Types of legitimacy
Another stream of business studies literature focuses on different types of legitimacy, which are summarised in Table 2.5. The traditional view is that organisational legitimacy is driven primarily by external factors (Suchman, 1995; Weber, 1947). This view underscores the importance of political regimes to which organisations must conform. An equally crucial view is the importance of external and internal factors that determine organisational legitimacy (Drori & Honig, 2013). This view recognises the influence of external actors and internal organisational attributes on legitimising organisations.
Suchman (1995) identified three types of legitimacy, pragmatic, moral, and cognitive. Pragmatic legitimacy relates to the self-interest of an organisation and relevant actors, which is based on a direct exchange between them. There are three different types of pragmatic legitimacy: exchange, influence, and dispositional (Suchman, 1995). Exchange legitimacy is based on an exchange between actors who are driven by their own interests and
Table 2.5 Types of legitimacy and their descriptions
can scrutinise the organisation during this exchange (Dowling & Pfeffer, 1975; Elsbach & Sutton, 1992). Influence legitimacy is when actors support the organisation because of their interests. Dispositional legitimacy is when organisations and actors share the same values and interests and are trustworthy (Scott, 1995). All three types of pragmatic legitimacy are based on the relevant actors’judgement of the organisation. Although the judgement is based on self-interest, it is also somewhat socially driven (Bitektine, 2011). Tost (2011) argues that because the legitimacy judgement is influenced by different actors, the perception of organisational legitimacy can be generalised.
Normative or moral legitimacy is based on whether the organisational activities are the right thing to do (Suchman, 1995). Relevant actors define what is right or wrong by judging and approving or disapproving an organisation's behaviour. There are four types of moral legitimacy: consequential, procedural, structural, and personal (Suchman, 1995). Consequential legitimacy is a judgement of what organisations have achieved, and is based on performance and measurement of these organisational achievements. These measurements reflect an organisation's effectiveness and the extent of its contribution to social welfare (Scott, 2008). Procedural legitimacy is achieved if organisations embrace socially accepted procedures. Structural legitimacy is similar to procedural legitimacy, although it focuses on the entire organisational system, whereas procedural legitimacy focuses on organisational routines (Scott, 2008). Personal legitimacy is based on “the charisma of individual organisational leaders” (Suchman, 1995, p. 581) and their ability to communicate with different actors (Patel et al., 2005). Different actors can judge charisma in various ways - it is thus challenging to judge legitimacy based on individual characteristics. The judgement is often determined by an organisation's contribution to the market’s social welfare (Tost, 2011) or to broader notions of public and environmental welfare.
Cognitive legitimacy is considered to be the most powerful type of legitimacy because it is “based on cognition rather than on interest or evaluation” (Suchman, 1995, p. 582). Cognitive legitimacy is associated with existing cultural and institutional aspects (Suchman, 1995). The pre-existence of institutions helps to determine and examine an organisation’s characteristics and behaviour (Bitektine, 2011; Scott, 1995). Cultural aspects are used to examine the extent to which actors’ established beliefs affect organisational legitimacy (Suchman, 1995). Based on these beliefs, the actors see the organisation’s actions as legitimate or illegitimate (Suchman, 1995). They evaluate cognitive legitimacy based on the historic development of existing beliefs and regulations (Aldrich & Fiol, 1994). Cognitive
Disciplinary foundations 39 legitimacy is characterised by organisational characteristics and existing rules that determine organisational legitimacy (Tost, 2011).
The three types of organisational legitimacy are linked and develop in a broader societal system (Suchman, 1995; Tost, 2011). The accountability for some degree of structure and embeddedness in the broader social system in which organisations operate is crucial to examining organisational legitimacy (Tost, 2011). External actors develop the policies and regulations within the social system, meaning that they largely influence all three types of organisational legitimacy (Kostova & Zaheer, 1999). As a result, organisations aim to balance their internal characteristics and external forces (Bitektine, 2011; Suddaby & Greenwood, 2005).
Drori and Honig (2013, p. 347) define internal legitimacy as “the acceptance or normative validation of an organisational strategy through the consensus of its participants, which acts as a tool that reinforces organisational practices and mobilizes organisational members around a common ethical, strategic or ideological vision”. Internal legitimacy is important for achieving organisational objectives by obeying the codes of conduct established within the organisation (Kostova & Zaheer, 1999). Common codes stipulate certain patterns of behaviour for employees and the wider organisation (Deephouse, 1996). Internal legitimacy can be developed via employee training (Esteban-Lloret et al., 2018), and can be extremely significant with areas such as governance (Walters & Tacon, 2018), employment strategies and commitment to local populations (Forstenlechner & Mellahi, 2011), and sustainability (Loconto & Fouilleux, 2014). Internal legitimacy is therefore crucial to organisational survival and operations (Kostova & Roth, 2002), and especially for social tourism enterprises (Vestrum et al., 2017; Yang et al., 2018) given their specific commitment to the public good, although external actors can also clearly influence an organisation’s reputation within the environment in which the organisation operates (Bitektine & Haack, 2015). Therefore, organisations also feel institutional pressure to satisfy external actors (Zimmerman & Zeitz, 2002). In their study of community-based music festivals that aim to improve the identity and economy of rural communities, for example, Vestrum et al. (2017) identified three legitimation strategies used by the community enterprises: conformance to the internal (rural community) environment; conformance to the external (cultural festival) environment; and changing the internal (rural community) environment.
External legitimacy is the acceptance and validation of external stakeholders, including governments and social groups (Deephouse, 1996; Drori & Honig, 2013; Rottig, 2016). Achieving external legitimacy is more challenging than achieving internal legitimacy becauseorganisations have to satisfy a number of external actors, which can be a time-consuming process (Kostova & Zaheer, 1999). External legitimacy is also vital for organisational survival and success because external actors can influence how the organisation is perceived (Drori & Honig, 2013). Deephouse (1996) has found that the two key actors, the government and the public (whose opinion is often shaped by the media), can confer external legitimacy. The expectations of the enviromnent in which organisations operate often differ from an organisation's internal practices (Drori & Honig, 2013). As a result, organisations engage in the institutionalisation of organisational legitimacy by adjusting their practices (Bitektine & Haack, 2015; Zapata Campos et al., 2018). This could make striking a balance between internal and external legitimacy challenging (Kostova et al., 2008; Xu & Shenkar, 2002). Organisations must continuously adjust their practices to meet the interests of external actors, which can be difficult, because the nature of the institutional environment is usually constantly changing, especially for organisations and businesses operating in an international environment. Therefore, the legitimacy type also changes (Suchman, 1995). The type of legitimacy organisations aim to achieve depends on their objectives and positioning within the market. As a result, organisational legitimacy and how it is used can be influenced by various factors.
Factors influencing organisational legitimacy
Kostova and Zaheer (1999, p. 66) identify a number of factors that influence businesses, and MNCs in particular: “the characteristics of institutional environment; the organisation’s characteristics and actions; and the legitimation process by which the environment builds its perceptions of the organisation”. An institutional environment’s characteristics are represented by complexity and multiplicity, with tourism recognised as usually providing a more complex institutional environment than many other industries and business sectors because of the nature of the tourism system, its service dimensions, and the mobility of its consumers (Roxas & Chadee, 2013). Kostova and Zaheer (1999) propose that because the cognitive and normative pillars of an institutional environment are tacit and not easily codified, they present a challenge for MNEs to establish legitimacy in a host country. Conversely, the regulative domain is easily codified by laws and regulations, and therefore easier to follow (Scott, 1995). Established regulations serve as guidelines for businesses regarding what is right and wrong - but because the institutional environment
Disciplinary foundations 41 is not static, neither are these regulations (Shipilov, 2012). This makes the institutional environment more complex and organisational legitimacy harder to achieve, because businesses must continuously adjust their operations. For example, Soares et al. (2020) noted that the institutional environment is particularly significant with respect to information and communications technology, with hotel technologies, from infrastructure to communication, being socially and technically legitimised in their institutional environment via certificates offered by platforms that legitimise hotels before users and competitors (Gretzel et al., 2017).
Changes in the institutional environment create institutional pressures that influence organisational legitimacy (Dacin et al., 2002). This is particularly relevant for businesses and MNEs from EEs and developing countries because of the institutional changes these markets have experienced since the 1990s (Rottig, 2016; Wang et al., 2018). Formal institutions are often considered unstable and filled with institutional voids, making the institutional environment more difficult to navigate (Puffer et al., 2016; Rottig, 2016). In examining the hotel sector in St Petersburg, Russia, Karhunen (2008) found that industry-level isomorphic forces were not at work during the economic transition. As a result, and combined with substantial market imperfections, significant intra-industry strategic diversity emerged. However, the underlying institutional logic shifted as the transition continued. Karhunen (2008) argued that during the transition, diversity was based on local versus foreign management and during the post-transition it was grounded more on operational legitimacy. As a result, the majority of hotels were operating according to shared norms and practices, although the lack of state coercive pressures also allowed some hotels to operate more informally and ignore institutional norms.
Kostova and Zaheer (1999) argue that unless businesses have a clear understanding of existing formal and informal rules, they will not successfully maintain legitimacy in a foreign market or in a different domestic market than the one they normally operate in (Wang et al., 2018; see Box 2.3). While understanding how formal and informal institutions work is important, knowing the nuances of the institutional voids can also affect organisational legitimacy. For example, misguided regulations formed by the government to favour a particular industry are considered a void (Khanna & Palepu, 2005; Rottig, 2016), and not knowing about these regulations can influence an organisation’s ability to achieve legitimacy in that market. If a business lacks institutional knowledge, this can undermine its performance and reputation in the market (Deephouse, 1996; Rottig, 2016).
BOX 2.3 THE IMPACT OF THE INSTITUTIONAL ENVIRONMENT ON THE GEOGRAPHIC DIVERSIFICATION OF CHINESE TOURISM FIRMS
Wang et al. (2018) examined a sample of Chinese listed tourism companies with respect to the influences of local institutional environments on tourism firms’ geographic diversification decisions and strategies as they sought to expand their spatial reach and grow their business and market. Their study found that institutional factors had a significant positive impact on firms’ geographic diversification decisions, including with respect to the overall extent of marketisation. the relationship between local governments and the market, and the degree to which a product or market was developed. The results also show that the moderating effects of the business type indicate that tourism firms operating a non-natural or historical business have a high possibility of diversifying across regions if they are located in regions with a high degree of marketisation, a loose relationship between local governments and the market, and a developed non-public economy or a developed product market (Wang et al., 2018).
Another factor that influences organisational legitimacy is organisational characteristics, including size, performance, and reputation (Deephouse, 1996; Kostova & Zaheer, 1999). An organisation’s size can affect its visibility in a market, as well as public expectations (Tost, 2011). This can shape an organisation’s behaviour in that market. The relevant stakeholders’ performance expectations are also important for achieving legitimacy (Kostova & Zaheer, 1999). Choosing whose expectations to meet depends on the power a stakeholder has over an organisation’s legitimacy. Therefore, managing the relationship with this stakeholder is a key factor in achieving legitimacy. For example, Ahlstrom et al. (2008) suggest that to gain legitimacy in China, a company must establish a relationship with the local government because of its power to shape an organisation’s reputation. A finding borne out in Wang et al.’s (2018) study of the influences of local institutional environments on Chinese tourism firms’ geographic diversification strategies (see Box 2.3).
Organisational reputation can also influence legitimacy by creating a particular image of the organisation (Bitektine, 2011; Suchman, 1995; Rao, 1994) and, as noted above, is particularly significant with respect to CSR and sustainability reputation. Further, reputation can enable businesses and
Disciplinary foundations 43 MNEs to develop relationships with key stakeholders. Some scholars argue that reputation and legitimacy should be separated to gain a deeper conceptual understanding of organisational legitimacy, but the two concepts are closely interrelated (Bitektine, 2011; Rao, 1994). For example, a strong reputation can enhance strategic practices by deviating from standard practices and remaining legitimate. Reputation can also contribute to attaining different types of legitimacy - for example, when an organisation is striving to achieve normative legitimacy, a strong reputation for transparency and accountability is necessary (Deephouse & Carter, 2005). This may be extremely important, for example, with emissions reporting by tourism and transport companies, so that comments regarding positive commitments to reducing climate change impacts and promoting sustainability can be matched by clear information on carbon footprint (Scott et al., 2016; Zeppel, 2012). Both concepts allow for an examination of organisational behaviour, which is executed through the process of judgement by relevant stakeholders (Bitektine, 2011). Reputation is complementary to organisational legitimacy and judgement because it contributes to building an organisation’s image in a particular market (Rao, 1994).
Another factor that can influence organisational legitimacy is the legitimation process, which is referred to as “the process through which legitimacy is achieved” (Kostova & Zaheer, 1999, p. 73). The legitimation process is influenced by the institutional environment as well as organisations. The institutional environment defines the rules and regulations that organisations must follow, which, to an extent, shapes the way organisations operate and are perceived by external actors (Bitektine & Haack, 2015). An organisation can influence the legitimation process by incorporating existing rules and regulations into internal practices (Drori & Honig, 2013). The legitimation process is complex because of its social and cognitive nature. Organisations operating in a particular legal field will need to obey the existing rules and regulations relevant to the field that organisations operate in. Depending on the development of the institutional environment, they may have to adjust any standards that do not fit with the existing internal practices (Drori & Honig, 2013). In tourism, a common way to meet standards is to undergo public, i.e. governmental, or private accreditation according to a predefined set of standards, and these may relate to such issues as health and safety (Labonté et al., 2018; Mehta et al., 2017), sustainability (Baird et al., 2018; Font et al., 2019; Gôssling & Buckley, 2016; Hughes & Scheyvens, 2016), or even religious standards, such as halal or kosher (Hall & Prayag, 2020; Box 2.4). Organisations can employ various strategies to overcome legitimation issues in domestic and foreign markets.
BOX 2.4 HALAL ACCREDITATION AND CERTIFICATION
“Halal” is one of the Islamic principles that refers to what is lawful and permissible for Muslims to consume and practice. It is one of the core customs and practices observed in Islam in addition to the five fundamental pillars of Islam (Arkan al-Islam): belief in the only God, Allah, and Muhammad as the last prophet (shahadah), pray five times a day (salat), pay almsgiving (zakat), practice fasting in Ramadan month (sawm), and make a pilgrimage to Mecca at least once in a lifetime during the month of pilgrimage (hajj), which is obligatory for Muslims. Consuming what is lawfill and permissible is stipulated in Islamic laws (also referred to as Shariah), which frames the principles of Islam based on the Quran (the sacred book of Islam), the Hadith (collected reports describing the Prophet Muhammad (peace be upon him)), Sunnah (traditions and habitual practice in Islamic communities), and the fiqh (Islamic jurisprudence). The five commandments (al-ahkam al-khamsah): obligatory (wajib/fard), recommended (mandub), permissible (mubah), discouraged (makruh), and prohibited (haram) are a network of rules in social, spiritual, cultural and every aspects of Muslims’ life.
Islam strictly dictates consuming halal and makes distinctions between halal and haram (an opposite concept to halal that indicates what is unlawful and prohibited for Muslims) in the Quran. Although there is a great deal of commonality in understanding what is halal and haram, there are different interpretations of the Quranic verses as a result of different schools and teachings; customary practices (Razak et al., 2020); and time, place, and circumstances (Armanios & Ergene, 2018; Riaz & Chaudry, 2004). Table 2.6 provides an overview of the main elements of halal and kosher foods.
With the growth of travel to and from Muslim majority countries and the internationalisation of trade, attention to the consumption and production of hospitality and tourism products by and for Muslims has become increasingly formalised and regulated with the development of a number of national halal certification and accreditation programmes, although there is no single international standard for halal. Halal certification is undertaken worldwide. Despite the fact that there are common understandings of halal, each halal certification awarding body has different standards, requirements, and processes that may be influenced by different teachings, cultures, and other factors. As a result, the absence of a universal halal standard
Table 2.6 Comparative summary of the differences between halal and kosher food
Note: In this table, “O” means permissible; “X” means not permissible.
Source: Adapted and modified from Razak et al. (2020) and Riaz and Chaudry (2004).
increases institutional complexity for consumers and food manufacturers (Latif, 2020; Latif et al., 2014).
Halal certification is an assurance of products as being halal issued by a halal certification awarding body and has been developed in response to the internationalisation of the trade in food and other products as well as consumer concerns as to product authenticity and the security of supply chains. In order to ensure the integrity, sometimes referred to as halalness, of halal products, several governments have established a set of institutional arrangements to manage halal certification and/or authenticity. Various mechanisms have been employed, including specific halal related legislation, inclusion under consumer law, and the creation of and/or recognition of halal certification bodies by the government. Halal certification systems have been developed in a number of countries and legal jurisdictions, including Malaysia, which established the first standards in 1974; Indonesia; Brunei; UAE; Qatar; Saudi Arabia; Oman; Kuwait; Bahrain; some states in the USA - California, Maryland, Michigan, Minnesota, New York, Texas; Canada; and Singapore. Obtaining halal certification can take a number of forms, including examinations and the implementation of processes by the halal certification awarding body that requires a high standard of cleanliness, high-quality products, and compliance with Islamic laws from producers, suppliers, and sellers. However, the procedures and requirements can vary greatly between different halal authorities.
Riaz and Chaudry (2004) categorised halal certification in terms of registration of a site (or a business) certification, certification for a product for a certain period of time, and yearly certification. Site registration certification is awarded to a site that is inspected and approved to manufacture, distribute, or market halal food, e.g. a plant, production facilities, abattoir, slaughterhouse, restaurant, and any establishment of handling food. However, this type of certification is confined to the boundary of the site and should not be used for a product or sendee available outside of that site. Product certification is issued for a specific period or quantity of the product. If for quantity, it is described as a batch or shipment certification where each batch or consignment needs to be certified. Yearly certification requires annual inspection through halal compliance and guidelines, and payment of a fee to the certification body is usually required. This type of certification may require a fixed renewal period for certification upon inspection or may be automatically renewed uponinspection or any other requirement from the certification awarding bodies.
There were more than 300 recognised halal certification awarding bodies globally in 2018 (Hall & Prayag, 2020), and each body has its distinctive logo. These bodies can be a government, Islamic community, or organisation; an NGO; a private business; or even an individual Muslim. Regenstein et al. (2014) identified resource availability, willingness to cooperate and work with the company on problem-solving, ability to explain their halal standard and fee structure in a clear manner, and acceptability among consumers and importers as significant factors in certification. In other words, awarding bodies must possess authenticity, credibility, and recognition in order to be recognised as a credible halal certification awarding body.
Each halal certification awarding body has its own standard and requirement, which may differ from others. In the Food and Agriculmre Organization’s (FAO) general guidelines for the use of the term "halal” (CAC/GL 24-1997), The Codex Alimentarius, which is globally recognised as a global food code, standard, and guideline, it states:
The Codex Alimentarius Commission accepts that there may be minor differences in opinion in the interpretation of lawful and unlawful animals and in the slaughter act, according to the different Islamic Schools of Thought. As such, these general guidelines are subjected to the interpretation of the appropriate authorities of the importing countries. However, the certificates granted by the religious authorities of the exporting country should be accepted in principle by the importing country, except when the latter provides justification for other specific requirements.
(FAO & World Health Organization [WHO], 2001, p. 1)
Different procedures and schemes are applied in different halal certifications. In general, the products first meet local guidelines on quality and safety standard, then they can be considered for halal certification. The halal certification process generally starts with the application and submission of the required documents (e.g. ingredients, facility, and hygiene), followed by an audit, and finally the issuance of halal certification (Latif, 2020; Riaz & Chaudry, 2004).
The differences between halal certification awarding bodies are significant and are not purely administrative, because of the implications for export as well as different markets (Riaz & Chaudry, 2004). If a market area or target is a specific country, then it is important to choose a certification that is widely recognised and acceptable in that country.
Muslim majority countries like Indonesia, Brunei, Malaysia, Turkey, and the Gulf Cooperation Council (henceforth GCC) countries have made huge efforts to ensure and promote halal food internationally, especially given the growth in demand and their desire to develop their food manufacturing sectors. Many governments have developed halal standards and regulations for halal food in order to assure consumers of the authenticity of their halal food products as well as create a market niche for them in the international halal marketplace.
Partly as a result of the competition between countries to be halal hubs, the recognition of foreign halal certification is substantially different between countries. The Malaysian authority (JAKIM) recognised 84 foreign halal certifications as of February 2020, while its Indonesian counterpart (MUI) recognised only 45 foreign halal certification bodies in May 2020. The appointment of foreign halal certification is supposedly made based on compliance with the guidelines of bodies such as JAKIM or MUI. Foreign halal certification bodies are required to be monitored or evaluated by MUI or submit annual reports to JAKIM to maintain their appointment. JAKIM recognises food and goods certified by the recognised foreign halal certification bodies. For example, all imported meat and its by-products to Malaysia must be halal certified by JAKIM or listed by foreign halal certification bodies. Plants are inspected by JAKIM and the Malaysian Department of Veterinary Services. The MUI categorises its recognition of foreign bodies into slaughtering, raw material, and flavour. To give an example of the implications of this, Brunei halal is only recognised by MUI under its slaughtering category; thus, only meat and by-products are recognised as halal, while processed meatbased food and goods are not recognised.
Non-Muslim majority countries, such as Australia and New Zealand, recognised the economic prospects of the halal food export market, and the governments of both countries established a regulatory halal framework in conjunction with the private sector and Islamic community associations. The Australian government issued guidelines with respect to slaughter, preparation, identification, processing, segregation, storage, and certification in order to maintain the quality of Australian manufactured or produced halal food products. New Zealand also has similar guidelines established by the government (Hall & Prayag, 2020).
Yuri Oh & C. Michael Hall
Strategies to achieve organisational legitimacy
Another stream of business literature focuses on how organisations achieve legitimacy. Many scholars state that organisations achieve legitimacy through isomorphism - that is, by adopting their practices, structures, and norms to those of the institutional environment (Aldrich & Fiol, 1994; Bitektine & Haack, 2015; Deephouse, 1996; DiMaggio & Powell, 1983; Meyer & Rowan, 1977). Meyer and Rowan (1977) introduced the notion of institutional isomorphism, where formal rules and routines within an organisation are governed by the wider institutional environment. To achieve legitimacy and gain access to the necessary resources, organisations must become isomorphic with the institutional environment in which they operate (Meyer & Scott, 1983). Therefore, organisational legitimacy can be achieved by conforming to the existing institutional environment. DiMaggio and Powell (1983) identify three mechanisms that, in practice, should induce an isomorphic change in organisations: coercive, normative, and mimetic. Isomorphism can “make organisations more similar without necessarily making them more efficient” (DiMaggio & Powell, 1983, p. 147), Coercive isomorphism arises from political influence, where businesses depend upon other actors for strategic resources. A clear example of coercive isomorphism is when a government can secure funding to attract a business to relocate or even allow it to establish a local presence and, in return, the business has to adapt its practices to support a destination’s economic development (Rottig, 2016). For example, an international hotel chain may modify its guest data and online privacy practices from one destination to another in order to satisfy the requirements of host governments. Coercive isomorphism leads an organisation to conform to the regulatory environment.
Normative isomorphism can emerge from within an organisation and its authority to control how it conforms to established norms, standards, and practices (DiMaggio & Powell, 1983). Normative isomorphism is driven by professions within the organisation, which can create misalignments between internal and external legitimacy, causing the organisation to undertake illegitimate activities (Greenwood et al., 2002). Mimetic isomorphism occurs when organisations learn from and imitate the strategies of existing organisations to succeed in the market. However, imitating strategies is problematic because it does not allow for new ideas and practices to emerge (Greenwood et al., 2002). Further, because organisational attributes differ and are important to achieving organisational legitimacy (Greenwood et al., 2011), mimicking one organisation’s behaviour may not be a suitable strategy.
Conformity through isomorphism restricts organisations’ strategic choices, because all three types of isomorphism imply some degree of following the host market’s rales (Zimmerman & Zeitz, 2002). Kostova et al. (2008) propose that there is a limited isomorphism in MNCs because of their multiplicity and ambiguity. Since MNEs operate in diverse institutional environments, the institutional pressures they face differ, and each sub-unit can, to some extent, select the strategies for adapting organisational practices and responding to institutional pressures (Kostova et al., 2008). Parent companies often impose certain obligations as to what practices can or cannot be adopted, because a sub-unit’s legitimacy in a particular country can affect MNEs’ legitimacy in other markets (Spencer & Gomez, 2011; Zapata Campos et al., 2018).
MNEs can use several strategies to address the challenges of achieving legitimacy. Communication strategies can enhance organisational legitimacy when information flows are managed between the company and key actors (Suchman, 1995; Suddaby & Greenwood, 2005). This allows the company to balance external and internal legitimacy, depending on which type it aims to achieve. Communication is an important element of the legitimation process because it enables businesses to manage actors’ judgement (Bitektine & Haack, 2015). Businesses can achieve this by controlling the information actors receive, which can negatively or positively affect organisational legitimacy judgement (Bitektine & Haack, 2015). For example, as noted above, if a business adopts corporate social responsibility practices, this creates a positive perception of it on the part of external actors (Zheng et al., 2015; Zapata Campos et al., 2018). However, a negative effect can emerge as a result of a business' involvement in corruption or human rights abuse, which can destabilise its legitimacy and operations in some markets (Kostova & Zaheer, 1999; Muthuri & Gilbert, 2011; Pfarrer et al., 2008). In the case of encouraging tourism MNCs to combat corruption and favouritism three different strategies are available: 1) anti-corruption reform; 2) “tightrope” balancing; and 3) tolerance for corrupt practices (Windsor, 2019), with the actual strategy dependent on where perceived legitimacy is desirable. Control of information cannot be guaranteed, and how MNEs are regarded can be communicated verbally through the media or through non-verbal actions, such as selecting the
Disciplinary foundations 51 right environment and manipulating external actors'perceptions (Bitektine & Haack, 2015; Suchman, 1995). This is a particularly important issue for international travel and tourism MNEs, for example, as what is acceptable in the destination with respect to things such as animal, human, and labour rights may be unacceptable in the main markets where tourists come from. In such cases, such businesses and destinations may be particularly vulnerable to negative communications (Seyfi & Hall, 2020; Zapata Campos et al., 2018).
Environment selection is another strategy that can enable organisations to achieve legitimacy (Suchman, 1995). It involves selecting the most favourable environment in which an organisation can operate as it is, without adjusting any of its practices (Zimmerman & Zeitz, 2002). In international tourism, this is possible when a tourism MNE is familiar with the rules, norms, and regulations of a host market and enters it with the right product (Suchman. 1995). However, businesses need to acquire knowledge about the logic behind developing the institutional environment of a particular market, as this can enable businesses to interpret the existing rules and regulations and make a more informed selection decision.
Manipulating the organisation’s perception is another legitimation strategy, and entails changing the environment to attain consistency between the organisation’s needs and the environment (Zimmerman & Zeitz, 2002). It is described as an anticipated and purposeful intervention to develop and influence specific institutions to support an organisation’s operations (Dowling & Pfeffer, 1975; Oliver, 1991; Suchman. 1995). Manipulation requires a departure from existing norms, and is influenced by innovative organisations that require existing institutions to be altered (Suchman, 1995; Zimmerman & Zeitz, 2002). Organisations manipulate the environment by influencing the relevant actors’ perceptions (Bitektine & Haack, 2015) - for example, by becoming part of a trade association or entering into partnerships with local investors, which can affect the manipulation of institutional logics (Suddaby & Greenwood, 2005; Pache & Santos, 2010). This strategy can also help enhance external legitimacy without adapting organisational practices (Xu & Shenkar, 2002). Manipulation is the most strategic legitimation strategy because it is purposeful (Zimmerman & Zeitz, 2002). However, the choice of strategy depends on a business’s objectives.