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In political science, legitimacy is the right and acceptance of an authority, usually a governing law or a regime. This paper argues that these theoretical perspectives may provide greater insights into managerial motivation for disclosure if they are linked more explicitly to Legitimacy theory, on the other hand, suggests voluntary disclosures are part of a process of legitimation. Legitimacy Theory specifies a social contract between the organisation and society. The accounting theories are stakeholder theory, social contract theory, legitimacy theory and signalling theory. Copyright © 1988-2020, IGI Global - All Rights Reserved, Additionally, Enjoy an Additional 5% Pre-Publication Discount on all Forthcoming Reference Books, Learn more in: Analysing the State of Sector-Specific CSR Reporting: Evidence From Pakistan, Learn more in: Corporate Social Responsibility and Financial Information: Theoretical Approaches and Recent Developments, Learn more in: Social Responsibility Reporting in Higher Education Institutions: A Systematic Literature Review, Learn more in: Sustainability Reporting in Transitional Economies. Legitimacy theory posits that for a corporation to continue to exist it must act in congruence with society's values and norms Legitimacy theory is based on the idea that a social contract exists between business and society. Critical race theory offers a way of seeing the world that helps people recognize the effects of historical racism in modern American life. Global Perspectives on Achieving Success in... Servant Leadership: Research and Practice. The main assumption of legitimacy theory is fulfilling the organization’s social contract, which enables the recognition of its objectives. 5 A theoretical stance that predicts companies’ behaviour towards managing and maintain the perspectives of key stakeholders though company disclosure. An authority viewed as legitimate often has the right and justification to exercise power. “The legitimacy of the modern state is founded predominantly on legal authority that is commitment to a code of legal regulations”. If legitimacy is interpreted descriptively, it refers topeople’s beliefs about political authority and, sometimes,political obligations. Legitimacy Theory As explained earlier, stakeholders are categorized according to their power, urgency and legitimacy. which democracy and legitimacy of power are in crisis, it is essential to know the meaning on the concept of legitimacy, which is best explained in the social contract theory. The first meaning refers to political philosophy and deals with questions … Shareholder Theory Economist Milton Friedman, whose work shaped much of 20th-century corporate America, was a believer in the free-market system and no government intervention. Normally the legitimacy theory is used to explain social and environmental reports disclosure. Legitimacy Theory: A Case Study For an organization to survive, it must have a clear understanding and ability to negotiate the numerous environmental factors that affect its operations. Legitimacy theory as an explanation for corporate environmental disclosures. Since symbols influence citizens in ways that reinforce the legitimacy of courts, the connection between institutional attitudes and acquiescence posited by Legitimacy Theory is both supported and explained. It highlights the extent to which corporate social and environmental disclosures are influenced by the boundaries established by the society in order to be appreciated and avoid being penalized by the community in which the company operates. This occurs when the authority of the state assumes power through democratic or constitutional means. O'Donovan, Gary An aspect of legitimacy theory, investigated in this research, is that in order to continue to exist a corporation will act to remain legitimate in the eyes of whom it considers is able to affect its legitimacy. legitimacy theory. Patten Further, this study explored changing disclosure levels in the context of a number of categories of social and environmental disclosures developed later in this paper. All rulers have an explanation for their superiority, an explanation that is commonly accepted but during a crisis can be questioned. Stakeholder Theory vs. Legitimacy theory explained the relationship between corporate social disclosure and communities as company are bound by the social contract to meet the communities’ expectations and … One way corporations act to remain legitimate to these According to Weber, beliefs in the legitimacy of a political system go beyond philosophy and they directly contribute to the state system stability and authority. The Legitimacy theory, according to Ness & Mirza (1991), argues that the voluntary disclosure of interpersonal responsibility information can be perceived as a strategy to lessen political costs. Institutional theorists contend that an organization’s legitimacy explains survival. The main aim of this thesis was to refine and develop legitimacy theory as an explanation for voluntary corporate envirormiental disclosures in the armual report. His theory of political liberalism delineates the legitimate use of political power in a democracy, and envisions how civic unity might endure despite … According to Weber, that apolitical regime is legitimate means that its participants havecertain beliefs or faith (“Legitimitätsglaube”) inregard to it: “the basis of every system of authority, andcorrespondingly of ever… The word legitimacy can be interpreted in either a normative way or a “positive” (see positivism) way. In order to best describe and analyze the theory of social contract and its relevance in the world we are living, we Contribution Racial and ethnic minority perceptions that the police lack lawfulness and legitimacy, based largely on their interactions with the police, can lead to distrust of the police. This belief helped shape his shareholder theory of capitalism: that a company’s sole responsibility is to make money for its shareholders. In his sociology, Max Weber put forward a veryinfluential account of legitimacy that excludes any recourse tonormative criteria (Mommsen 1989: 20). Legitimacy theory defined that organizations are bounded by social contract in which organization agrees to do social activities and in return they get authority to meet their objectives without any interference. Number of times cited according to CrossRef: 33. (Dowling & Pfeffer, 1975). Whereas authority denotes a specific position in an established government, the term legitimacy denotes a system of government—wherein government denotes "sphere of influence". LEGITIMACY THEORY Legitimacy theory Legitimacy theory Introduction Legitimacy is referred to a common assumption or perception which is related to action of a business or entity as proper, appropriate desirable under socially developed system of values, norms, definitions and beliefs (Suchman, 1995, p. … Second, it demonstrates that the centrality of political legitimacy presumes an understanding and analysis of politics as community. These theories were explained and discussed from a corporate social responsibility point of view, this was done by identifying the conditions that best suits these theories. Legitimacy may be based on law, constitution or statute. The role of legitimacy theory in explaining managers’ decisions is then discussed and it is emphasised that legitimacy theory, as it is currently used, must still be considered to be a relatively under‐developed theory of managerial behaviour. 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