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Organizational strategies in the context of legitimacy loss: Radical versus gradual responses to disclosed corruption


Schembera, Stefan; Scherer, Andreas (2017). Organizational strategies in the context of legitimacy loss: Radical versus gradual responses to disclosed corruption. Strategic Organization, 15(3):301-337.

Abstract

How do organizations respond to the loss of legitimacy in the context of disclosed corruption, and what drives the particular responses adopted? In this article, we study the organizational strategies of three multinational companies before, during, and after legitimacy loss due to disclosed organizational corruption. We explore why some multinational companies exceed regulatory expectations and choose radical strategies that substantially influence their environment by defining a new benchmark of anti-corruption practices, while others follow a more gradual approach. We build on the concept of legitimacy in institutional theory and focus on three strategies that organizations tend to adopt to regain legitimacy: isomorphic adaptation, moral reasoning, and strategic manipulation. Based on our empirical study, we suggest that when a transgression is accompanied by a strong legitimacy shock, transgressors are likely to see no alternative but to react both radically and instantly. We identify two distinct extremes of strategic manipulation: decoupling and substantial influence.

Abstract

How do organizations respond to the loss of legitimacy in the context of disclosed corruption, and what drives the particular responses adopted? In this article, we study the organizational strategies of three multinational companies before, during, and after legitimacy loss due to disclosed organizational corruption. We explore why some multinational companies exceed regulatory expectations and choose radical strategies that substantially influence their environment by defining a new benchmark of anti-corruption practices, while others follow a more gradual approach. We build on the concept of legitimacy in institutional theory and focus on three strategies that organizations tend to adopt to regain legitimacy: isomorphic adaptation, moral reasoning, and strategic manipulation. Based on our empirical study, we suggest that when a transgression is accompanied by a strong legitimacy shock, transgressors are likely to see no alternative but to react both radically and instantly. We identify two distinct extremes of strategic manipulation: decoupling and substantial influence.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Business and International Management
Social Sciences & Humanities > Education
Social Sciences & Humanities > Industrial Relations
Social Sciences & Humanities > Strategy and Management
Language:English
Date:2017
Deposited On:23 Aug 2019 09:02
Last Modified:13 May 2020 23:10
Publisher:Sage
ISSN:1741-315X
OA Status:Green
Publisher DOI:https://doi.org/10.1177/1476127016685237
Other Identification Number:merlin-id:14166

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