Controlling Interdependence: Organizational Legitimacy

Because organizations are only components of a larger social system and depend upon that system’s support for their continued existence, organizational goals and activities must be legitimate or of worth to that larger social system. “Legitimation is the process whereby an organization justifies to a peer or superordinate system its right to exist, that is, to continue to import, transform, and export energy, material, or information” (Maurer, 1971:361). This legitimation is accomplished partially through the organization’s espousing legitimate goals and partially through its own value system.

In the most general sense the values of the organization legitimize its existence as a system. But more specifically they legitimize the main functional patterns of operation which are necessary to implement the values, in this case the system goal, under typical conditions of the concrete situation. Hence, béSddás legitimation of the goal-type and its primacy over other interests, there will be legitimation of various categories of relatively specific subgoals and the operative procedures necessary for their attainment. There will further be normative rules governing the adaptive process of the organization, the general principles on which facilities can be procured and handled, and there will be rules or principles governing the integration of the organization, particularly in defining the obligations of loyalty of participants to the organization as compared with the loyalties they bear in other roles (Parsons, 1956:68).

Legitimacy is bound up with social norms and values; and while it is not correlated perfectly with either law or economic viability, it bears some relationship to both. Actions or organizations may be legitimate, even though they are not specifically provided for in the law. Many customs of interpersonal and interorganizational behavior, such as reciprocity and fair but limited competition, are functional for the integration of the social system and hence are accepted but rarely codified into formal laws. Similarly, many economically viable activities áre neither legitimate nor legal, such as selling narcotics. There are also instances when activities are both legitimate and economically viable, though not legal, such as the production and selling of liquor during prohibition. If an activity is legitimate to a large enough segment of the population, it will probably be economically viable as well.

Many norms and values governing formal organizations are only imperfectly formalized in the legal system. Perhaps the best example of this are the laws governing incorporation. The charters of incorpora-tion granted and the powers and reasons for granting them are quite general and broad in scope. Whether or not the corporation, once established, can in fact survive depends upon whether it develops goals and operations perceived as legitimate by the larger society.

On occasion, the social acceptability that comes with legitimacy may be more important than economic viability. The Penn Central Railroad bankruptcy demonstrates the case of an organization which is not particularly economically viable, but which will not be allowed to die because the transportation provided is necessary to the nation. The airlines were subsidized by the government for quite some time to g keep them in operation, and the protection of infant industries or industries vital to national defense also illustrates governmental or social actions to assist in the survival of enterprises which might otherwise collapse if left unprotected from the vagaries of the economic environment.

Legitimacy is a conferred status and, therefore, always controlled by those outside the organization. As with the existence of social norms generally, legitimacy is known more readily when it is absent than when it is present. When activities of an organization are illegitimate, com- , ments and attacks will occur. While legitimation is a social process, it is not clear how large a part of the social system must confer its approval for an organization or its practices to be considered legiti-mate. We suspect that legitimacy need not be conferred by a large j segment of society for the organization to prosper. If objections are raised by some groups regarding the acceptability of an organization; the problem of legitimacy will be a function of how widely the objections are dispersed and whether sufficient interest is generated to sup- port the opposition.

It is also not clear by what process social collectivities come to judge an activity or an organization as being legitimate or illegitimate. Legitimation is, probably, a retrospective process, in which verbal justifications are mustered to provide approval for the organization in question. Organizations may themselves seek to establish their status in society by generating statements of their goals which in the current environment would be found to be acceptable by the relevant publics. When values change, organizations alter and restate their goals to give the appearance of supporting the new ideas. Thus, when the energy crisis was of great concern, one could observe many institutional ad-vertisements for oil companies, automobile firms, and others which pointed out how the various organizations were contributing to the solution of the problem. A few years earlier, when the environment and its protection was the rage, the same organizations and the same advertising activity was directed toward showing how this problem was being handled.

The retrospective character of legitimacy or of social justification generally implies that an organization reviews its past actions and outputs in the context of current societal values and interests. For the most part, there is ambiguity in the nature of action so that it is feasible to provide new justifications as values change. There is also a great deal ,of diversity in the values held by a society and its various subgroups at any one point in time, so that the probability of an organization finding some subgroup espousing values consistent with its activities would be quite high. The retrospective nature of legitimacy also implies that the same activity can be seen as simultaneously legitimate and illegitimate, in that the multiplicity of values and the ambiguity of reality permit conflicting interpretations of organizational actions. When CBS paid H. R. Halderman, the aide to President Richard Nixon who was convicted for his role in illegal government and political activities, for an interview broadcast on “60 Minutes,” the other networks attacked the practice of paying for news as illegitimate. On the other hand, the payment might be considered legitimate if you are concerned with the privacy of the individual and his right to refuse to discuss his life with others. One could see the act as a bribe to obtain exclusive coverage and competitive advantage or as a just payment for providing a public service. Legitimacy is determined as a function of other factors relating to the organizational action, such as self-interest or the desire to maintain the actions for reasons which may or may not be legitimate.

For the organizational strategist, the ambiguous, retrospective, and socially constructed nature of legitimacy are important features. The manipulation of social legitimacy to maintain social support can be achieved only if one is able to argue convincingly that what the organization is doing is just and worthy. The attempt by CBS to justify its payment to Halderman as payment for a personal memoir, while plausible, implicidy argued that the person was to be rewarded for being a participant in a national scandal. CBS might have had more success by adopting the position that Halderman should not be allowed to escape public questioning simply because he refused interviews without payment. Instead of being perceived as a competitor willing to violate industry norms for market advantage, it is possible ¡that CBS could have presented itself as a public servant willing to bear the cost of blackmail to serve the public interest and bring details of ¡the political scandals to light. Organizational legitimacy is not a given. It is the consequence of the interpretation of actions, and there is some latitude for describing actions in terms of legitimate social values.

An important part of the management of the organization’s en-vironment is the management of social legitimacy. While legitimacy is ultimately conferred from outside the organization, the organization itself may take a number of steps to associate itself with valued social norms. For one thing, the organization may alter or design its actions so that they fit a concept of established legitimacy. That is, the organi-zation may conform to social values. Alternatively, the organization may attempt to change the social definition of legitimacy with respect to its own operations and objectives. Since the alteration of broad social norms and values is quite expensive and problematic, what typically occurs is that the organization attempts to have its operations redefined as legitimate by associating them with other generally ac-cepted legitimate objectives, institutions, or individuals. We can illus-trate both strategies.

Clark (1956), examining the operation of adult education in Cali- fomia, has noted that in the course of adapting to the demands of their environment, the organizations involved may have inadvertantly changed their norms and values. Organizations, he suggested, may transform their initial values in the process of adjusting to emergent problems. Social values are more likely to be altered when they are precarious because they are not strongly held or widely shared. Social u; values tend to be precarious when they are undefined, when the posi-tion of functionaries is not fully legitimized, and when they are unacceptable to the host population (1956:328-329). Clark makes the in- teresting observation that the precarious values are likely to evoke movements or crusades. Firm values require no efforts, but proble- ; matic norms or values require action to ensure their continuance. Simi- larly, legitimate organizations are less likely to have to take actions to legitimize themselves than are organizations which are on the fringes of legitimacy.

Adult education in California was viewed as a marginal activity. Nominal public funds were made available; administrators and in-structors were accorded low status by their peers; and there were many who questioned whether it was even a legitimate school activity. This marginal status in part derived from the historical origins of adult education as remedial training for immigrants to learn English and other knowledge required for citizenship. As immigration gradually declined, this remedial function ceased to be important. But the organization did not simply go out of existence. State funding was allocated on the basis of attendance, and adult education confronted, on the one hand, an uncommitted clientele, and on the other, the fact that the students were the rationale for existence (Clark, 1956:333). Not surprisingly, there developed what Clark referred to as an “enrollment economy” (1956:333). Schools adapted their functioning to attract students, since students were the sine qua non of existence. Because of the diverse population served, the course offerings became increasingly heterogeneous, and the school adapted freely to changes in public taste. In other words, the adult educational system became primarily a service enterprise. This transformation, moreover, was completely at odds with common notions that educational direction was the educator’s responsibility not the student’s. Thus, in meeting short-term demands for enrollment, the adult educational system operated outside the norms of legitimate educational practice and thereby lost some of its claims for educational respectability (1956:335).

While the adult education system was quite able to justify its budget on the basis of enrollment, it began to find its role in the educational system challenged, and with it, its claim to resources. This forced the adult education system to develop rationales for its service function. One rationale was that adult education was a valuable public relations tool for the school system, as it involved more people with the schools. Another rationale was that adult education was geared to the demands of the public and thus could meet the complaints that schools were not relevant to public needs. As a consequence of the organizational adaptations to the environment, which required enrollment for funding, educational values were largely replaced by these new ideologies in adult educational programs. There is currently even some evidence that acceptance of these values is beginning to permeate the more traditional programs in education.

1. The Case of the American Institute for Toreign Study

The adult education system in California is a case of an organization adapting to environmental demands and then justifying its adaptations with an ideology more suitable than its former precarious educational values. In contrast, the American Institute for Foreign Study (AIFS) provides an example of an organization responding to a threatened illegitimacy by identifying itself, its methods of operation, and its output with other already legitimate social institutions. By associating with these institutions, the organization hoped to attain a similar legitimacy.

AIFS was, in 1965, affiliated with International Study Services, Inc., (ISS) a profit-making organization which was, in essence, a tourist agency catering to an educational clientele. ISS did not operate its tours under its own name, but worked closely with the nonprofit AIFS. The day-to-day affairs of ISS and AIFS were operated jointly, and the same men comprised the management of both organizations. ISS held an exclusive, noncancellable long-term contract with AIFS with “responsibility to plan the itineraries, reserve the necessary ac-commodations, engage the local guides, hire the buses, and reserve the airline and rail tickets” (AIFS, 1969:12). In short, AIFS provided the contact with the public and much of the legitimation. ISS, the travel .,;á agent, merely reaped the financial benefits.

The AIFS-ISS arrangement was designed to meet the problem of legitimacy faced by organizations in the business of arranging foreign study tours for high school students. Several attacks had been made on the operation of such tours and the entire concept. These attacks made legitimacy problematic and important for the arranging organizations. One attack came from Wallace Roberts in a February 15, 1969, Satur- day Review article entitled, “Thirty Thousand Innocents Abroad.” He criticized commercial summer foreign study programs, questioned . both their value to the student and the legitimacy of running educa- tional programs for profit. Roberts wrote, “Many people felt that education and commercialism are mutually exclusive” (1969:61). Four years earlier, Dr. Stephen Freeman pointed out that the ability of the teacher to sell the program might not be a good guide to whether he can adequately supervise students in Europe, and further, since reimbursement (and profits) increase with enrollment, there are pres- sures to admit any student regardless of qualifications or even lacking psychological maturity. Freeman concluded that the selection of the leader-chaperone should be totally separate from recruitment or finan-cial considerations.

Further difficulties faced foreign study programs. In A Guide to Study Abroad (Garraty and Adams, 1962), a reference work on for-eign study, the Freeman critique was repeated and the emphasis was on study abroad during the college, rather than the high school, years Even the State Department entered the picture, publishing pamphlets urging careful consideration of summer study programs, especially with respect to the financial capabilities of the contracting organiza-tions.

Confronted with such problems of legitimacy, AIFS-ISS took a-number of steps to: (1) legitimate the organization, (2) legitimate the output, and (3) legitimate the methods of operation. AIFS ap-proached the issue of incompatible goals in education and profit making most directly. They ran the foreign study program under a nonprofit organizational banner, and the business interests were under a separate organization. AIFS claimed to be a “nationwide non-profit y association of students and teachers” (AIFS, 1969:3). ISS was created as a shareholder-owned, for profit Connecticut corporation. Once the nonprofit nature of AIFS was established, the organization employed a consistent and distinctive tone in its contacts with the environment. Students became “members,” salespeople became “area secretaries “, and pretrip orientation material became “an extensive information ser-vice on foreign countries.” Through its nonprofit status, AIFS was able to use the social legitimacy lodged in the political system. It obtained endorsements from prominent politicians under the blanket of being a nonprofit educational organization. The specific mechanism used was a scholarship program. AIFS funded scholarships and asked prominent political figures to hand them out. The politicians, of course, obtained favorable publicity in return. According to an AIFS brochure:

In 1968, on the suggestion of the late Senator Robert Francis Kennedy, a tax- exempt Scholarship Foundation was organized for the Institute. During 1969, the Foundation awarded scholarships to deserving students worth approximately $30,000…  For example, last year awards were administered by Senator Edward Kennedy, Senator Jacob Javits, Mayor John V. Lindsay, and Congressman Lowell Weicker. School systems involved in the scholarship program in 1969 included those in New York City, San Francisco, Chicago, Pittsburgh, Boston, and Detroit (AIFS, 1969:32).

The first payoff for coopting political support came in late 1967. President Johnson proposed a travel tax to improve the United States balance of payments. Johnson’s proposal for a tax on overseas expenditures would have added approximately $7.50 a day to the costs of AIFS-ISS students and teachers, or about $300 to the cost of a program already priced at about $850. AIFS-ISS and the Foreign Study League made presentations seeking an educational exemption from the regulation to a congressional subcommittee holding hearings on the proposed legislation. Senator Javits, involved in administering the AIFS scholarship program, spoke out publicly indicating his strong support for a student-teacher exemption. There was also opposition from politicians not associated with AIFS; and eventually the entire idea was dropped.

The nonprofit umbrella and the scholarship program were also important in obtaining support from prominent educators and the organized educational system itself. Given the general unease about .mixing education with private business, the active support of the educational establishment would be an important selling point with parents, while opposition from the establishment would have made the ‘ success of the program more difficult. AIFS-ISS used two strategies to obtain educator support. One was to give teachers and administrators the opportunity to travel through Europe free in return for recruiting -students. Administrators and officials of higher rank could be retained as program evaluators or administrators. Such persons would be flown [to Europe to evaluate or assist in the administration of the program. AIFS also used a traditional form of cooptation with its board of advisors in Europe and America. The American board was divided into a high school division and a college division. In 1969, the 22 members   of   the   High   School   Advisory Board   consisted   of   10   principals,   8 superintendents or deputy superintendents, the executive secretary of the National Council of Teachers of English, the Deputy Commissioner of Education from Connecticut, the chairman of an English department, and the Director of Editorial Services for the National Association of Secondary School Principals. The advisors were well dispersed throughout the states and selected from large cities.

The issue of whether this cooptation was worth anything in enhancing the legitimacy of the organization can be raised. While a conclusive answer cannot be provided, there is some evidence AIFS was able to obtain considerable support from educators for planning and marketing programs. In addition to the regular AIFS summer study program, AIFS offered what were known as cooperative programs.

The American Institute for Foreign Study offers school systems, teacher’s associations and other educational organizations an opportunity to sponsor their own foreign study program without financial risk or logistical worries (AIFS, 1969:36).

In practice, the school system personnel themselves took most responsibility for designing the study program, planning the itinerary, and choosing the foreign campus. The travel planning was left to AIFS, which also assisted in recruiting participants. Cooperative programs tended to be large and, of course, legitimate, since the educational group itself did the planning. Of the six cooperative programs run in 1969, five of the districts or organizations running the program were represented on the United States Board of Advisors. In the case of the sole exception, the study tour was organized by the Distributive Education Clubs of America, a subsidiary of National Student Marketing which later purchased ISS.

To further ensure its legitimate image, AIFS selected fine European universities as study sites for regular programs, even though theoretically, any site in Europe could be used for study. European campuses offered some unique advantages. They could be listed in the AIFS brochure and thus increase the legitimacy of the educational operations. Participating institutions included the Hebrew University in Jerusalem, the University of Salzburg, and the Koyal Academy of Music in London. Actual course operations were left in the hands of faculty from these universities. The schools themselves received some money during a time when their facilities would go either unutilized or underutilized.

AIFS also concerned itself with the legitimacy of its output—the students who had studied abroad. It was important to provide the feeling that the program was an educationally worthwhile experience. From a survey of participants of past programs, it was determined whether a chaperone (high school teacher) or a student who was in college received credit or advanced standing. If so, the school from which standing was received was listed in the AIFS brochure under the heading of Academic Credit (AIFS, 1969:9). It was pointed out in the third paragraph under that heading that advanced standing was the result of proficiency examinations and hence could not be dừectly attributed to AIFS. However, AIFS did provide certificates for the work completed and implied that these were instrumental in obtaining credit. It is not possible to determine what percentage of students enrolled in the program received credit or advanced standing, but the list of 144 universities is impressive, including Chicago, Stanford, Vassar, Brown, Vanderbilt, Northwestern, and Purdue.

In addition to the obvious implication that the program facilitated advanced standing in these various colleges and universities, the listing tells the reader that former AIFS participants attended these fine and select colleges.

From a management perspective, the problem of legitimation is to link the organization or its actions to beliefs about how the action will lead to values that are socially accepted. It is a problem similar to that faced by advertisers: convmcing the buyer that the product will provide the experiences or features đesừed. While the advertiser has only the consumer to attend to, the legitimacy of an organization is assessed by many relevant publics. In the case of AIFS, without the implied support of the educational establishment, it is not likely that it could have attracted students, teachers, and parents. And while it may have been sufficient to attract students with the opportunity for travel in Europe, this would not have sufficed for parents and educators. AIFS was able to operate with low costs because of the support of the educational establishment—most of the marketing function was handled free by educators.

Organizational legitimacy appears to be especially problematic when organizations of different distinguishable types compete for the same resources or the same activities—in the words of Levine and White (1961), for the same domain. Thus, legitimacy may be an issue in competition between public and private organizations. Public organizations, like municipally owned utilities and the United States Postal Service, may find it easier to claim social worth than then private counterparts. Legitimacy affects the competition for resources. An organization which can convince relevant publics that its competitors are not legitimate can eliminate some competition. The issue of education versus commercialism is not merely of theoretical interest. There are bread-and-butter resource implications for organizations competing over appropriate organizational domain activities.

Legitimacy may also be a problem when an established organization begins new or different activities. With custom and time, social norms develop to legitimate the activity, but new ventures may confront problems of legitimating their operations and output, especially if the new activity is really something quite different and not an imitation of something already being done. Legitimacy is also problematic when the organization’s methods of operation or output run counter to social norms.

In any case where organizational legitimacy is a problem, the organization may either adapt to conform to societal expectations or achieve legitimacy through identification with socially legitimate goals or institutions. In any case, the definition of legitimacy is likely to evolve and change as organizations and classes of organizations either, adapt to social norms or to resource pressures, or attempt to identify with previously legitimated norms and institutions. Social legitimacy for an organization is, therefore, always somewhat problematic, because the definition of what is legitimate is continually changing ancfj evolving, partially in response to the actions taken by organizations.

Source: Pfeffer Jeffrey, Salancik Gerald (2003), The External Control of Organizations: A Resource Dependence Perspective, Stanford Business Books; 1st edition

Leave a Reply

Your email address will not be published. Required fields are marked *