The effect of communication on the legitimacy and performance of organizations.
| Autor | Prado-Roman, Camilo |
1 Introduction
Communication management is essential for the governing of organizations because of its ability to influence individuals' behavior. The knowledge on this relationship has been widely developed in numerous research areas to solve different organizational problems. These problems range from attempting to achieve improvements in the internal functioning of organizations to seeking to improve external relations with clients and other stakeholders.
However, good communication does not always ensure successful organizational performance. There are numerous factors that can condition people's behavior regarding communication. For example, organizations have sometimes been involved in conflicts with society and as a result their legitimacy has been challenged (Palazzo & Scherer, 2006). In uncertain environments, individuals eliminate or reduce the validity they give to communication channels when making decisions (Bitektine & Haack, 2015). This leads to them questioning the credibility of the organization, even if the communication process is appropriate. A condition for organizational communication to have the desired impact is the existence of a relationship of trust with the stakeholders (Piber, Demartini, & Biondi, 2019).
Institutional theory can help improve our understanding of the effect of communication on organizational performance. This theory indicates that organizations gain stakeholders' support when they show legitimacy (Choi & Shepherd, 2005). Legitimacy is understood as "the perceived appropriateness of an organization to a social system in terms of rules, values, norms, and definitions" (Deephouse, Bundy, Tost, & Suchman 2017, p. 37). Thus, trusted organizations will have greater legitimacy (Piber et al., 2019) and greater access to the resources necessary to survive, thanks to their stakeholders' support (Brown, 1998). Organizational legitimacy is a key resource for the success and survival of organizations (Deephouse & Suchman, 2008), and it has been proven that it is decisive for their survival (Ruef & Scott, 1998). However, these authors point out that organizations should not behave like passive elements of the legitimization process. On the contrary, in order to achieve acceptance by their numerous stakeholders, they should develop actions that range from adjusting to established social models (for example, through isomorphism strategies) to manipulating the environment in which they operate (Oliver, 1991). Along these lines, researchers of Institutional theory have paid special attention to the role played by communication in the legitimacy of organizations, especially the nature of communication when generating changes, as well as its contribution to the creation and maintenance of the institutional environment (Cornelissen, Durand, Fiss, Lammers, & Vaara, 2015; Yim & Park, 2019).
So far, researchers in the field of communication and legitimacy have focused on analyzing the role played by discourse and narrative management to influence evaluators' assessments regarding the achievement of organizational legitimacy. The impressions produced by these tools among the interested parties lead to the obtainment of legitimacy (Bansal & Clelland, 2004). For example, some authors have analyzed the role of environmental disclosures as tools for acquiring legitimacy (e.g. Cho, Roberts, & Patten, 2010; Deegan, 2002). Recently, it has been shown that corporate social responsibility (CSR) communication predicts legitimacy, because it makes organizations more credible (Lock & Schulz-Knappe, 2019). therefore, to improve their legitimacy with key stakeholders, corporations and large entities are increasingly revealing material information in integrated reports (Camilleri, 2018). In fact, the extent and quality of annual reports have a positive impact on organizational legitimacy (Aerts & Cormier, 2009).
Although previous studies have shown the existence of communication techniques that enhance legitimacy (e.g. discourse and narrative), the impact of communication on legitimacy is still unknown. How much does communication explain organizational legitimacy? Also, what is the predictive relevance of these variables to organizational outcomes?
The aim of the investigation is to examine the effect of communication on the legitimacy and performance of organizations. This research framework was built based on Institutional Theory (DiMaggio & Powell, 1983; Meyer & Rowan, 1977). Using this approach, the study contributes to the literature in several ways. Firstly, it provides new evidence of the size of the effect and the predictive relevance of communication in relation to the legitimacy and performance of organizations. Secondly, it identifies the effect and the predictive relevance of legitimacy in relation to the performance of organizations. From a practical point of view, the research provides ideas on how managers can improve their performance through communication management and organizational legitimacy.
2 Literature Review and Hypotheses
Communication can be understood as the social interaction by which oral and/or written messages are transmitted through speaking, gestures, speeches, texts, or other means. It is a continuous and at the same time dynamic process that contributes to the construction of organizations. Through the creation and manipulation of the meaning of messages and symbols, communication channels transmit cognitive contents and intentions between individuals. It is like a physical force that drives cognitive reactions between individuals (Ashcraft, Kuhn, & Cooren, 2009). This makes it an essential process for the life and existence of organizations because it has a direct role in the company's general performance (Rapert & Wren, 1998).
2.1 The effect of communication on organizational legitimacy
Researchers of Institutional Theory suggest that studying the communication process in organizations has the potential to improve the wealth and explanatory power of theories and institutional models (Cornelissen et al., 2015). These researchers place the communication process at the center of Institutional Theory because they understand that institutions are the result of continuous communication processes between individuals. The interaction between individuals through the exchange of points of view leads to the building of a shared understanding of the organization and its environment (Dowling & Pfeffer, 1975). Some authors have recognized that institutions exist and develop mainly through communication (McPherson & Sauder, 2013).
From the legitimacy-as-process perspective (Suddaby, Bitektine, & Haack, 2017), some researchers identify legitimization as a process of persuasion and influence for collective meaning-making, based on language (Zilber, 2006) and communication (Suddaby, 2010). Organizations are social communities developed thanks to the communication between their members. Daily interaction between the organization's members leads to the formation of shared meanings (Walsh & Ungson, 1991) composed of knowledge, culture, and social norms. This group of shared meanings determines what the desirable, appropriate, and acceptable beliefs, goals, and attitudes will be (Kersten, 1986). That is, they pave the way towards organizational legitimacy. Organizational legitimacy is a product of action, which is continually reproduced and reconstructed by members of an organization in concert with external legitimation activities (Drori & Honig, 2013).
The role played by communication in organizational legitimacy has been analyzed previously (Camilleri, 2018; Vaara & Tienari, 2008). Some authors have revealed that both companies that are more sensitive to environmental issues and those that are less sensitive to these issues use reports to disseminate their environmental results, as a tool to gain legitimacy (Cho & Patten, 2007). Regarding discourse to obtain legitimacy, it has been observed that discourses related to the recognition of an action together with institutional characteristics obtain better legitimacy evaluations, compared to discourses made up of denials linked to technical characteristics (Elsbach, 1994). Other authors have identified the elements that make up the rhetorical strategies that lead to the legitimization of institutional changes (Suddaby & Greenwood, 2005). It has also been observed that communication based on the narrative of historical data enhances organizational legitimacy (Golant & Sillince, 2007). Recent research analyzes the role play by social networks in refocusing a crisis, regaining public confidence, building public opinion, cultivating relationships with stakeholders, and repairing legitimacy (Yim & Park, 2019). In essence, it has been noted that communication is one of the essential elements in the legitimization process due to its ability to influence individuals' evaluations (Bitektine & Haack, 2015). Communication is a tool that can be used to convey new ideas and values, for example, to generate a better understanding of priorities and strategic objectives. It can also be used to create environments that facilitate institutional changes or to cause changes in legitimacy assessments (Bitektine & Haack, 2015; Diez-Martin, Blanco-Gonzalez, & Prado-Roman, 2018). This occurs because it is a source of validity, understood as "the extent to which there appears to be a general consensus within a collectivity that the entity is appropriate for its social context" (Tost, 2011, p. 689).
The better the communication is (more satisfactory, credible, continuous, transparent, and understandable), the greater the validity it transmits, and the greater its credibility and influence on individuals' judgments. Thus, given that validity has a strong effect on individuals' judgments, it is possible to persuade them to act or assume certain behaviors as their own, through communication conducted through both internal and external channels...
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