What is the business legitimation process?

If we analyze the theory of legitimacy, we find that organizations seek to operate within a framework that involves limits and internal rules, in order to reflect a perception of legitimate activity for third parties who observe them.

The limits and norms of which we speak are changing, and they assume that the organization adapts to the environment in which it operates.

For Lindblom , legitimacy and legitimacy are two very different things:

1. On the one hand, legitimacy was viewed as a status or condition

2. While legitimation involves the process that leads to an organization that is legitimately judged

Legitimacy is determined by considering the existence of a social contract between the company or organization and the society in which it operates.

We introduce a new concept, the social contract, which is used to determine the perception that society has about how companies should manage their activity.

This social contract makes companies subject their survival and growth to two basic issues:

1. Give society a desirable end

2. An adequate distribution of economic, social or political benefits

In this way, society marks the path to the success of companies, making their survival determined to the extent that they meet their expectations, beyond the interests of the investors themselves, being able to generate sanctions and restrictions that would significantly undermine the companies that do not meet your expectations.

Throughout this process, what is intended is for customers to identify with the company, think for example of a company that has millions of revenues, involves customers, they feel proud of buying their products, validate the actions they take, identify themselves With your products, you will undoubtedly have a competitive advantage over your competition.

What would happen if you are found to be taking action against human rights? Without a doubt, that competitive advantage would plummet.

The authors Dowling and Peffler indicate a relationship between the value we give to a company according to its projection and behavior in society, in this way we legitimize its activity in two ways:

1. Through their day to day in the products or services they offer

2. In communication: through the symbols and values it develops

The study of legitimacy is something that cannot be done directly, it comes from the analysis that emerges from social behavior, we must observe a set of factors that influence decision-making.

In this process, different measurements have to be determined that vary depending on the authors, for example Schuman refers to three types of legitimacy:

1. Pragmatic : It depends on the relationship with its environment, especially pressure or interest groups, establishing a direct connection between the values that the company projects and the interest of these groups in identifying with them. Sharing objectives means increasing legitimacy.

2. Moral : In these cases, legitimacy is determined by a more philosophical component, that moral duty of what to do. It has a positive aspect of the final result of what the company does, involving a wide range of factors, such as workers' rights, respect for the environment, etc.

3. Cognitive : Legitimacy is determined in the decision-making process. In these cases, what is commonly accepted tends to be adopted and decision-making is simplified.

Max Weber refers to the concept of "domination/authority" as the probability of finding obedience within a given group, a formula of influencing a group either unconsciously or through a common interest.

Weber, identifies three types of legitimate authority dependent on his character:

1. Rational Legitimacy / Legal Authority : Weber speaks of domination through the law, assuming that there is respect on the part of the members for a right, whether agreed or granted. In these cases, the norm establishes the duties, powers and coercive means to enforce compliance. Another fundamental factor is the hierarchy, let's think about the legal system itself, where a priority of authority is established in a general way, and to whom we should go to raise a complaint or doubt.

2. Traditional legitimacy / Traditional authority : Weber points out tradition as a formula that authorizes what is commonly accepted, what has been done since time immemorial, or issues that are approved by culture and are acceptable to the majority. The formula to be followed does not obey to legal provisions, but to tradition, let's think for example of a tradition established such as that of the Toro de la Vega de Tordesillas, a celebration legitimized by the tradition that dates back to 1534, where the bull is persecuted by picadores and spearmen, later an authority regulated it (the City Council through an ordinance in 1999) and in turn another higher authority prohibited it (Junta de Castilla y León in 2016).

3. Charismatic character legitimacy / Charismatic authority : This last category is referred to by the qualities and personality of certain people or figures. In this case Weber relates adepts (dominated) to innate leaders. These are people who are considered role models, heroes, leaders, but they are not valued from an ethical point of view, but from the point of view of followers. Examples of charismatic leaders are found in both a positive sense as can be the case of Ghandi, as a negative, as may be the case with Hitler. Temporal, historical, cultural factors, etc., determine the legitimacy of the leaders, the validity of that charisma depending on the strength that the followers develop. It is a totally irrational authority, far from norms and traditions, resulting in very different effects depending on the importance it takes.