Maintaining Moral Legitimacy through Worlds and Words: An Explanation of Firms' Investment in Sustainability Certification

• Author: Thomas Zellweger,Melanie Richards,Jean‐Pascal Gond
• Date: 01 July 2017
• DOI: http://doi.org/10.1111/joms.12249
• Published date: 01 July 2017

Maintaining Moral Legitimacy through Worlds and

Words: An Explanation of Firms’ Investment in

Sustainability Certification

Melanie Richards, Thomas Zellweger and

Jean-Pascal Gond

University of St. Gallen; University of St. Gallen; Cass Business School, City University London

ABSTRACT A prominent way for firms to manage their moral legitimacy is to invest in

sustainability certifications. However, a significant subset of firms remain reluctant to invest in

sustainability certifications even decades after the establishment of such certifications. Our

paper seeks to elucidate this variance by exploring how firms in the coffee, tea, and chocolate

industries legitimise themselves on moral grounds through external communication to

stakeholders. Drawing on insights from French Pragmatist Sociology, we suggest that firms

primarily rely on two distinct sets of legitimacy principles that reflect their identity orientation:

the ‘civic and green’ world and the ‘domestic’ world. Specifically, our results show that

reliance on the domestic world is negatively related to firms’ investment in sustainability

certifications. Our findings also suggest that the strength of the relationship between these

distinct methods of moral legitimising and certification varies depending on whether firms are

characterised by first- or multi-generation family control.

Keywords: certifications, first-/multi-generation family firms, French pragmatist sociology,

moral legitimacy, sustainability

‘Since 1873 the Ganong family and friends have put their heart and soul into the chocolate confec-

tioner’s art, an art never lost. Whidden [Ganong] began his career in Ganong’s hard candy room.

He served as factory superintendent before becoming President in 1957. Whidden’s extensive

knowledge of production made him a stickler for quality. He is best remembered for his unwavering

commitment to his employees and the community. Taste the difference family tradition makes’.

Extracted from Ganong’s archived website from 2011. The firm had no sustainabil-

ity certification (as of 2013).

Address for reprints: Melanie Richards, University of St. Gallen, Dufourstrasse 40a, 9000 St. Gallen,

Switzerland (melanie.richards@unisg.ch).

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C2016 John Wiley & Sons Ltd and Society for the Advancement of Management Studies

Journal of Management Studies 54:5 July 2017

doi: 10.1111/joms.12249

‘[Market ups and downs] led to the suffering of many of the world’s 25 million coffee farmers,

who often get little financial return on this labour-intensive crop. Bare subsistence, environmental

degradation, unstable societies: It’s not fair! Who said life was fair? We did. That’s who. When

we started Kicking Horse Coffee in 1996, we scoured the planet to find bona fide Fair Trade cof-

fee. We discovered the Fair Trade Labelling Organizations International (FLO), an umbrella

organization that sets fair trade standards, and TransFair Canada, the national certification orga-

nization. These organizations demand rigorous monitoring, auditing and certification before they

allow us to proudly use the Fair Trade label’. Extracted from the Kicking Horse Coffee

archived website from 2011. The firm has been Fairtrade Certified (as of 2013).

‘[T]he legitimacy of business has fallen to levels not seen in recent history’ (Porter and

Kramer, 2011, p. 64), and the moral dimension of firm legitimacy has been eroded over

the past twenty years (Palazzo and Scherer, 2006). Firms lose legitimacy when they do

not conform to social norms, values, and expectations (Ashforth and Gibbs, 1990; Such-

man, 1995). The loss of ‘moral legitimacy’ results specifically from a negative normative

evaluation of a firm’s activities by stakeholders (Suchman, 1995, p. 579) and is often

associated with stigmatisation (Goffman, 1963). Such stigmatisation can result in a dete-

rioration of firm performance (Baucus and Baucus, 1997; Jonsson et al., 2009) because

stakeholders are likely to shun the firm based on ethical reasons (Gond et al., 2016; Jons-

son et al., 2009) or the fear of future wrongdoing (Nisbett and Ross, 1980). Maintaining

moral legitimacy is especially challenging for firms that operate in industries in which

social injustice and environmental transgressions have been historically commonplace.

Such is the case for the coffee, chocolate and tea industries, which are challenged by low

wages for plantation workers, hazardous work conditions, environmental transgressions,

and, in the case of cacao, even child slavery (Schrage and Ewing, 2005).

To tackle these severe problems, various sustainability certifications have emerged

and proliferated to form a ‘standards market’ (Reinecke et al., 2012, p. 791). Companies

that wish to certify their products must source their crops from an inspected producer

organisation, have their supply chain audited regularly and, in most cases, pay a fee to

receive the sustainability certification (SCAA_Sustainability_Council, 2010). Because of

the lack of official regulations and universally binding rules, sustainability certifications

do not necessarily enhance the socio-political regulatory legitimacy of firms (Zimmer-

man and Zeitz, 2002) but constitute voluntary efforts intended to signal a firm’s ethical

behaviour. Moreover, since sustainability certifications intend to show a firm’s ethical

standing rather than adhere to taken-for-granted professional norms, they likely

enhance a firm’s moral legitimacy (Palazzo and Scherer, 2006) instead of cognitive legit-

imacy (Suchman, 1995).

In light of increasing public awareness of the social and environmental issues in the

coffee, chocolate and tea industries, one would expect firms to invest in sustainability

standards such as certifications to communicate their moral legitimacy (Gilbert et al.,

2011). However, even though many firms indeed rely on certifications for legitimacy

purposes, firms’ investment in sustainability certifications still varies substantially despite

the fact that such certifications have existed for decades. While some firms refuse to col-

laborate with any certifying organisation, others adhere to the most stringent standards

delineated by Fairtrade International.

[1]

Although scholars recognise that not all firms

677Maintaining Moral Legitimacy through Worlds and Words

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C2016 John Wiley & Sons Ltd and Society for the Advancement of Management Studies

respond equally to sustainability movements (e.g., Berrone et al., 2010), the variance in

firms’ investment in sustainability certifications remains poorly understood (Campo-

piano and De Massis, 2015; Delmas and Gergaud, 2014). In particular, it remains

unclear how firms manage their moral legitimacy (Palazzo and Scherer, 2006) through

communication with stakeholders and, in so doing, decide whether to adopt a recog-

nised standard (Haack et al., 2012; Slager et al., 2012). This lack of insight is surprising,

as communication strategies have been identified as key tools to manage legitimacy

(Crilly et al., 2016; Suddaby and Greenwood, 2005), and the use of vocabulary defines

a firm’s persuasive power (Ruebottom, 2013). More importantly, communication strat-

egies are central to the management of moral legitimacy as they constitute and convey

to multiple stakeholders the organisational identity of a firm (Chreim, 2005) and hence

the values inherent to this identity (Dutton and Dukerich, 1991).

Our paper begins to address this gap by revealing the distinct ways through which

firms can legitimise themselves on moral grounds in their communications with consum-

ers. Drawing on insights from French Pragmatist Sociology (Boltanski and Thevenot,

2006 [1991]), we argue that the manner in which organisations manage their moral

legitimacy can be captured through their use of specific moral principles, which are

referred to as ‘worlds’ (Boltanski and Thevenot, 2006; Mair et al., 2012; Patriotta et al.,

2011). French Pragmatist Sociology assumes that society offers distinct worlds (e.g., the

domestic world, civic world, green world, market world, industrial world, inspired

world, and world of fame) upon which actors can draw to build justifying arguments

(Cloutier and Langley, 2013). Each world defines legitimacy principles that can be used

to justify organisational practices on moral grounds. For instance, the civic world values

civic duties and the collective over particular interests; the green world values nature, the

biosphere, and a harmonious relationship between humans and nature (Lafaye and

Thevenot, 1993). By contrast, the domestic world consists of traditions that honour inter-

personal ties and respect for family values. Arguably, and as suggested by the introduc-

tory quotes, these worlds and corresponding values reflect what firms define as

‘appropriate behaviours’ (March and Olsen, 2009); they are embedded within organisa-

tions’ identity orientation and expressed in the processes through which corporations

manage and produce value for their stakeholders, notably their suppliers and consumers

(Brickson, 2005, 2007).

The corporate social responsibility (CSR) literature is traditionally associated with the

civic and green worlds, which are based on civic equality, human rights, ecology and

collective welfare (Thevenot et al., 2000). What tends to be overlooked is that there are

alternative ways for firms to legitimise themselves on moral grounds, especially in the

domestic world, which stresses tradition, trustworthiness, local attachment and personal

ties (Thevenot et al., 2000). Whereas firms seeking to achieve legitimacy by promoting

the civic and green worlds should be more inclined to adopt sustainability certifications,

firms that draw from the domestic world should be less inclined to adopt such certifica-

tions. Accordingly, this paper argues that the heterogeneity in firms’ investment in certif-

ications arises because firms vary with respect to how much they rely on two distinct sets

of legitimacy principles: ‘civic and green’ or ‘domestic’.

The strength of the relationship between the communication of certain legitimacy

principles and investment in sustainability certification is likely to vary based on a firm’s

678 M. Richards et al.

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C2016 John Wiley & Sons Ltd and Society for the Advancement of Management Studies