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KUT MACHAR:PRESENTATION SOCIAL THEORY. Discuss how legitimacy theory can be used to explain voluntary corporate social responsibility reporting by companies.

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Presentation on theme: "KUT MACHAR:PRESENTATION SOCIAL THEORY. Discuss how legitimacy theory can be used to explain voluntary corporate social responsibility reporting by companies."— Presentation transcript:

1 KUT MACHAR:PRESENTATION SOCIAL THEORY

2 Discuss how legitimacy theory can be used to explain voluntary corporate social responsibility reporting by companies. Legitimacy theory “Legitimacy theory is a generalized perception or assumption that the actions of an entity are desirable,proper,or appropriate within some socially constructed system of norms, values and belief”. Legitimacy theory, mean that a firm performs various socially desired actions in return for approval by its stakeholders and this ultimately guarantees its continued existence.

3 Social contract Legitimacy theory suggest that there is an implied social contract governing the relationship between a company and society that provides for the company legitimacy as long as its activities are consistent with society values. Legitimacy theory widely accepted right to govern or regulate, from the facts that it purpose is to act in the interest of the whole of society. If the a company is acting in a way that is acceptable by society it is agreed to be legitimate company. Legitimacy gaps failures in corporate performance, example major pollution leaks, financial scadal,unhealth products smokes.

4 Corporate social responsibility (CSR) It where a firm takes on the responsibility of not just abiding by laws but ethics, morals and societies values. It aims to give a positive impact of all its stakeholders,customers,suppliers,employees,communities and environment. Social responsibility means that a business take action to meet broader demands such as clean environment safe working condition,equitabable treatment of citizens and fair trading with consumer.

5 4 Stage of legitimacy Establishing legitimacy. Maintaining legitimacy. Extending legitimacy. Defending legitimacy. Legitimacy theory to explain how social disclosures in annual reports changed around the time of major social disasters. Examples of disasters Bhopal 1984 India and Gulf oil spill, 2010 US and many tragedy.

6 Strategies to close legitimacy gap Change performance and activities to meet standards of society and communicating this change to stakeholders. It involves attempt to change external expectation through communication. It involves using communication to redirect attention from the legitimacy gap. Managers make strategic use of social and environmental disclosures in their reports. Organisations may act legitimately as it can benefit the appearance of their reports to society which often reflects positively for the organisation itself.

7 REFERENCES Demosthenes M.(2011).Governance, Sustainability and Ethics,pearson,Sydney,Australia. Tilting M.V.& C.A.(2010)” The edge of legitimacy: voluntary social and environmental reporting in Rothmans, annual reports "accounting.auditing and accountability journal,23(1) pp.55.81


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