as a generalized perception or assumption that the actions of an entity are

desirable, proper or appropriate within some socially constructed system of norms, values, beliefs and definitions.177 Being perceived as legitimate is considered to be vital to organizations and is therefore an important motivation of corporate CSR. Legitimacy is based on perception; therefore an organization must prove its legitimacy. Legitimacy management is thus focused on communication. In institutional theory, the quest for legitimacy can be explained by isomorphism; companies become similar because of cultural influences in the business world and from society at large. Isomorphism can be normative, coerced or mimetic.178 Coercive isomorphism is said to occur when other organizations or society drive the organization to adopt certain norms. CSR can be said to be a process in which companies engage in a dialogue with all their stakeholders.179 These stakeholders create legitimacy for the organization, which gives them the right to exist and to survive; i.e. gives them their license to operate. Two vital criteria for this according to Carroll180 are the stakeholders' legitimacy and their power. Therefore, it is most important for an organization to find out who their most important stakeholders are. The possible stakeholders of a company have previously been presented in Figure 1. Sustainability This term is defined by the World Commission on Environment and Development as “meeting the

needs of the present without compromising the ability of future generations to meet their own needs”.181 It implies that companies should operate in ways that secure long-term economic performance by avoiding short-term behavior that is socially detrimental or environmentally wasteful.182 This principle is seen as working best for issues, which coincide with a company’s economic or regulatory interests. A pragmatic approach to sustainability is that it should be a custom- made process aligned with the organization’s strategy.183

5.1.2 Business­oriented motivations for CSR: In this section we present business-oriented motivations for a company to perform CSR activities, notably brand and effects on consumer preference, risk management, control, CSR as attracting and retaining employees and total quality management. Brand & effects on consumer preference A significant motivation for CSR can be considered its effects on brand and consumer preference. The

definition of a brand is “a name, term, sign, symbol or design, or a combination of these, intended to identify the goods or services of one seller of a group of sellers and to differentiate them from those of competitors”.184 Branding is perceived as an asset or long-term investment that is expressed as goodwill, loyalty, reputation, a guarantee for present and future consumer preference. If the primary consumer expectations of quality, usefulness and timeliness of a product are met, it is argued that

177 178 179 Suchman, M.C. (1995). Powell, P. & DiMaggio, W. (1983). Stakeholder theory argues that a company needs to address other parties than the traditional shareholder perspective. Stakeholders instead consist of the different groups that are affected by a company’s actions and usually consist of consumers, NGOs, employees, communities, suppliers, investors, political groups, governments and trade associations (Freeman, 1984). Carroll, A. (1991). Porter, M. & Kramer, M. (2006). Porter, M. & Kramer, M. (2006). Garriga, E. & Melé, D. (2004). Keller, K.L. (1998). 180 181 182 183 184


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