Legitimacy Maintenance After a Corporate Social Irresponsibility Scandal: Lessons From The Parmalat Case

Abstract

From the organizations’ perspective, maintaining legitimacy in such contexts has been considered relatively unproblematic (Patriotta, 2011; Scherer et al., 2013) as it entails following adaptive strategies and conforming substantially (or even merely symbolically) to the dominant institutional logics (Suchman, 1995; Elsbach, 1994; Scherer et al., 2013). 3 Nonetheless, whilst the implementation of a adaptive strategy to maintain the corporation with its main audiences is a necessary phase, it cannot be considered sufficient to assure the maintenance of audience support. Audiences evaluate competitive advantage and other sources of reassurance that supporting the company is worthwhile from a rational perspective. This restoration process may be complemented by the corporations’ power over resource dependent audiences. Independent audience decisions are based on the competitive advantage of firm in each business. When their are untouched, the adaptive strategy leads to audience support and successful business rehabilitation processes with all audiences, even with those that were initially harmed. However, if competitive advantage is feeble independent audiences will not sustain the weak business (or corporation) even if adaptive strategies have been implemented. The presence of an unharmed competitive strategy is crucial to the selection of which parts of an organization (or the organization as a whole) can be reintegrated with all the main audiences of the company after a CSI scandal, including the “harmed” audience. The richness of the empirical setting allows us to highlight that a significant difference between firm characteristics that plays a crucial role in determining the reactions of the main constituent audiences and, consequently, the possibility for maintain the legitimacy. The post-crisis turnaround processes to succeed is the possession of sound source(s) of competitive advantage in one (or more) of the business(es) in which the firms operates.