Wall street vs. main street

Firm strategies for defending legitimacy and their impact on different stakeholders

Anna Lamin, Sri Zaheer

Research output: Contribution to journalArticle

84 Citations (Scopus)

Abstract

We assess the effect of firm strategies to defend legitimacy on two different stakeholder groups-the public ("Main WStreet") and the investment community ("Wall Street"). We identify four types of firm strategies in response to challenges to their legitimacy-denial, defiance, decoupling, and accommodation- drawing from theory and from case studies of international outsourcing. We then develop and test hypotheses on the effectiveness of these strategies in defending legitimacy across these two stakeholder groups, using data from media reports and press releases on all 126 distinct accusations of the use of international sweatshops by U.S. firms from 1990 through 2002. We find that denial and defiance responses hinder the recovery of legitimacy on Main Street, and none of the responses has a positive effect on public perception, whereas Wall Street is unaffected by denial and defiance but views decoupling favorably. Main Street and Wall Street thus perceive firm actions to defend its legitimacy quite differently, suggesting that these worlds operate by separate moralities in which Main Street appears to privilege fairness as a core value, whereas Wall Street privileges profit.

Original languageEnglish (US)
Pages (from-to)47-66
Number of pages20
JournalOrganization Science
Volume23
Issue number1
DOIs
StatePublished - Jan 1 2012

Fingerprint

Outsourcing
Firm strategy
Legitimacy
Stakeholders
Profitability
Recovery
Denial
Decoupling
Public perception
Core values
Profit
Accommodation
Hypothesis test
Morality
Press releases
Fairness
International outsourcing
Sweatshops

Keywords

  • Crisis response
  • Legitimacy
  • Stakeholder theory
  • Stigma management
  • Thought worlds

Cite this

Wall street vs. main street : Firm strategies for defending legitimacy and their impact on different stakeholders. / Lamin, Anna; Zaheer, Sri.

In: Organization Science, Vol. 23, No. 1, 01.01.2012, p. 47-66.

Research output: Contribution to journalArticle

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