Strategies of Legitimacy through Social Media: The Networked Strategy

Itziar Castelló, University of Surry

Michael Etter, King’s Business School

Finn Årup Nielsen, University of Denmark

Accepted article at Journal of Management Studies:

https://doi.org/10.1111/joms.12145

ABSTRACT

How can corporations develop legitimacy when coping with stakeholders who have

multiple, often conflicting sustainable development (SD) agendas? We address this

question by conducting an in-depth longitudinal case study of a corporation’s

stakeholder engagement in social media and propose the concept of a networked

legitimacy strategy. With this strategy, legitimacy is gained through participation in non-

hierarchical open platforms and the co-construction of agendas. We explore the

organizational transition needed to yield this new legitimacy approach. We argue that, in

this context, legitimacy gains may increase when firms are able to relax their internal

locus of control and relate non-hierarchically with their publics. We contribute to the

extant literature on political corporate social responsibility and legitimacy by providing

an understanding of a new context for engagement that reconfigures cultural, network,

and power relations between the firm and their stakeholders in ways that challenge

previous forms of legitimation.

Key words: legitimacy, social media, stakeholder engagement, sustainable development

INTRODUCTION

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Organizational researchers implicitly assume that “legitimacy ultimately exists in the

eye of the beholder” (Zimmerman and Zeitz, 2002, p. 361). This view implies a

unidirectional perception of legitimacy and presents legitimacy as an evaluative process

in which the beholder of legitimacy judges an organization (Zimmerman and Zeitz,

2002). This evaluator–target model is echoed throughout the institutional literature

(Deephouse and Suchman, 2008; Meyer and Scott, 1983; Parsons, 1960; Tost, 2011;

Weber, 1978) and is often used to explain legitimacy (or illegitimacy) as a critical driver

of institutional and organizational change (Greenwood et al., 2002; Suchman, 1995) and

of the isomorphic adaptation of corporations to social pressures (DiMaggio and Powell,

1983; Greenwood et al., 2008).

Legitimacy literature also considers the other side of the process, in which organizations

exercise strategic choices to change the type and amount of legitimacy they possess

(Scott, 1995; Suchman, 1995; Vaara and Tienari, 2008; Zimmerman and Zeitz, 2002).

This approach considers the proponents of legitimacy as strategic targets who can be

manipulated to benefit the organization (Baum and Oliver, 1991; DiMaggio and Powell,

1983; Dowling and Pfeffer, 1975; Zimmerman and Zeitz, 2002). Although these

approaches constitute the basis for most of the legitimacy literature, they fail to fully

analyze the relations between the legitimacy’s subject, typically the organization, and

the beholders, typically the stakeholders, in building legitimacy and managing complex

situations (Bitektine, 2011; Scherer et al., 2013; Tost, 2011). Indeed, the literature tends

to underestimate the importance of power relations between actors in the control of the

legitimacy process (Courpasson et al., 2008; Lawrence, 2008). Moreover, it fails to

consider the existence of different cultural orders, including the distinct SD claims

(DiMaggio, 1997) that precede legitimacy formation (Bitektine, 2011) and constitute the

legitimation process (Kostova and Zaheer, 1999).

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Political perspectives on legitimacy highlight the power relations between actors and

propose given structural governance conditions in which legitimacy occurs (Mena and

Palazzo, 2012; Scherer et al., 2013; Vogel, 2005). However, the political perspective has

often been accused of being overly normative (Kuhn and Deetz, 2008; Scherer and

Palazzo, 2007; Schultz et al., 2013) and of neglecting consideration of the complexity of

the debates between corporations and society by assuming institutionalized interactions

(Baur and Arenas, 2014) and the closure of debates by means of consensus. Such

regulated interactions and consensus building are especially unlikely when corporations

address SD issues (Baur and Arenas, 2014), which typically call for the negotiation of

social, economic, and environmental factors (United-Nations, 1987). Indeed, addressing

SD issues often requires shifting through a multitude of complex and often

contradictory stakeholder demands (Hardy and Phillips, 1998) that are defined beyond

nation–state governance institutions and instead by multiple ethical systems, cultural

backgrounds, and rules of behavior that coexist within the same communities (Beck,

2006). As the legitimacy of the business community around SD issues is often

challenged (Matten et al., 2005; Porter and Kramer, 2011; Scherer and Palazzo, 2011),

stakeholder engagement processes have become important instruments for legitimacy

building (Banerjee, 2003; Scherer et al., 2013).

Since SD issues rest on the principles of environmental integrity, social equity, and

economic prosperity (Bansal, 2005), reactions to these issues based on notions of

Corporate Social Responsibility (CSR) fall beyond general expectations regarding the

role of corporations in a capitalist system (Patriotta et al., 2011; Scherer et al., 2013).

Researchers have argued that legitimacy in resolving SD issues requires active

engagement with stakeholders (Freeman, Harrison, et al., 2010; O'Riordan and

Fairbrass, 2008; Palazzo and Scherer, 2006) and, in turn, the “recognition and respect of

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common humanity and the ways in which the actions of each may affect the other”

(Noland and Phillips, 2010, p. 40). It also requires “the ability to establish trust-based

collaborative relationships with a wide variety of stakeholders” (Sharma, 1998, p. 735).

Due to their apparent lack of gate-keeping and symmetric two-way communication

(Morsing and Schultz, 2006; Vorvoreanu, 2009), open social media platforms, like

Facebook and Twitter, are suitable platforms for undertaking a corporate-public

dialogue regarding SD issues (Ángeles and Capriotti, 2009; Etter, 2014; Fieseler and

Fleck, 2013; Lee et al., 2013). However, these platforms can also turn public

engagements into ever-moving arenas (Whelan et al., 2013) since they increase the

complexity of the debates but decrease the level of institutionalization of the interaction

between the stakeholders and the firms (Schultz et al., 2013).

Our study examines the process of addressing legitimacy through stakeholder

engagement using social media within the complex context of SD. We ask: How can

corporations develop legitimacy when addressing stakeholders’ multiple and often

conflicting agendas?

To answer this question, we examined the internal formulation, launching, and

consolidation of a stakeholder engagement initiative conducted with use of social media

by Health Corporation (pseudonym), an internationally operating pharmaceutical

company, as well as the reaction to it by its stakeholders. The results of our examination

revealed that a relatively new stakeholder engagement platform and the work of a few

managers enabled a change in both the understanding and implementation of the firms’

legitimation processes. Our findings describe a process of legitimation over time

through the development of a new networked legitimacy strategy consisting of

participation in non-hierarchical, open platforms and the co-construction of SD agendas.

We argue that, in the context of social media, legitimacy gains are more likely when

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firms are able to relax their internal locus of control and adopt new cultural orders while

re-defining terms and networks of engagement. With our analysis, we contribute to the

extant literature on political CSR and legitimacy.

LEGITIMACY STRATEGIES IN A GLOBALIZED NETWORKED

ENVIRONMENT

Legitimacy and the management of the legitimation process

In a context of multiple, competing political associations and interest groups,

organizations must be accepted by the general public to have the right to exist and

pursue their affairs (Deephouse and Suchman, 2008; Knoke, 1985). Legitimacy is

understood as societal acceptance, or the “generalized perception or assumption that the

actions of an entity are desirable, proper or appropriate within some socially constructed

system of norms, values, beliefs, and definitions” (Suchman, 1995, p. 574). Suchman

(1995) identified three primary forms of legitimacy: pragmatic legitimacy, which is

based on audience self-interest; cognitive legitimacy, which is based on

comprehensibility and taken-for-grantedness; and moral legitimacy, which is based on

normative approval.

Organizational scholars have defined legitimation as “the process whereby an

organizations justifies to a peer or superordinate system its right to exist” (Maurer,

1971, p. 361, as found in Suchman, 1995, p. 573). In organizational studies of

legitimacy, organizations are analyzed as the “subjects of legitimation” (Deephouse and

Suchman, 2008), as are the entities “whose acceptability is being assessed” (Deephouse

and Suchman, 2008, p. 54). The “sources of legitimacy” (Ruef and Scott, 1998), or the

“beholders of legitimacy” (Zimmerman and Zeitz, 2002), are “the internal and external

audiences who observe organizations and make legitimacy assessments” (Ruef and

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Scott, 1998, p. 880), or are “those who have the capacity to mobilize and confront the

organization” (Meyer and Scott, 1983, pp. 201-2).

Several aspects of power relations, such as the need to identify and engage with the

holder(s) of collective or central authority over legitimation, have also become

important issues in legitimacy research (Deephouse and Suchman, 2008). Regarding the

legitimation process, stakeholder theorists have emphasized not only the importance of

stakeholder identification on the basis of power (Freeman, Harrison, Wicks, et al., 2010;

Mitchell et al., 1997) but also the need to understand the complexities of engagement

(Maak, 2007; Wicks and Freeman, 1998), especially under new conditions of the

globalization of SD issues (Scherer and Palazzo, 2011; Scherer et al., 2013). The

interaction between corporations, legitimation, and SD have been investigated using

three approaches, defined by Scherer et al. (2013), as strategic manipulation,

isomorphic adaptation, and moral reasoning. These strategies are each described

according to their structure, process, and outcomes (Miles et al., 1978).

Strategic manipulation

Strategic manipulation is founded on a tradition in which firms are defined as economic

actors seeking to maximize their benefits (Ashforth and Gibbs, 1990; Dowling and

Pfeffer, 1975; Pfeffer and Salancik, 1978). As such, it emphasizes “the ways in which

organizations instrumentally manipulate and deploy evocative symbols in order to

garner societal support” (Suchman, 1995, p. 572). Manipulation, in turn, is understood

as the active attempt by corporations to “influence their promoters” (Pache and Santos,

2010, p. 463). It is also based on the understanding that corporations shape societal

expectations (Scherer et al., 2013) while being managerially organized in structures of

centralized communication where the processes and rules of engagement, as well as the

stakeholders who are invited to engage with them, are defined and controlled by the

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firm (Katsoulakos and Katsoulacos, 2007; Lozano, 2005). In strategic manipulation

strategies, such asymmetric communication engagements (Gruning and Hunt, 1984as

found in Morsing and Schultz, 2006) are led by the corporation in the form of face to

face meetings, conferences, or training sessions. Since the corporation selects the

stakeholders for these engagements, not all stakeholders have equal opportunities to

participate in them or are equally important to the organization’s strategic decision-

making (Clemens and Cook, 1999; Elsbach and Sutton, 1992; Meyer and Scott, 1983).

Strategic manipulation strategy recognizes the need to direct the engagements toward

creating a consistency between the organization and its environment (Zimmerman and

Zeitz, 2002) in the organization’s effort to gain pragmatic legitimacy (Scherer et al.,

2013).

Isomorphic adaptation

Isomorphic adaptation—refers to “the ways in which sector-wide structuration

dynamics generate cultural pressures that transcend any single organization’s purposive

control” (Suchman, 1995, p. 572) and lies in the institutional tradition (e.g. DiMaggio

and Powell, 1983; Meyer and Rowan, 1977; Zucker, 1977). Scherer et al. (2013)

provided a prime example of the isomorphic adaptation approach when they qualified

Nike’s decision to publish the names of its supply-chain as a “proactive move” (Scherer

et al., 2013, p. 268) in response to the company’s interaction with civil society

organizations while defining the decision of Puma and Adidas to do the same a few days

later as an “isomorphic adaptation to a new standard” (Scherer et al., 2013, p. 269).

Recognizing that engagement is becoming socio-centric and firms are conditioned by

societal expectations, isomorphic adaptation means that corporations may decide to

adopt a societal claim if the pressure is sufficiently strong (Carberry and Brayden, 2012)

or if society has increasingly begun to take the claim for granted (DiMaggio and Powell,

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1983). Legitimacy gains are fundamentally related to the acquisition of cognitive

legitimacy on the basis of the comprehensibility and taken-for-grantedness of the SD

concerns that the corporations chose to adopt (Scherer et al., 2013).

Both strategic manipulation and isomorphic adaptation approaches, however, are limited

under the conditions of globalization, especially in relation to SD issues (Child and

Rodrigues, 2011; Jones and Fleming, 2003; Scherer and Palazzo, 2011; Scherer et al.,

2013). Each of these approaches have been criticized for neglecting the increasing

complexity and heterogeneity of SD issues and for underestimating the importance of

the intersubjective processes that lie behind social interactions (Castelló and Galang,

2014; Palazzo and Scherer, 2006).

Moral reasoning

The moral reasoning approach rests on political theory and examines the governance

comprising the engagement processes (Rasche et al., 2013; Scherer and Palazzo, 2011;

Vogel, 2010). The political theorist perspective detaches the “general perception of

legitimacy from the corporation as such (Greenwood et al., 2011)” (Scherer et al., 2013,

p. 260) to emphasize the importance of the processes of social interactions. Underlying

this perspective is the search for a non-hierarchical, non-corporate centric, and

deliberative mode of governing stakeholder engagement (Scherer et al., 2013). In this

view, legitimacy comes about as the result of the “forceless force of the better

argument” (Habermas, 1990b, p. 185, as found in Scherer and Palazzo, 2011, p. 916).

Moral legitimacy, in turn, emerges from communicative interactions in which

stakeholders, through a deliberative process, aim at consensual agreements that are

evaluated in terms of the “intersubjective recognition of validity claims” (Habermas,

1990a, p. 58) and thus reflect a “pro-social logic” (Suchman, 1995, p. 579).

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Political theorists, including Habermas, also recognize deliberative engagements based

on the forceless force of the better argument as “too idealistic” (Habermas, 1998, p.

244; see also Elster, 1986; Scherer and Palazzo, 2007). Kuhn and Deetz (2008) have

argued that such communicative processes rarely fulfill the ideal conditions for open

speech (Habermas, 1990a) due to institutionalized power relations and systematically

distorted ideologies embedded in language, routine, and practice. To overcome this

challenge, Scherer and Palazzo (2007) asserted legitimation processes through

stakeholder engagements should be managed in accordance with democratic processes

that are oriented to defining rules and standards (Scherer and Palazzo, 2007). To this

aspiration, Baur and Arenas (2014) responded that deliberative democracy is only

appropriate when interactions are institutionalized but not when they are unregulated.

The problem of how corporations should face SD issues that involve multiple non-

institutionalized stakeholders with conflicting agendas remains under-researched.

Recently, Scherer et al. (2013) argued that an important difference between moral

reasoning, isomorphic adaptation, and manipulative strategies lies in their respective

assumptions about the locus of control. Here, “locus of control” refers to the extent to

which an organization believes it has and enacts control over events that affect

organizational legitimacy (Gillespie and Dietz, 2009; Thomas and Lamm, 2012;

Trevino, 1986). Rotter (1966) conceptualized the locus of control as internal (e.g., a

person believes that he/she controls his/her life) or external (e.g., a person believes that

due to environmental factors he/she cannot influence control over his/her life). Strategic

manipulation departs from the hypothesis of an internal locus of control where

corporations can influence how stakeholders perceive their legitimacy. Isomorphic

adaptation strategies assume an external locus of control, where the corporation is

subjected to institutional pressures and routines. From a moral reasoning perspective,

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though, the locus of control is neither internal nor external, but legitimacy results from

the “discourses that connect organizations with their environment” (Scherer et al., 2013,

p. 264), which places the locus control in the deliberative process itself. Scherer et al.

(2013) suggested taking a paradoxical approach that combines strategic manipulation,

isomorphic adaptation, and moral reasoning to manage diverse and conflictive issues is

needed. However, the manner in which these diverse and often conflictive issues should

be managed, especially in increasingly interconnected societies where Internet-based

communications are changing the institutional power relations between the beholders

and the subjects of legitimacy, remains to be researched.

The increasing importance of social media for legitimation

The Internet and social media platforms such as Facebook and Twitter are changing the

form of relations between business and society (Benkler, 2006; Castells, 2008;

Papacharissi, 2010). These popular open platforms are spaces that multiply the

complexity of stakeholder engagements and the diversity and heterogeneity of their

conversations (Papacharissi, 2004). The advantages of using these open platforms,

include ease of access to multiple stakeholders, increased speed in communications

(Kent and Taylor, 1998), apparent lack of gate-keeping mechanisms (Kent and Taylor,

1998), and the facilitation of two-way communication between participants (Kent et al.,

2003) that enables conversations without formal hierarchies (Beckert, 2009), makes

them unique spaces for coping with the emerging diversity and plurality of the SD

agenda (Castelló et al., 2013). Participants in social media can no longer be classified as

formal, functional, or institutionalized stakeholders (e.g., as customers or NGOs) but are

defined as publics that may be categorized in relation to their different and changing

affinities to the issue under discussion (Castelló et al., 2013; Whelan et al., 2013). The

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presence of these new participants is both shifting the power dynamics in SD debates

and increasing the complexity of the debates (Bennett, 2003a; Castells, 2007).

However, despite the promise of social media to improve the efficiency of engagements

between firms and their publics, recent studies have shown that the implementation of

the engagement is neither automatic nor easy (Besiou et al., 2013; Etter, 2013; Fieseler

et al., 2010). The dialogic features enabled by web pages, blogs, and other social media,

for instance, are difficult to apply in interactions with stakeholders online (Ángeles and

Capriotti, 2009; Bortree and Seltzer, 2009; Etter, 2013; Ingenhoff and Kölling, 2009;

Insch, 2008; Kent et al., 2003; Rybalko and Seltzer, 2010). Although recent

communication research has developed indicators to measure the dialogic level of the

engagement (Ángeles and Capriotti, 2009; Besiou et al., 2013; Lee et al., 2013), little

research has attempted to identify the legitimacy constraints on managing online

engagements in complex environments. Research is thus needed to understand how

corporations gain legitimacy through engagements in social media.

METHODOLOGY

Case and analytical approach

Using a longitudinal approach (Pettigrew, 1990), we conducted a single in-depth case

study to capture the evolution of an institutionally complex (Greenwood et al., 2011;

Hart, 1995) and under-researched environment (Scherer et al., 2013): the construction

of legitimacy for SD issues. We used purposeful sampling (Bernard, 2000; Patton,

2002) to study a best practices case (Pettigrew, 1990) for managing SD issues. Health

Corporation, a multinational pharmaceutical corporation, has extensive experience in

CSR and stakeholder engagement, as evidenced by its public reporting on

environmental issues since the 1990s and its production of the first Triple Bottom Line

Report. In recognition of this work, Health Corporation has received multiple

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sustainability awards. Like other multinational pharmaceutical companies, though,

Health Corporation is now facing the challenges of globalization.

For 41 months (from October 2009 to February 2013), we analyzed and measured

Health Corporation’s processes for engagement with stakeholders through a social

media platform managed by the Health Corporation’s Stakeholder Engagement

Department (SED), which is responsible for coordinating stakeholder engagement in

direct line with the Executive Vice President in charge of Sustainability and

Communications Affairs. We used a combination of methods (Flick, 1998; Merriam,

1998; Patton, 2002) to ensure triangulation. Employing a mixed-methods approach

allowed us to assess corporate legitimacy strategies and stakeholder judgments. We

mainly used three sources of data, as described below.

First, we performed 13 formal recorded and transcribed semi-structured interviews and

12 informal non-recorded interviews with Health Corporation Stakeholder Engagement

Department (SED) members (e.g., the Vice President Sustainability, Program Manager

SED, and Communication Manager). We interviewed these members for 10 months

before the launch of the SED Twitter account, which was the period of the group’s

strategy formulation, and for 36 months after the launch, when the account was

consolidated. We reached saturation by interviewing all people involved in this process.

Second, we collected the company documents describing Health Corporation’s strategy.

We complemented this data collection by reviewing all the Integrated Reports from

Health Corporation distributed from 2002 to 2012.

Third, we collected all Twitter (an open microblogging platform) data related to Health

Corporation from January 2011 (the launch of the Health Corporation account) to

February 2013. Doing so allowed us to capture “perspectives in action” as the process

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unfolded (Snow and Benford, 1988), compensating for possible retrospective biases in

the interview data.

Data analysis

The data analysis comprised three iterative steps: In step 1, we identified the key actors,

events, and programs and then drafted a case chronology; in step 2, we looked at the

extent of legitimacy based on four measures (density, cultural distance, relational

affinity, and sentiment); finally, in stage 3, we examined the multi-level nature of

changes in the legitimation process by comparing insights gained from our review of

social media use, interviews, and company archives. The use of this approach allowed

us to move to a further level of abstraction.

First step. Based on our review of the interview data and documents, we defined the

firm’s structure and listed the main activities in relation to stakeholder engagement. We

then drafted a case chronology by examining the data to discern any changes in

activities, language, or stakeholders. Most of these data are narrated in the findings.

Second step. We examined the evolution of legitimacy as it unfolded in the process of

adapting to a new engagement strategy online. Research has mostly approached the

analysis of online engagement through effect measures, such as sentiment (Arvidsson,

2012; Lee et al., 2013). After a review of the legitimacy literature (e.g. Bitektine, 2011;

Deephouse and Suchman, 2008) and examination of our data, we defined both the

drivers and effect indicators, an approach taken for the analysis of intangibles such as

reputation (Fombrun et al., 2000; Helm and Klode, 2011) but novel to legitimacy. Our

analysis was based on the identification of three measures—density, cultural distance,

and relational affinity—as indicators of the drivers of legitimation (Vergne, 2011) and of

sentiment as an effect indicator. Drivers of legitimacy address legitimation as a public

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discursive process in which organizations are problematized (Hudson and Okhuysen,

2009) in terms of their adherence to publicly-evaluated norms and expectations

(Deephouse and Suchman, 2008). While density of conversation gives an indication of

the presence (or absence) of a discursive negotiation and has extensively been used as a

legitimation measure (e.g. Berrone et al., 2009; Hannan and Carroll, 1992; Kostova and

Zaheer, 1999), scholars have argued that it may not sufficiently explain legitimacy gains

because it might mask other potential explanations (Baum and Powell, 1995; Zucker,

1989), such as attraction of attention in relation to scandals (Bansal and Clelland, 2004).

Wry et al. (2011) suggested evaluating cultural elements, such as common stories and

vocabularies shared by the beholders of legitimacy and the subjects of legitimation

while Van Wijt et al. (2013) proposed examining relational elements that facilitate

connection (Galaskiewicz, 1985), coordination, and dialogue (Battilana et al., 2009)

among the beholders and subjects of legitimation. Relational and cultural elements are

particularly interesting to observe in social media engagements since geographical

distance reduces cognitive proximity. In accordance, we defined cultural distance and

relational affinity as legitimation measures. Lastly, we performed a sentiment analysis

that has previously been used to measure online reputation and legitimacy (Arvidsson,

2012; Turney, 2002) because it reflects the positive or negative judgments about

organizational actions by stakeholders. To operationalize the legitimacy indicators we

developed the following measures: Density. As a proxy of density, we measured the

number of tweets over time. Using a Twitter application programming interface (API),

we extracted tweets outbound from the Health Corporation SED account (3,349 tweets)

and all tweets in Twitter that mentioned Health Corporation (43,904 tweets) for the

period between January 2011 to February 2013. We then longitudinally analyzed density

to determine the number of conversations that were held on the Twitter platform

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regarding Health Corporation from its launch to one year subsequent. Cultural distance:

As proxies for common stories and vocabularies, we measured differences in the topics

of conversation between the firm and the stakeholders. After conducting the automated

topic mining of the tweets posted in the Health Corporation account and the tweets

regarding Health Corporation posted by stakeholders, we manually analyzed each topic

and its words. By classifying the topic and their words into 61 first-order codes and then

5 second-order codes (business, CSR, disease, interaction, and jobs), we were able to

identify a typology for the discourses. (Table I shows the first- and second-order codes,

words, examples of tweets and the calculations used in the automated topic mining.) In

the process of defining the various stages, we calculated the number of topics per stage

in the Health Corporation and stakeholder samples. To define distance, we calculated

the percentage of second-order codes related to each topic per stage in the Health

Corporation and stakeholder tweets and compared the percentage of second-order codes

per stage. A low percentage indicated low distance and, therefore, similarity in the

topics of conversation between Health Corporation and its stakeholders and a high

percentage indicated high distance and, therefore, dissimilarity in the conversation.

Relational affinity: As proxies for relational affinity, we identified the type of

stakeholders and the dialogical components of the conversations. To detect which

stakeholders Health Corporation directly reached over Twitter, we analyzed the

“followers” of Health Corporation’s SED Twitter account and categorized them into

different stakeholder groups. Followers were defined as those account holders who have

subscribed to the Health Corporation Twitter account and therefore directly receive the

messages that Health Corporation disseminates over Twitter. We coded all followers

manually according to the information each follower displayed in his/her Twitter

account (e.g., “I am 28 years old and diabetic”). Expanding upon O’Riordan and

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Fairbrass’s (2008) categorization of the stakeholders of pharmaceutical companies, we

then built the categories of the stakeholder groups iteratively during a first coding phase,

which resulted in a total of seven categories: CSR community, general public, general

health community, patients with disease, disease community, communication

consultants, and other businesses. We took the same approach to analyzing the

“following” stakeholders, which we defined as those stakeholders from whom Health

Corporation receives a tweet after they post. We then calculated the percentages of each

stakeholder group. We also analyzed online interactions (Rybalko and Seltzer, 2010)

through the Twitter API of each tweet that Health Corporation disseminated. The

Twitter API disclosed whether a tweet was (a) directed toward another account holder,

(b) a direct reply to a Twitter message from another account holder, or (c) a retweet (a

message that had been originally posted by another account holder and is now being

redistributed by the Health Corporation’s SED). Following Rybalko and Seltzer (2010),

we classified the tweets into four categories based on their relational intent: interactive,

non-interactive, retweets, and responses. We then determined the percentage of

interactive tweets compared to all disseminated tweets sent during each of the three

stages to gain insight into Health Corporation’s interactivity with it stakeholders and the

changes in this interactivity over time. Sentiment: We measured evaluative judgments of

Health Corporation by conducting a sentiment analysis of the social media content over

time. Sentiment analysis is a technique that identifies positive and negative words in

texts with the use of natural language processing and computational linguistics

(Arvidsson, 2012; Nielsen, 2011; Thelwall et al., 2010). We calculated the sentiment

score of the polarity in a text (tweet) using a pre-coded wordlist (the AFINN database)

to identify negative and positive sentiments in texts using a calculation formula and

algorithm described in Nielsen (2011).

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-------------------------------------------

INSERT TABLE I ABOUT HERE

--------------------------------------------

Third step: To systematically examine the interplay between institutional changes with

actions over time, our third step was to re-visit the collected data. As recommended in

process research (Langley, 1999), we refined our case chronology by comparing

evidence of internal dynamics of change extracted from the interviews and archives

with evidence of legitimacy change as measured by legitimacy indicators. Specifically,

to understand the recursive relationship between actors’ agency and the evolving

organizational-level context, we sought textual evidence of the role of

interdependencies and of the contextual factors that affected them. One means of doing

so was to review SED strategy documents and the interview transcripts of SED

members to identify the antecedents, forms, motives, and outcomes of the engagements

and instances of changes in practice and routine on the part of the main actors. By

relating the changes in legitimacy indicators with the roles taken in the evolving

stakeholder engagement strategies and practices and then corroborating these with our

textual analysis of the role interdependencies, we were able to achieve a further level of

abstraction in our labeling. Specifically, we were able to identify a category of

instigators who originated new ideas or practices and in turn shaped a new form of

legitimacy strategy. The research process resembled episodes of “intense discussions”

and “trial-and-error drawings” to achieve “what, in the end, felt right and true to the

data” (Smith, 2002, p. 395), and it permitted triangulation of the data and methods using

SED informants to verify the findings at key points in the analysis (Creswell and Miller,

2000).

After refining our conception of the three stages of change, we incorporated the

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resulting stage chronology into a graphical analysis. For the sake of space, in the

legitimacy tables and figures that will be iteratively introduced in the findings section,

we show only the final information regarding the differences between Health

Corporation and stakeholders’ tweets per stage.

FINDINGS

Health Corporation’s SED initiated its social media strategy with the launching of a

Twitter account in January 2011. Although Health Corporation’s SED has a long

tradition of stakeholder engagement with SD issues, it was unable to generate the

legitimacy that it had envisioned until almost one year after the launch of its strategy.

We analyzed the means by which the SED coped with the tensions generated by the new

engagement process during three main stages: strategic manipulation; networked

strategy limited to contextual engagements; and networked strategy, contextual and

structural). Figure 1 depicts the process of change.

-------------------------------------------

INSERT FIGURE 1 ABOUT HERE

--------------------------------------------

Stage 1: Strategic manipulation (2010–February 2011)

Until the launch of its social media platform, Health Corporation’s SED engagement

activities had been focused on face-to-face meetings, workshops, and conferences with

selected stakeholders. They included such events and programs as “Changing the A

Illness” and “World A Illness Day” (as disclosed in Health Corporation Sustainability

Reports). The objective of these activities was to engage “with multiple stakeholders to

address key areas of our business” and to “find common ground for more sustainable

solutions” (Health Corporation Report, 2010, p.13). Health Corporation’s SED was

responsible for selecting the salient stakeholders, organizing meetings, defining the

18

central issues based on information collected while holding stakeholder consultations,

and ensuring that action plans were implemented. By the end of 2010, Health

Corporation had defined a new engagement approach for addressing SD issues that

aimed at introducing additional stakeholder groups to engage in a dialogue.

The SED’s new strategic plan acknowledged the current engagement situation and

mandated a transition toward better engagement that would lead to legitimacy gains.

The strategic plan defined new principles of engagement that involved “Sharing

Challenges in the Open” and “Co-creating Solutions” through “Social Media Dialogue”

in order to shift from “Focusing on the Inner Circle to Fully Integrated SED

Communication to all Stakeholder Groups” (Health Corporation SED 2011 strategy,

internal document).

To achieve these goals, the SED launched a new Twitter account, the “Health

Corporation SED,” in January 2011. Two managers at SED, Tom and Bob

(pseudonyms), were made responsible for managing the account, although this task

comprised only about 10% of their entire workload. They immediately faced the

challenge that social media engagement was unfamiliar to Health Corporation: “Fact is,

we don’t know yet exactly how to handle Twitter” (RES2, 28.3.2011). With the

introduction of the Twitter account, suddenly the engagement process was open to

multiple, heterogeneous stakeholders and topics, which increased the complexity of the

engagements. There was “a lot of uncertainty (in managing Twitter)” (RES3,

28.3.2011). Also for some SED members, Twitter was not considered “serious enough

to treat illnesses” (RES2, 1.11.2011).

During the first months after the launch of the Twitter account, the primary initiative

taken by Bob and Tom was to issue messages regarding the SED addressing topics such

as the launching of the new sustainability report or its programs on climate change. As

19

the SED managers explained, “We have great examples of corporate social

responsibility. That is what we want to communicate” (RES2, 28.3.2011). However, the

SED team was not able to engage with multiple stakeholders or provoke online traffic

about the organization, as evidenced by the low level of interactivity (6.3%) in the

conversations and low density of tweets (a maximum of 1500) in the first month. Figure

2 shows the density of stakeholders and Health Corporation tweets per month per stage;

Table II, meanwhile, shows the percentage of interactivity per stage. The results

indicated that the members comprising the “following” and “followers” of the SED

Twitter account were mainly the CSR community; whereas 33.9% and 31.5% of the

stakeholders, respectively, were “following” and “followers,” only 9.4% and 3.2% were

patients. Table III and IV show the percentages of followers (III) and following (IV) per

type and stage, where N represents the number of followers or following in each stage.

These results indicated that the SED was only able to engage with stakeholders with

whom it had already established close relationships.

-------------------------------------------------------------------------------

INSERT FIGURE 2 AND TABLE II, III AND IV ABOUT HERE

-------------------------------------------------------------------------------

The SED acknowledged the importance of the CSR community, but it recognized that it

was not the main target stakeholder group. The SED managers explained that several

institutional and organizational constraints had prevented them from engaging with

other more strategic stakeholders, such as patients or the medical community, using

Twitter. These constraints included the engineering-rooted culture of the organization,

which was reflected in its use of scientific language and terminology that contrasted

with the informal language used in social media platforms; the institutional orientation

to hierarchical processes requiring approval for all forms of external communication;

20

and the establishment of fixed working hours that ended at 4 PM local time coexisting

alongside a policy that customer complaints must be resolved within 48 hours, which

prevented SED managers from conducting real-time conversations over the Twitter

platform.

Regarding the cautiousness of their approach to new and unknown stakeholders and

their emphasis on the importance of controlling the topics of the engagements, the SED

managers stated that they viewed Twitter “as any external media channel, where certain

corporate procedures must be followed…. We have a strategy that we have to follow;

you have to communicate (get approval by the communication department) before

sending anything in social media” (RES2, 28.3.2011). Rooted in recognition of

institutional and organizational constrains, the SED’s controlled and cautious approach

to stakeholder engagement—“Our goal,” one manager informed us, “is not to make

mistakes” (RES3, 28.3.2011)—resulted in a strategic manipulation approach that did not

provide opportunities for legitimacy building.

Stage 2: Limited Networked strategy: (March 2011–October 2011)

Stage two occurred from approximately the middle of March 2011 to the end of October

2011, when Tom and Bob decided to change their approach to online engagement.

Experimenting with the Twitter account, they often confronted institutional constraints

and Health Corporation norms, such as the assigned working time problem noted above

or policies requiring the use of a formal tone in conversations. As a consequence of

these policies and procedures, one manager stated, “officially, I am only working 10%

on it, but yesterday I spent twelve hours just in one day” (RES2, 1.11.2011). He also

stated that, “I post in a much more personal tone than originally intended” (RES 3,

28.3.2011) in order to communicate with stakeholders in a tone appropriate to the

Twitter platform.

21

To foster an understanding of how to make contact with online stakeholders, Tom and

Bob reviewed patient blogs and investigated how others in the medical community were

using Twitter. Their review of patient online communities affected their selection of

conversation topics, resulting in a decreased cultural distance between the SED and

stakeholders. As Tom explained, “I think that we're learning a lot about the types of

messages people want, especially, for example, the diabetes community. So by

following their conversations, I can see what they really want is to have more messages

around normalizing diabetes” (RES2, 11.10.2012).

Perhaps most importantly, Tom and Bob realized that their status as representatives of a

pharmaceutical company was very much challenged in the Internet environment.

Stakeholders did not appreciate their attempts to control ongoing conversations within

patient forums or under a given hashtag (a Twitter function in which tweets concerning

the same issue are subsumed and merged into an ongoing conversation with the use of a

pound sign and phrase or term—e.g., #diabetics). For instance, one Tweet stated,

“@Health Corporation SED Paula seen the clown this [drug] company gave millions to

[company linked in a video]. This same company has a drug on the market”

(momwithdiabetes, 7.11.2011). Tom and Bob resolved this conflict by focusing on

contextual engagements. They learned the names of their key stakeholders, identified

their rituals of response, and detected their own status in the network:

“@momwithdiabetes Hi Susan! Could you be more specific? We really are not going

for a clown image!” (Health Corporation SED, 8.11.2011). The topics of the

engagements, in turn, became increasingly influenced by this effort to know the

stakeholders, a point that Tom acknowledged when he explained, “I also know who big

influencers are and so I do target my messages sometimes around what they like…. So I

22

would say that has definitely become part of my topic selection process” (RES2,

11.10.2012).

After Tom and Bob gained an understanding of the issues that stakeholders wanted to

discuss—particularly related to diseases, the launch of some products, and the

difficulties of minorities in obtaining treatment—they increased the number of tweets

that they issued regarding these topics. The result was that distance between the SED

and stakeholders regarding the topic of “disease” decreased from 26.9% during stage

one to 12.1% during stage 2, while the distance regarding CSR, previously the main

focus of the SED, decreased from 65.5% in stage one to 45.6% in stage two. Figure 3

shows the measure of the distance between the codes of Health Corporation and the

stakeholders at each stage.

--------------------------------------------

INSERT FIGURE 3 ABOUT HERE

--------------------------------------------

During this experimental stage, Bob and Tom realized that each stakeholder or

stakeholder group had a set of topics of conversation (or agendas) in which they were

interested and that entering the conversation required gaining acceptance as part of the

community. They also discovered that “there are agendas by a variety of stakeholders of

which we are not aware of, and where we might want to join,” something made possible

because social media is “close to real life conversation” (RES2, 11.10.2012). An

example of Tom and Bob being invited to enter a dialogue with a stakeholder can be

found in the following exchange of tweets: Ophea’s first message: “RT

@HealthCorporation: Motivating! RT @DiabetesOnline: Exercise can limit diabetes,

study says http://bit.ly/qRhNYA” (Opheacanada, 7.09.2011). Health Corporation’s reply:

“@opheacanada Thanks for the RT! And keep up the fantastic work you are doing for

23

kids!” (Health Corporation SED, 7.09.2011). The results of our analysis of the

development of Twitter followers, shown in tables III and IV, reveal that an increased

balance was obtained between the stakeholder groups during the stage of contextual

engagement. In stage two, 21.5% of followers claimed to be members of the health

community, and 13.5% to be patients, compared with 10.3% and 3.2%, respectively, in

stage one. 14.9% were general public. While the SED’s connection to the CSR

community remained strong, its engagement with des-institutionalized activist

(including patients) and the medical community also started to gain importance.

Interactivity with the tweets disseminated by Health Corporation reveals that the

relational composition of the tweets also changed in favor of higher interaction (see

table II). Specifically, the percentage of non-interactive tweets decreased from 65% in

stage one to 27% in stage two, and the interactive tweets (including interactive and

interactive responds) increased from 10,1% in stage one to 32% in stage 2 (see table II).

Also the stakeholders started to express a more positive sentiment toward Health

Corporation over each stage (see Figure 4).

-------------------------------------------

INSERT FIGURE 4 ABOUT HERE

--------------------------------------------

Despite increasing their outreach to and interaction with stakeholders, Bob and Tom’s

engagement capacity was limited by cognitive and time factors. Tom and Bob

acknowledged that neither of them had the information necessary to answer all the

questions posed during contextual engagements nor enough time to attempt to do so as

the number of contextual engagements increased, “because if we want to go out and

listen to specific communities about what do they talk about … you need to have big

resources behind you” (RES5, 11.10.2012). A belief in keeping control of the

24

conversation, however, remained embedded in their understanding of how stakeholder

engagement should work at SED. Not convinced of the need to provide corporate access

to Twitter to other employees, top managers argued that if more people were exposed to

stakeholder engagement, there would be a greater the risk of a reputational crisis: “The

risk … prevents us from using various types of dialogical media” (RES1, 1.11.2011).

Stage 3: Networked strategy: contextual and structured (November 2011– January

2013)

Stage three occurred from early November 2011 to January 2013, when all four

legitimacy indicators showed that the SED was beginning to gain legitimacy. During

this period, cultural distance decreased regarding all topics. It decreased to 16% in

Business, 0.2% in CSR, and 12.4% in disease. “Jobs” was not heavily addressed by

SED since other social media tools were dedicated to it and since SED only

occasionally directed these tweets to Facebook (see figure 3). At the same time,

relational affinity (including interactive responses) increased from 10.1% in stage one to

36.2% in stage 3 (see table II); the density of tweets doubled to 3500 tweets per month

from approximately 1500 during stage one (see figure 2); and sentiment, which

oscillated around 60% during stage 2, fluctuated between 63% and 93% in stage 3 (see

figure 4).

As the effectiveness of the new legitimacy strategy became recognized outside the SED

department by Health Corporation top management, Bob and Tom were invited to

present their practices to other departments at Health Corporation. As Bob explained, “I

gave a presentation to the corporate branding team about how Twitter can be useful …

and all of a sudden it gets put into their planning processes” (RES2, 1.11.2011). Top

managers at Health Corporation agreed on the advantages of allowing other employees

to have corporate Twitter accounts and the expansion of Twitter activity across the orga-

25

nization. To institutionalize the best practices and norms for engagements developed by

Bob and Tom, they introduced structuring tools, such as new “social media guidelines,”

that we call, to emphasize their structural and relational role, “terms of engagements.”

As Bob explained, “We have more guidelines; we have also been doing quite a bit to

make people feel safe” (RES2, 11.10.2012).

In addition, Health Corporation introduced new mobile communication technologies,

such as tablet computers, and started to create a network of relations among employees

who opened accounts. Together with the Health Corporation communications manager

and the new Twitter account holders, Bob and Tom began holding monthly meetings,

distributing information lists periodically, re-tweeting interesting tweets, connecting

people through Twitter, training employees by giving PowerPoint presentations that ex-

plained the guidelines, monitoring of general sentiment and providing frequent advice.

SED top management acknowledged the importance of building relationships with pre-

viously unknown stakeholders without excessively controlling the engagement despite

the existence of uncertainty: “We have to recognize that sometimes we set the agenda,

sometimes it will be them [the stakeholders] who will set the agenda” (RES1,

07.11.2012). This view was reflected in the social media guidelines, which stated, “We

generally encourage anyone to participate actively in social media” (Health Corpora-

tion, social media guidelines, p. 1), and which encouraged employees to participate in

open dialogue without having to control the topic of engagement: “it’s a conversation.

Talk to your readers like you would talk to real people in professional situations… Con-

sider content that’s open-ended and invites response. Encourage comments. You can

also broaden the conversation by citing others” (Health Corporation, social media

guidelines, pp. 1-2).

26

The new legitimation approach resulted in the introduction of some new stakeholder

claims into Health Corporation’s sustainability agenda. These stakeholders were often

not belonging to organizations which SED had previously related to. For example,

when, in one discussion, stakeholders “started the discussion about public figures and

persons (with diabetes) who do not change their lifestyle” and finally came up with

“Paula Dene, a cook that has diabetes” (RES2, 11.10.2012), SED introduced this into

their programs. When a stakeholder tweeted to the SED, “We want to create a creative

writing competition for children with #diabetes and their #travel stories. Interested?”

(Diabetesrelief, 2.11.2011), SED responded, “Taking it up at this week's meeting! Hope

to get back to you soon” (Health Corporation SED, 2.11.2011). Beyond this and similar

anecdotal evidence, social media is not a space where systematic behavioral intentions

on firms’ activities are reflected or all debates are solved. We observed how some

concerns from new stakeholders were introduced into the firm´s sustainability agenda as

a result of social media conversations while others were left unresolved. In the analysis

of the aggregated data the improvement of the general sentiment about Heath

Corporation is also observed.

DISCUSSION

In this study, we sought a better understanding of the legitimation process in a complex

and heterogeneous environment where engagements regarding SD issues occurred

online. We first described the change from face-to-face engagements mainly built upon

a strategic manipulation strategy to online engagements built on a new, networked

strategy. We finally presented the networked legitimacy strategy as an option for

legitimation that overcomes the limitations of other legitimacy strategies presented in

the literature.

27

The process and mechanism of change in the introduction of a new engagement

environment

The results of our case study showed that the introduction of social media into the

process of stakeholder engagement challenged the effectiveness of previous legitimacy

strategies. Based on our findings, we presented the processes and mechanisms that

enabled the transition from a face-to-face, centralized strategic manipulation strategy

(stage 1), to contextual engagements (stage 2) to an online networked strategy (stage 3).

From strategic manipulation (stage 1) to contextual engagements (stage 2): Breaking

rules and routines and relaxing the locus of control.

Our case study shows how an organization with experience regarding coordinated and

centralized stakeholder engagement struggled to engage with new stakeholders using

social media. We show that breaking the organizational rules, norms, and routines and

relaxing the internal locus of control facilitated organizational legitimacy in the new

Internet based community.

The process of breaking rules, norms, and routines has been widely discussed as a driver

of change in organizational theory (Ahrne et al., 2007; Dyer, 1998; Scott, 2001; Weber,

1947), but it has been neglected from a legitimacy perspective beyond some

acknowledgement of the importance of suppressed judgments and clandestine practices

in legitimacy building (Bitektine and Haack, 2015). Our study demonstrates the

importance of analyzing the organization as a relational entity that is able to destabilize

its current institutional order (Bitektine and Haack, 2015), ultimately adapting to new

cultural norms and network forms.

We argue that the adaptation to this new cultural and network order is ultimately related

to the organization’s ability to challenge the assumptions about who influences the

legitimation process. Our case showed how SED engagements, prior to the launch of its

28

Twitter account, were based on an internal view of the locus of control. Because they

were convinced of their ability to influence legitimacy judgments, SED managers

effectively selected the topics of engagement, as well as the language, timing, and tone

of the messages, and the number and type of stakeholders that participated in each

engagement.

After the launch of the Twitter account, SED managers realized their exclusion from

certain conversations and sought to gain access to new networks (e.g., patient

communities) and new topics of engagement (e.g., food habits of diabetic people in

certain communities). They did so by adapting to the new cultural order of social media

(e.g., the use of an informal tone, instant replies, and personalized conversations), in the

process gaining cultural alignment with the new stakeholders and, therefore, gaining

legitimacy (DiMaggio, 1997). The SED managers also realized that they needed to relax

their internal locus of control and accept that stakeholders would influence their

agendas. In other words, they learned to participate in the SD debates without having to

control the process of engagement. We see legitimation as a process for developing

subjective perceptions not only about fairness and the distribution of justice (Major and

Schmader, 2001; Tost, 2011) but also about cultural alignment (Suchman, 1995) and

social domination.

Our case study shows how, in the context of social media, an important condition for

legitimacy building is the relaxation of the internal locus of control, which allows for

mutual recognition between a corporation and its stakeholders. SED’s new strategy

provided the opportunity for acquiring new cultural skills useful for avoiding negative

judgments in social media. However, this also required the investment of considerable

time and resources in building new relationships with previously unknown stakeholders.

SED’s engagements, meanwhile, were contextual, depending on SED managers’

29

particular ability and interest in relationship building with a particular stakeholder. They

were also constrained by the cognitive and temporal limitations of the SED managers.

Purely contextual deliberative engagements that encourage individual decision-making

are considered too idealistic, limited (Baur and Arenas, 2014; Kuhn and Deetz, 2008;

Scherer and Palazzo, 2007), and risky (Raisch and Birkinshaw, 2008) for corporations.

For this reason, the development of contextual engagement has often promoted new

discipline and control mechanisms (Raisch and Birkinshaw, 2008) such as rules and

hierarchical approval processes. However, these control mechanisms reduce managers’

ability to adapt to new cultural (Jarzabkowski et al., 2013), network, and institutional

requirements. The online environment in particular is characterized by the seeking of

democratic aims by a plurality of publics (Papacharissi, 2010). Interactions are

numerous and polyphonic (Castelló et al., 2013) and the principles of relationship

building amongst actors are based on the freedom of speech (O'Mahoney and Ferraro,

2007) and community belonging (Bennett, 2003b). Restricted, centralized, and overly

controlled stakeholder engagements conceal the capacity to build relationships through

social media. The relaxation of the locus of control, meanwhile, promotes adaptation to

new cultural norms. However, learning new cultural norms is not enough. Moral

legitimacy in the Internet also requires the investment of considerable time and

resources for managers to develop a position open to dialogue with an increasing

multiplicity of des-institutionalized publics influencing in the general sentiment.

From contextual engagements (stage 2) to networked engagements (stage 3):

Introducing the terms and networks of engagement

We analyzed how the SED leveraged the network capacity of the organization by

opening up the engagement process to multiple employees who were able to cope

contextually with the polyphony of the stakeholders’ claims. Developing a range of

30

departmentalized structures, such as a social media manager for each department, was

not the best solution since the development of different departments, platforms, or

specific roles in charge stakeholder engagement might create tensions among

organizational groups (Gibson and Birkinshaw, 2004; Greenwood et al., 2011) without

actually helping to determine how engagements should be coordinated (Greenwood et

al., 2011; Schreyögg and Sydow, 2010). The development of terms and networks of

engagement solves this coordination problem without pre-establishing strict

organizational structures that restrict the access of any employee to contextual

engagements with the public. Such use of networked strategies does more than drive the

enactment of contextual engagements: it also provides an organizational frame of

reference to give a sense of direction and coordination. At the same time, training

programs, lists of employees’ already in the social media, and clear guidelines reduce

the risk of employee misbehavior, resolving some of the limitations related to pure,

unregulated contextual engagements.

The networked legitimacy strategy: A comparative approach

Building on the above findings, we analyzed both process dimensions, such as

legitimacy outcomes and communication orders, and structural characteristics as

necessary conditions for the desired outcomes (Mohr, 1982). The structure and process

dimensions have been defined as fundamental to defining organizational strategies

(Miles et al., 1978) and enabling a holistic understanding of the phenomenon of

legitimation (Miles et al., 1978). Table V summarizes the characteristics of the

networked strategy examined in this longitudinal case study and compares it to the

previously presented legitimacy strategies.

-------------------------------------------

INSERT TABLE V ABOUT HERE

31

--------------------------------------------

Baseline theories

Social media platforms are not only technologies influencing communication, but also

spaces that transform societal forms of relation and power (Benkler, 2006; Castells,

2008). Sociologists and communication theorists have approached this phenomenon by

examining the communication dynamics between production communities (Wilson and

Peterson, 2002) and societal actors such as activists (Bennett, 2003a), or the global

governance dynamics between powerful and powerless actors (Castells, 2008). In

addition to challenging centralized legitimacy building theories, social media provides a

new context for identify how firms cope with increasingly complex engagements in

contexts where relations must be explained beyond the economic nexus of contracts

(Jensen and Meckling, 1976) and stakeholders are displaced from their established

institutional roles (Whelan et al., 2013).

Structural characteristics of the networked strategy

The conditions of social media have altered the structural characteristics of the

engagement between firms and their stakeholders (Castelló et al., 2013; Fieseler and

Fleck, 2013). Engagements are no longer defined hierarchically by the firm but are open

to participation by multiple publics. The open and inclusive nature of social media

platforms leads to engagements among different stakeholders where the locus of control

should not be internal, as in the strategic manipulation approach, or external, as in

isomorphic adaptation, but should rest in the assumption that moral legitimacy emerges

in a process of mutual recognition and dialogue.

Instead of intersubjective socially oriented engagements (Scherer et al., 2013), as

presented in moral reasoning strategy, we argue that in the networked strategy agendas

are co-constructed and progressively coordinated in multiple and contextual

32

engagements. A networked strategy promotes the individuality of each member of the

social group (Baldassarri and Diani, 2007) while facilitating the connection among them

and their common processes of sense-making (Beckert, 2010; Diani, 2005). To ensure

the success of their engagements, however, organizations tend to define networks and

terms of engagement as guiding principles.

Our findings, however, highlight the importance of a non-hierarchical governance

approach to engagement. Since legitimacy is built on the stakeholder’s capacity to

access the debate on equal terms, its acquisition requires a transition in the emphasis in

moral reasoning strategies from those built on ideal speech situations and conditions of

induced democratic deliberations to those founded on open access, mutual recognition,

and dialogue. The use of horizontal, non hierarchical, and non institutionalized

conditions of governance found on the Intranet contraindicates the employment of

strategic manipulation, isomorphic adaptation, and moral reasoning strategies that are

based on a hierarchical firm-centric or societal-centric relationships between firm and

their stakeholders.

Communication order of the networked strategy

Strategic manipulation and isomorphic adaptation strategies tend to be organized by the

firm in one-way communication events (Gruning and Hunt, 1984; Morsing and Schultz,

2006), such as in showrooms, congresses, fairs, or programs with selected stakeholders.

In contrast, networked strategies favor two-way communication (Morsing and Schultz,

2006) between the firm and its stakeholders, favoring dialogic engagements. The

organization of engagement in networked strategy is conducted through open platforms

of communication in which contextual exchanges are made possible and facilitated by

symmetric two-way communication engagements. Networks and terms of engagement

provide a direction that reduces the uncertainty of purely contextual engagements in

33

which each employee must identify the conditions and objectives of the engagements

for themselves.

Legitimacy as the outcome of engagements

Legitimacy, in the context of globalization and social media communication, emerges

from the extent to which the firm participates in public dialogues and considers the

worth of its conversational counterpart. Manipulative engagements aiming at pragmatic

legitimation are considered insufficient by publics that value voice, dialogue, and a

multiplicity of judgments (Bennet and Iyengar, 2008). Unlike in moral reasoning

strategies, moral legitimacy does not relate only to the process of facilitating

deliberation on a particular SD issue, but rather surfaces through participation in open

multistakeholder platforms where the perception of general sentiment is prioritized at

the resolution of the particular debates. As shown in this case study, moral legitimacy

appears when the firm relaxes its locus of control, recognizes the value of multiple

publics, and establishes dialogues with them without imposing institutional conditions

to external stakeholders.

Contributions, limitations, and research agenda

The first contribution of this study lies in its unique longitudinal approach to proposing

a new, networked legitimacy strategy to cope with heterogeneous and often conflicting

SD issues in the context of social media. Uncovering the characteristics of such a

networked strategy and its relation to legitimacy advances insight into the little-

understood phenomenon of the corporate management of SD issues in globalized and

online environments. We first described a new context of engagement (through social

media) in which the previous relations between a firm its publics were challenged by a

multiplicity of demands. We then argued that, in such contexts, firms should engage

with a new strategy that focuses on participating in dialogues rather than reaching

34

agreements under the conditions of ideal speech or controlling engagements with

stakeholders. We then defined constrains that firms face in adapting this new strategy

and related them to the locus of control.

Our study makes contributions to two streams of literature. First, it contributes to the

political CSR literature by bringing a networked approach to understanding the

engagement process for coping with SD issues. Our description of the networked

strategy complements the extant literature that emphasizes the importance of the

creation of structures, such as standards and norms, to constrain the power of firms over

the engagement process (e.g. Banerjee, 2003; May et al., 2007; Mena and Palazzo,

2012; Rasche et al., 2013). Previous research has emphasized the use of structures to

protect stakeholders via contracts or laws (Davis, 2005; Sundaram and Inkpen, 2004) or

described the consequences of their absence as resulting in a lack of standards (Gilbert

et al., 2011; Sethi, 2002) or in “soft governance” (Morth, 2005; Scherer and Palazzo,

2011). The identification of the limitations of these structures in research taking various

political perspectives and methodological approaches, however, has resulted in claims

for more effective enforcement of laws and standards from authorities (Vogel, 2009) and

the creation of conditions of democracy to ensure input legitimacy (Mena and Palazzo,

2012).

The metaphor of the networked society (Castells, 2000) as a theory for stakeholder

engagement removes the focus from the conditions of structural power, opening up the

possibility for understanding more soft constraints on legitimacy acquisition. The

analysis of the locus of control, we propose, is a way to bring sociological perspectives

into the analysis without de-emphasizing the importance of institutional power relations

(Gillespie and Dietz, 2009). Sociological networked analysis during the legitimation

process includes stressing the importance of recognition and status (Castells, 2000) to

35

stakeholders in the process of engagement. It also gives us a way to accept the

heterogeneity of stakeholders and the plurality of their perspectives regarding SD issues

(Hardy and Phillips, 1998) without assuming a purely psychological or relativistic

position (Wicks and Freeman, 1998).

We, therefore, make a contribution to an understanding of the challenges resulting from

the emergence of globalized, networked environments that, we argue, require the use of

a networked strategy to gain legitimacy. Managing SD issues through corporate social

responsibility policies and practices has become a key dimension in gaining legitimacy

(Lamin and Zaheer, 2012; Marcus and Fremeth, 2009; May et al., 2007; Porter and

Kramer, 2011), but the processes of coping with the tensions that these new processes

generate remains underexplored (Lamin and Zaheer, 2012). Our study sheds light on

these tensions and provides insight into the organizational implications of managing

legitimacy.

Second, this study contributes to legitimacy literature with an analysis of the

legitimation structures, processes, and outcomes in environments of institutional

complexity. Scholars have analyzed organizational responses to legitimacy claims and

their alteration and variability across time (Greenwood et al., 2011; Patriotta et al.,

2011) and studied a variety of legitimacy strategies shown to increase corporate

capacity to cope with different stakeholder demands (Pache and Santos, 2010; Scherer

et al., 2013) in organizations with numerous contexts, managerial skills, and perceptions

of legitimacy constitution (Scherer et al., 2013) and its relational implications (Diani,

2005; Van Wijk et al., 2013). Our study, though, is the first to empirically and

longitudinally examine how corporations cope with complex and heterogeneous

demands and to analyze the importance of the interplay among cultural elements such as

SD agendas, network elements, and the locus of control in legitimacy building, which

36

remains a challenging problem in institutional theory research (Van Wijk et al., 2013).

Bringing institutional theory to an analysis of political corporate responsibility yielded

new theoretical insight into previously unexamined elements of interaction within

legitimation processes.

Our study faced several limitations, especially since legitimacy measures are subject to

multiple constraints (Vergne, 2011). However, we believe that our analysis of different

sources of data supported our conclusions regarding legitimacy building. By proposing

a measure of legitimacy building based on four dimensions, we also contributed to an

understanding of the expansion of the frontiers between assumptions regarding

legitimation and the actual realization of legitimacy. We note, however, that we focused

our observation on a restricted source of legitimacy for Health Corporation. By

examining the use of Twitter, we were able to identify network and cultural affinities as

well as general sentiment, but were unable to explain behavioral intentions among

stakeholders or to provide more than anecdotal evidence of the resolution of debates and

their direct influence on firms’ activities. Finally, the study of social media interactions

is a growing sub-field, as shown in the increasing number of publications on this topic

(Huy and Shipilov, 2010; Kaplan and Haenlein, 2010). By studying this process closely,

we believe that we have contributed to a naturalistic generalizability, which allows for

the broadening of our findings to similar cases (Stake, 1994), and analytical

generalizability, allowing for the broadening of our findings to theory (Yin, 1984).

CONCLUSION

We began this paper by highlighting the complexity of stakeholder engagements related

to SD issues and the importance of legitimacy building in a globalized networked

society. By conducting a longitudinal case study of a multinational pharmaceutical

company during the launch and consolidation of a social media stakeholder engagement

37

tool—Twitter—we were able to illustrate the development of a new, networked

legitimacy strategy. By doing so, we showed how a new communication environment

was able to instigate change in the stakeholder engagements. Our analysis of the case

revealed the capacity of firms to recognize and change previously firm-centric

legitimacy strategies. Previous research into legitimacy has emphasized the importance

of firm efforts regarding stakeholder engagement efficacy, societal efforts in imposing

norms and standards, or ideal institutional conditions. Alternatively, we observed an

evolution of legitimacy strategies toward nonhierarchical, non regulated participatory

relationships that might enlighten a Copernican turn (Lozano, 2005) in the management

of SD issues.

38

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TABLES

Table I: Cultural affinity: Second order codes, first order codes, words, and examples

Second order codes

First order codes ”words” in auto-matic topics analysis Tweet example

Business

Approval of medicine; Business; Chi-nese market news; competitive analy-sis; court decision; financial analysis; financial news; financial reporting; HC in Chinese market; investor story; Kickbacks; management decision; market analysis; managing diabetes; new patents; personals decisions; prod-uct launch; product strategy; research alliance; research results; share price information; share recommendation; software change; treatment alliance

reporting - financial - ex-ecutives - business - …

13% Sales growth. Our 2010 Annual Report out now.

CSR

Animal testing,; Children and diabetes; CSR; CSR Award; CSR event; CSR performance; CSR report; drugs for poor; Employee ranking; obesity & di-abetes; pregnancy & diabetes; preven-tion program; women and diabetes

bottom - line - triple - en-vironmental - CSR …

Our CEO shares view on sustainable investment & how Triple Bottom Line is integrated into business strat-egy

Disease

Bleeding disorder; diabetes detection; diabetes program; diabetes statistic; di-abetes program; diagnosis; disease; Metabolism and hormones; obesity; Study on weight loss; treatment prod-uct; weight loss

diabetes - treatment - na-tionwide - health - obe-sity - …

Health Corporation Joins Nationwide Diabetes/Pre-Diabetes Treatment Al-liance - Diabetes Healt

Jobs

pharmaceutical specialists; physician jobs; financial jobs; internships for graduates; clinical texting personnel; technician workforce; administrative jobs; management/executive/director positions

Jobs &sales - - district - dbm - flagstaff - com-pensation…

Healthcare IT Jobs: SALES INCEN-TIVE COMPENSATION ANA-LYST Job: Healthcare IT Analysts at Health Corporation in NJ

Interac-tion

greetings and wishes; hope - good - well - lovely - thanks - …

Hi Rob. I have sent Christina a mail and we will get back to you! Re-gards, Scott

Method for calculating the automated topic mining: We represented the corpus of tweets as bags of words excluding web links and stop words (common words such as 'the', 'to', “re”) and used the frequency of the remaining words as elements in a tweet-by-word matrix and applied non-negative matrix factorization (NMF) on the matrix (Lee and Seung, 2001; Nielsen et al., 2005). The NMF resulted in sets of “words” that are called factors. A factor with loadings for tweets and a factor with loadings for “words” was created. For ease of interpretation, a winner-takes-all function was applied on the NMF factors across topics to exclusively assign each tweet and each word to a single topic. The number of topics was set to √ (min(#tweets,#words)/2) inspired by a rule of thumb in data clustering (Mardia et al., 1979).

Table II: Interactivity between SED and stakeholders per category per stage (relational affinity)

Tweets ExampleStage 1:1.2011-3.2011

Stage 2: 4.2011-10.2011

Stage 3: 11.2011-2.2013

Non-interactive tweets We will be in Lisbon encouraging healthy

lifestyles. Hope to see you there!

64.7 29.8 14.4

Interactive tweets @elainecohen Great blog on telecommuting!

6.3 16.8 19.5

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Interactive tweets responds

@badpancreas: Sorry to hear that. Is there someone from GlobalHealth I could pass on feedback/suggestions to improve things going forward?

3.8 15.2 16.7

Retweets RT @CSRwire: Reading the #CSR Daily today's top stories via @pointsoflight @greeneconpost

25.3 48.2 49.4

Total   100 100 100

Table III: Followers Health Corporation Twitter account, % per typology of followers, per stages, accumulated data.

Follower category DescriptionStage 1: 1.2011-3.2011 (n=184)

Stage 2: 1.2011-10.2011 (n=651)

Stage 3: 1.2011-2.2013 (n=3156)

CSR community

consultants, interested Users, blogs. forums, media outlet, campaigns, universities, NGOs, associations

31.5 34.3 32.4

General public no specific background displayed 45.7 14.9 12.1

General health community

medical companies, NGOs, forums, blogs, specialized media outlet, associations, campaigns, universities, centers

10.3 21.5 20

Patients with disease explicitly displayed 3.2 13.5 15.4

Disease community

NGOs, forums, blogs, specialized media outlet, associations, campaigns, universities, centers

4.3 7.8 9.4

Communications consultants Marketing, PR, Social Media 4.5 6.3 8.4

Other businesses corporate Twitter accounts 0.5 1.7 2.3

Total   100 100 100

Table IV: Following Health Corporation Twitter account, % per typology of following, per stages, accumulated data.

Following Category Description

Stage 1: 1.2011-3.2011 (n=180)

Stage 2: 1.2011-10.2011 (n=731)

Stage 3: 1.2011-2.2013 (n=3239)

CSR community

consultants, interested Users, blogs. forums, media outlet, campaigns, CSR related universities, NGOs, associations

33.9 35.9 31.1

General public no specific background displayed 46.7 18.6 17

General health community

medical companies, NGOs, forums, blogs, specialized media outlet, associations, campaigns, universities, centres

9.4 21.8 22.3

Patients with disease explicitly displayed 4.3 11.9 13.6

Disease community

NGOs, forums, blogs, specialized media outlet, associations, campaigns

3.9 9.2 13.1

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Communications consultants Marketing, PR, Social Media 0.6 0.3 1.2

Other businesses corporate Twitter accounts 1.2 2.3 1.7

Total   100 100 100

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Table V: Characteristics of the legitimacy strategies

Legitimacy Strategies/dimensions

Strategic manipulation Isomorphic adaptation Moral reasoning Networked

Structures and governance

- High order justification Imposed – managerial logic Adapted – civic logic Normative– pro-social logic Co-constructed - through participation – networked logic

- Authority and hierarchies Firm centric - hierarchical relation

Society centric - hierarchical relation

Formalized track of deliberative decision making - hierarchical

Equal access to participation – non hierarchical

- Locus of control Internal: Control in the firm External: Control outside the firm, in the social agent

Control in the deliberation process

Requires relaxation of internal locus of control and recognition of mutual influence

- Organization Programs and departments in the firm

Programs and projects lead by the firm to adapt new norms

Physical platforms for dialogue usually managed in partnership or multistakeholder forums based on representation

Online platforms, open to any internal and external stakeholder participation in open multistakeholder forums

- Rules and norms Rules of engagement defined by the firm

Defined by social actors Negotiated amongst stakeholders

Cultural rules co-constructed by the participants in the platforms, mediated by the platform. Networks and terms of engagement defined by the firm as guidance principles

Process dimensions

Communication order One way communications One way communications Two way symmetric communication

Two way symmetric communication. Based on open access to public platforms

Legitimacy outcomes Pragmatic legitimacy Cognitive legitimacy Moral legitimacy – based on the facilitation of deliberation

Moral legitimacy – based on open participation, mutual recognition and general sentiment

Base discipline Strategic management theory Institutional theory Political theory Communication and social media

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FIGURES

Figure 1: Legitimation strategies and the process and mechanism of change

Figure 2: Density: Amount of tweets of Health Corporation and Stakeholders from January 2011 to February 2013.

0

500

1000

1500

2000

2500

3000

3500

4000Stage 1 Stage 2 Stage 3

Numberof tweets

Time

Health Corporation

Stakeholders

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Figure 3: Cultural distance: Percentage difference between Health Corporation and stakeholders second order codes, per stage.

Busi

ness

CSR

Dise

ase

Jobs

Inte

racti

on

Busi

ness

CSR

Dise

ase

Jobs

Inte

racti

on

Busi

ness

CSR

Dise

ase

Jobs

Inte

racti

on

Stage 1 Stage 2 Stage 3

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

38.7

65.5

26.932.0

0.0

57.7

45.6

12.1

18.8

6.3

16.0

0.2

16.3

32.3

12.4

Figure 4: Sentiment of stakeholder tweets, from January 2011 to February 2013.

0

10

20

30

40

50

60

70

80

90

100

jan-

11fe

b-11

mar

-11

apr-

11m

aj-1

1ju

n-11

jul-1

1au

g-11

sep-

11ok

t-11

nov-

11de

c-11

jan-

12fe

b-12

mar

-12

apr-

12m

aj-1

2ju

n-12

jul-1

2au

g-12

sep-

12ok

t-12

nov-

12de

c-12

jan-

13fe

b-13

Stage 1 Stage 2 Stage 3

Sentiment

Time

61