Managing Organizational Legitimacy: Communication Strategies for Organizations in Crisis.

Crisis situations can cause internal and external stakeholders to question the legitimacy of organizations. When faced with a crisis, organizations are compelled to communicate strategically with stakeholders to manage legitimacy. This study synthesizes literature on organizational legitimacy, crisis management, and niche-width theory to provide an investigation of the effects of crisis-response strategies on perceptions of organizational legitimacy. Using a quasi-experimental, 2 X 2 X 4 design, the study tests the hypotheses that (a) organizations that produce consistent crisis responses across stakeholders will enhance their legitimacy, while organizations that produce inconsistent crisis responses will reduce theirs; (b) generalist organizations are perceived as being more legitimate than specialist organizations; and (c) when combined, niche-width and crisis-response consistency will produce differing effects on organizational legitimacy. Conclusions drawn from the investigation support these hypotheses.

Keywords: crisis management, image management, organizational legitimacy, niche-width theory

Organizations share an interdependent relationship with their internal and external stakeholders; indeed, they rely on one another for survival. Perhaps the most obvious interdependency results from the typical organization-stakeholder transactions, where, for example, goods and services are provided by businesses and paid for by consumers. There are other relationships that are less obvious but no less important for organizational survival. One such relationship involves the development of organizational legitimacy. "Legitimacy is a generalized perception or assumption that the actions of an entity are desirable, or appropriate within some socially constructed system of norms, values, beliefs, and definitions" (Suchman, 1995, p. 574). Illegitimacy occurs when an organization's actions "are seen as undesirable or as violating societal norms" (Patterson & Watkins-Allen, 1997, p. 293). Legitimacy management is a cultural process whereby organizations attempt to gain, maintain, and in some cases regain stakehold er support for organizational actions. It therefore depends on communication with the organization's audiences for its success (Suchman, 1995).

Organizations may experience a "crisis of legitimacy" (Seeger, 1986, p. 148) when untoward results, such as loss of human life, can be attributed to organizational (in)action. During crisis situations organizations can experience a loss of legitimacy if their actions no longer conform to what is considered to be appropriate organizational behavior (Suchman, 1995). Three elements are common to most definitions of crisis: (a) a threat to the organization, (b) the element of surprise, and (c) a short decision time (Seeger, Sellnow, & Ulmer, 1998). Barton (1993), for example, defines organizational crisis as "a major unpredictable event that has potentially negative results" (p. 2; cf. Barton, 2001). Weick (1988) argues that crises are "low probability/high consequence events" (p. 305) that threaten the organization and its goals. Pearson and Clair (1998) state that "an organizational crisis is a low-probability, high-impact event that threatens the viability of the organization and is characterized by ambiguity of cause, effect, and means of resolution, as well as by a belief that decisions must be made swiftly" (p. 60).

Despite the growing literature on crisis management and the well-developed research on organizational legitimacy, the relationship between crisis and legitimacy is unclear. Seeger et al. (1998) state that "substantial research will be required before a clear relationship is established between legitimacy and successful crisis management" (p. 258). The current investigation analyzes the relationship between legitimacy and crisis management. The analysis synthesizes three areas of theory and research to do so: organizational legitimacy, crisis management, and niche-width theory. The work on crisis management and organizational legitimacy is combined to examine the organizational communication processes that occur during crises of legitimacy. Niche-width theory is also included in order to investigate any effects that organizational structure may have on legitimacy. Niche-width theory holds that organizations strategically target particular segments of the market, and that this segmentation results in generalis t and specialist organizations (Hannan & Freeman, 1989).

Three research questions derive from these literatures and guide the current investigation. First, what effects does crisis management strategy have on perceptions of organizational legitimacy? Second, do specialist and generalist organizations experience different levels of organizational legitimacy? And finally, are specialist and generalist organizations in crisis situations perceived differently regarding organizational legitimacy?

These questions are empirically tested in a quasi-experimental, multiple message design.

Literature Review and Hypotheses

Three bodies of work were synthesized to produce the hypotheses that guided this investigation: organizational legitimacy, crisis management, and niche-width theory.

Organizational Legitimacy

Most organizational legitimacy research falls into one of two categories-strategic or institutional (Dutton & Dukerich, 1991; Suchman, 1995). The strategic approach emphasizes the ways that organizations strategically manipulate symbols, through communication behavior, to achieve legitimacy. Exemplifying the strategic approach, Dowling and Pfeffer (1975) argue that "the actions that can be taken to legitimate an organization" (p. 122) are of paramount importance. The institutional approach, on the other hand, focuses attention on the cultural environment in which organizations exist and on the pressure that this environment exerts on organizations to engage in expected, normative behaviors. Legitimacy in this tradition is defined as "the degree of cultural support for an organization" (Meyer & Scott, 1983, p. 201), where culture refers to the shared system of beliefs held by society in general and by organizational stakeholders in particular. The strategic approach views legitimacy as a resource, and the ins titutional approach views legitimacy as a constraint.

Rather than viewing strategic and institutional approaches as mutually exclusive, it may be fruitful to examine both the ways that organizations strategically attempt to manage legitimacy and the ways that cultural expectations place institutionalized constraints on organizational behavior. As Suchman (1995) states,

Because real-world organizations face both strategic operational challenges and institutional constitutive pressures, it is important to incorporate this duality into a larger picture that highlights both the ways in which legitimacy acts like a manipulable resource and the ways in which it acts like a taken-for-granted belief system. (p. 577)

When legitimacy is conceptualized as the interaction between organizational strategy and stakeholder expectations, then legitimacy management is best viewed as a dialogic process and not a monologic organizational activity (Ginzel, Kramer, & Sutton, 1993). A dialogic approach to legitimacy management requires ongoing communication between the organization and its stakeholders, not one-way transmission of information from the organization to stakeholders. It involves strategic communications targeted toward specific organizational audiences, and it encourages participation of organizational stakeholders. It involves understanding that legitimacy is not something that can be claimed by organizations, but is instead something that is given by stakeholders. Legitimacy in this view is the stakeholder perception that an organization is good and that it has a right to continue its activities--a right granted the organization by its stakeholders (Bedeian, 1989). Legitimacy is managed successfully when organizational actions are perceived as being consistent with stakeholder expectations.

This approach is consistent with Carey's (1989) notion of ritualistic communication. Carey argues that there are two alternative views of communication that have been predominant, the transmission view and the ritual view. The transmission view is the notion that communication is a linear activity, suggesting a passive receiver. The ritual view, on the other hand, is the notion that communication is a two-way process, suggesting an active receiver involved in the creation of shared meaning. Carey's distinction between transmission and ritual views of communication is very much like Botan's (1997) distinction between monologic and dialogic communication, where transmission equals monologue and ritual equals dialogue. Botan states that "a person employing monologue seeks to command, coerce, manipulate, conquer, dazzle, deceive, or exploit. . . . Audience feedback is used only to further the communicator's purpose" (p. 189). Dialogic communication, on the other hand, is "characterized by a relationship in which both parties have genuine concern for each other, rather than merely seeking to fulfill their own needs" (p. 190). The key difference between a monologic/transmission view of communication and a dialogic/ritualistic view of communication is that the former treats receivers as a means to an end, while the latter treats receivers as an end in themselves. The dialogic/ritualistic view of communication emphasizes the interdependent relationship between organizations and stakeholders and is a more ethical perspective for communication behavior.