The interaction between legitimacy and institutional complexity A case study in a cultural context
June, 2018
Sanne Koelma S2666375
s.koelma@student.rug.nl +31 (0)621991603
Master Thesis MSc. Organizational & Management Control (Business Administration) Faculty of Economics and Business University of Groningen
Supervisor RUG: dr. E.G. van de Mortel Co-assessor RUG: dr. C.P.A. Heijes
Word count: 17887
Key words: ‘cooperating cultural organizations’, ‘stakeholder prioritization’, ‘legitimacy types’,
‘institutional complexity’, ‘strategies’.
ABSTRACT
This research aims to answer the question of how cultural organizations can create legitimacy for their different stakeholders in a context of institutional complexity by conducting a single- case study at a merged cultural organization in the Netherlands. The most important result of this research is that cultural organizations use a combination of different strategies (negotiation about requirements, elimination of requirements, finding a balance between the different requirements, and developing new institutional orders) in order to create different types of legitimacy for the different stakeholders. These different combinations of strategies depend on the prioritization of the different stakeholders and on the different kind of legitimacy types that have to be created for these stakeholders based on their way of judgement towards the organization.
TABLE OF CONTENT
1. INTRODUCTION ... 4
1.1 The cultural sector is under pressure ... 4
1.2 Cooperation in the cultural sector ... 5
1.3 Stakeholders to account to ... 5
1.4 Legitimacy ... 5
1.5 Institutional complexity ... 6
2. CASE DESCRIPTION ... 8
2.1 Case sector ... 8
2.2 Case organization ... 8
2.2.1 The organization DNK ... 8
2.2.2 Case stakeholders... 11
3. THEORETICAL FRAMEWORK ... 13
3.1 Stakeholders...13
3.2 Legitimacy ...15
3.3 Institutionalism and institutional complexity ...19
3.3.1 The different dimensions of institutions ... 19
3.3.2 Institutional complexity ... 20
3.3.3 Strategies to deal with institutional complexity ... 22
3.5 Conceptual model ...23
4. METHODOLOGY ... 24
4.1 Qualitative research ...24
4.1.1 Interviews ... 24
4.1.2 Documents ... 27
5. RESULTS... 28
5.1 Stakeholders...28
5.1.1 Document analysis ... 28
5.1.2 Interviews ... 29
5.2 Legitimacy ...34
5.2.1 Document analysis ... 34
5.2.2 Interviews ... 35
5.3 Institutional complexity and cooperation ...38
5.3.1 Document analysis ... 39
5.3.2 Interviews ... 39
5.4 Strategies ...40
5.4.1 Document analysis ... 41
5.4.2 Interviews ... 41
5.5 Elaboration of propositions ...42
6. DISCUSSION AND CONCLUSION... 46
6.1 Discussion and conclusion ...46
6.2 Research limitations and future research ...49
REFERENCES ... 50
APPENDICES... 54
Appendix 1: interview questions ...54
1. INTRODUCTION
1.1 The cultural sector is under pressure
In the period 2012-2016, the cultural sector in The Netherlands has been under pressure of spending cuts, the economic crisis and changing consumer preferences. As a reaction to the economic crises, the cabinet ‘Rutte-I’ cut back the cultural sector by €200 million in 2013 (Van der Horst, de Kleuver & Bogaart, 2017). Before this major cut back, the cultural sector in The Netherlands already had to deal with similar kinds of pressures given the fact that the economic crisis started around the year 2008. VNG (2010) states that the organizations in the field of art and culture are becoming more autonomous because more and more municipalities are putting them at a distance. The recent changes in the economic and political climate in the cultural sector in the Netherlands has led to increasing competition with other leisure providers, increasing spending cuts, dropping out of sponsors and a VAT increase from 6% to 19% on entrance fees for performing arts and the sale of visual art. The pace at which these changes take place is enormous. This forces these cultural organizations to be more enterprising and more ‘business-like’ than they might have been used to. One of the key concepts in these changes is ‘cultural entrepreneurship’ (VNG, 2010). According to Van der Zee (2011), the cultural organizations that think in a future-oriented way focus on generating new ideas and new audiences, and in doing so these organizations create new (financial) support areas.
So, the cultural sector in the Netherlands has been under a lot of different pressures recently. Many new cultural accommodations have been realized over the past ten years, meaning that culture is offered in more and more places (Dutch Ministry of Education, Culture and Science, 2016; Ministerie van Onderwijs, Cultuur en Wetenschap, 2016). Besides that, the competition for free time, the influence of digitalization and changing consumer behavior, reinforce the flexibility with which cultural offerings must be disseminated and presented (Ministerie van Onderwijs, Cultuur en Wetenschap, 2016). At the same time, the sector is challenged to innovate in business and artistic terms. The role of traditional cultural accommodations such as theaters, concert halls, pop venues, museums, etc. changes towards a more business-oriented role (Ministerie van Onderwijs, Cultuur en Wetenschap, 2016). Furthermore, the cultural organizations need to account to the government to be able to get their subsidies and, perhaps more important, to prevent a further cutback in their subsidies.
1.2 Cooperation in the cultural sector
One way to deal with all these different pressures is to combine knowledge by cooperating (De bibliotheken (the libraries), 2017; Museumvereniging (museum association), 2017; VSCD, 2017; Biblionet Groningen (library network Groningen), 2017). There are also cases in which different cultural organizations form one organization, meaning that a library and a cinema or a theater and a cinema work together (DNK, 2017; Theater Castellum, 2017).
Zhang, Shu, Jiang and Malter (2010) state that through interfirm cooperation, knowledge can be created. This means that new ideas can be generated through cooperation. So, all these kinds of cooperation are meant to deal with the different kinds of pressures, but the question remaining is how it actually works.
1.3 Stakeholders to account to
Cultural organizations have different types of incomes such as subsidies, sponsors and own revenues (Ministerie van Onderwijs, Cultuur en Wetenschap, 2016). This means that these semi-public organizations have to account to different stakeholders to be able to survive.
However, as indicated before, a shift is taking place between the amounts of the different income types. This means that there is also a shift in the justification process to the different stakeholders. This justification is a complicated and uncertain process for cultural organizations of weighing the interests of the various stakeholders, and it becomes even more difficult when the different interests do not run parallel or even are contradictory. Besides, this justification process also might get more difficult when different cultural organizations decide to work together, because cooperating means that these cultural organizations need to take the stakeholders of the others into account in their justification process. Cultural organizations are struggling to optimally connect with the not always equal interests of external stakeholders and, as stated before, the importance of optimally connecting all the different interest has grown because of the new developments around the cultural sector (Van der Horst, de Kleuver
& Bogaart, 2017).
1.4 Legitimacy
A well-known concept in the literature about accounting to stakeholders is legitimacy.
The concept of legitimacy is mainly discussed in the Neo Institutional Sociology literature, where organizations account to external parties in order to survive (DiMaggio & Powell, 1983).
Suchman (1995) defines legitimacy as “the general perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs and definitions” (p. 574). While the Neo Institutional Sociology studies give insight into the behavior of organizations concerning legitimizing, they do not take into
account the possibility that the interests of external parties may be mutually incompatible (Vermeulen, 2012). In the existing institutional literature, almost no research has been conducted to a systematic way in which organizations respond to conflicting interests of external parties (Pache & Santos, 2010).
1.5 Institutional complexity
Referring back to the cooperation between different cultural organizations, as mentioned before, this might have a downside. Every stakeholder has its own reference frameworks of norms, values and forms of interpretation that are underlying behavior, which Thornton and Ocasio (1999) call institutional logics. “Institutional logics can be defined as taken-for-granted, resilient social prescriptions, sometimes encoded in laws, specifying the boundaries of a field, its rules of membership, and the role identities and appropriate organizational forms of its constituent communities” (Greenwood & Suddaby, 2006, p. 28).
Typically, organizations have to deal with different logics that might be mutually incompatible (Friedland & Alford, 1991). To the extent that the different logics are incompatible, they inevitably generate challenges and tensions for organizations exposed to them (Greenwood, Raynard, Kodeih, Micelotta & Lounsbury, 2011). So, when cultural organizations decide to cooperate, they might increase these challenges and tensions. Greenwood, et al. (2011) state that these challenges and tensions can also be described as institutional complexity. It is clear that cultural organizations try to combine their knowledge by cooperating. This way they try to deal with the different kind of pressures in order to create legitimacy for all the different stakeholders. But how these cultural organizations actually deal with this kind of complexity when they try to create legitimacy, has not yet been examined in the literature. This means that the theory does not adequately answer the question of how cultural organizations can deal with the incompatible interests of stakeholders or, in other words, with institutional complexity. This leads to the following research question:
Which strategies do cultural organizations apply in order to obtain legitimacy with their stakeholders in a context of institutional complexity?
In order to answer the research question, some sub-questions have been formulated:
1. What are stakeholders?
2. What is legitimacy?
3. What is institutional complexity?
4. Is there a relationship between institutional complexity, stakeholders and legitimacy in theory?
5. Does cooperation affect the interaction between institutional complexity and legitimacy?
The aim of this research is to supplement the Neo Institutional Sociology by further exploring the concept of legitimacy in relation to strategic behavior and by giving more insight into organizational behavior in a situation of institutional complexity. In addition, this research seeks to enrich and give more depth to the theory by discussing the context of Dutch cultural organizations, a context that has not got a lot of attention in the existing institutional literature.
This is why a case study will be conducted at DNK in Assen. DNK is a cultural organization, consisting of a theater, cinema and library, that also has to deal with the changes in the cultural context. DNK is a merged organization since January 2017. Before, there were two organizations; the library, and the cinema plus theater. The organizations merged as a reaction to the changes in the cultural context. Referring back to the research question, it becomes clear why DNK is a suitable cultural organization to investigate in order to get an answer to the research question. This research is seeking to get an answer to the question of which strategies cooperating cultural organizations apply in order to obtain legitimacy in a context of institutional complexity. DNK has to deal with different kind of pressures due to the different requirements of the various stakeholders. This means that DNK has to create legitimacy in a context of institutional complexity, but how this cultural organization actually deals with this kind of complexity is not clear yet. In a practical sense, this research contributes to knowledge about processes that underlie the accounting activities to stakeholders of public organizations such as cultural organizations in a context of institutional complexity. This means that this research will only focus on the internal processes of DNK that underlie the accounting activities. It can support cultural organizations by discovering their strengths and weaknesses for the purpose of making improvement plans concerning their external parties.
This research is structured as follows; in the next chapter the context of investigation will be described by first giving a general overview of the case sector, followed by a more detailed overview of the case organization. Next the research question will be backed by seeking to give an answer to the sub-questions by using theory. After the theoretical framework, the research design and data analysis will be explained. Finally, the results of this research will be described and analyzed in order to answer the research question, followed by the conclusion, limitations and some recommended further research directions.
2. CASE DESCRIPTION
This chapter will give more insight into the context of investigation. First, a general overview of the Dutch cultural sector will be provided. Next, a more detailed description of the case organization and its stakeholders will be provided by using the organogram of DNK, the annual reports of 2015 and 2016 of DNK, and some information obtained in a short meeting with the manager of the department of market and development of DNK.
2.1 Case sector
The context of investigation is the Dutch cultural sector, which is a part of the semi- public sector. The work in these sectors serves a public interest and the funding is for a large part from public funds (Batenburg & Steijn, 2012). Yet, the organizations are at some distance from politics, which, however, indirectly has a considerable influence (Batenburg & Steijn, 2012). This means, in short, that the Dutch cultural sector concerns a private sector with a public task and a hybrid finance; subsidies, sponsors and own revenues.
As stated before, the Dutch cultural sector has to deal with a changing context (Van der Horst, de Kleuver & Bogaart, 2017), which forces the cultural organizations in the Netherlands to be more enterprising and fulfill a more ‘business-like’ role. For example, they have to consider positioning, cooperation, diversification of the revenue model, and especially structurally increasing visitor numbers (VNPF, 2013). As mentioned before, the cooperation between different cultural organizations seems a popular way to deal with the different and changing pressures in the cultural context, but it might also lead to more institutional complexity as indicated in the previous chapter. According to the Council for Culture (Raad voor Cultuur, 2014), partnerships in the cultural and creative sector are becoming more fine- meshed: “There are more and sometimes also unconventional partnerships; not only within the production and purchase column (vertical) but especially between stages, museums and companies (horizontal)” (pp. 14-16). It is important to notice that this changing context also influences the process of the cultural organizations in creating legitimacy for their different stakeholders.
2.2 Case organization
2.2.1 The organization DNK
As indicated before, a case study will be conducted at DNK; a cultural organization in the north of the Netherlands. DNK is a foundation consisting of a theater, library and cinema.
An organogram of DNK is presented below in figure 1 and will be used in the next section in order to get more insight into the different stakeholders of DNK. The organogram does not show the presence of a works council. However, DNK does have a works council consisting
of four employees, who consult with the employer on behalf of all the employees. DNK has been in existence since January 2017, when the company merged (cinema, theater and library). This choice was made because the library, and cinema plus theater, were under a lot of pressure, similar to the kind of pressures as indicated in chapter 1 of this research. The merger was a solution to deal with this pressure, since the three different parts were already in one building. The merger of different cultural functions under one roof are primarily intended to make efficiency improvements in business operations (Otte, 2017). She also states that the financial crisis, resulting in substantial cuts in cultural policy, are partly responsible for the choices these cultural organizations have to make.
Figure 1: organogram of DNK
Source: manager of the department of market and development of DNK
* In the Netherlands a director-chairperson is responsible for the (operational) management of an organization. This means that (s)he is the director of the organization, but (s)he also has to account to the supervisory board. In the remainder of this study, the term director will be used for this position.
DNK has some core values, which are; customer and guest oriented, enterprising, connecting, and originally. However, the foundation does not have a clear vision and mission, which might be caused by the fact that DNK does not exist for very long (the theater, cinema and library merged in January 2017). The goals of DNK are not to make profit, but to increase the margins to be able to use this extra money to live up to the expectations of their environment. But as with every other company, the overarching goal is to continue to exist.
Moreover, as stated before, companies need to be legitimate in the eyes of the external parties in order to survive (DiMaggio & Powell, 1983).
2.2.2 Case stakeholders
In this section, the stakeholders of DNK will be discussed, which were determined by reviewing the organogram (figure 1) and the annual reports of the years 2015 and 2016.
The organogram showed two important internal stakeholders, namely the supervisory board and the employees.
The annual reports of the years 2015 and 2016 of DNK are split in two; one for the library, and one for the cinema and theater, since DNK was not a merged organization at that time. In both annual reports is stated that DNK will only receive the subsidies from the municipality when they fulfill certain requirements. This means that DNK has to account their actions towards the municipality in order to create/maintain their legitimacy, and to get their subsidies. The annual reports for the cinema and the theater show three major areas of financial support; the government (municipality), sponsorship, and own revenues. The annual reports for the library showed that there are two big financial support areas for this part of the organization; the government (municipality) and own revenues.
The financial support area ‘own revenues’ for the cinema and the theater consists of two different stakeholders, namely the customers of DNK and the programming suppliers. The
‘own revenues’ for the library solely consists the customers. The customers of the library are the members, but also schools and other educational organizations.
In addition, there are two other external stakeholders of DNK, namely the cooperating partners and the media. The cooperating partners are other cultural organizations in the province Drenthe. The media is also an important stakeholder of DNK because of its power to
‘make-or-break’ the organization.
To summarize, based on the analysis of the annual reports, the organogram, and the information of the meeting with the manager of the department of market and development of DNK, eight major stakeholders of the foundation DNK were identified. Below in figure 2 an overview is provided of the different stakeholders of DNK. The internal and external
stakeholders, which are important to the whole organization are white. As indicated before, there are different customers for the different parts of the organization, but there is a possibility that these customers might overlap to a certain extent. That is why arrows are placed between the different customer groups.
Figure 2: overview of the stakeholders of DNK
3. THEORETICAL FRAMEWORK
This chapter describes the concepts within the literature that are used in this research and concludes with a conceptual model. The conceptual model is based on five propositions, which are also discussed in this chapter. Furthermore, this chapter seeks to answer the sub- questions as mentioned in the first chapter of this research. First of all, the first sub-question will be answered by using the stakeholder typology theory of Mitchell, Agle and Wood (1997) and these insights will be linked to the stakeholders of DNK. In order to investigate how organizations legitimize themselves towards their stakeholders, it is important to gain insight into the concept of legitimacy. So, to answer the second sub-question the concept of legitimacy will also be discussed by using the legitimacy types theory of Suchman (1995).
Furthermore, the concepts institutionalism and institutional complexity will be explained in order to answer the third sub-question and to gain insight into the situation that cultural organizations have to face. The same section concludes with an answer to the last two sub- questions about the theoretical relationship between the aforementioned concepts and the influence of cooperation on this relationship. Finally, some insight into different strategies for creating legitimacy will be discussed based on the study of Kraatz and Block (2008).
3.1 Stakeholders
According to Freeman (1984) stakeholders are “any group or individual who can affect, or is affected by, the achievement of the organization's objectives" (p. 46). This means that organizations need their stakeholders in order to survive, because stakeholders can have influence on the achievement of the goals of an organization. Belal (2002) states that stakeholder involvement is becoming more popular, but the way of dealing with the various stakeholders and their different requirements is still based on prioritization. This means that organizations decide which stakeholders are more important and need more attention over the others (Hill and Jones, 1992). This is in line with the stakeholder theory of Mitchell, Agle and Wood (1997). How the different stakeholders actually are identified and prioritized can be explained in view of the figure of Mitchell, Agle and Wood (1997) (figure 3). According to them, stakeholder types emerge from various combinations of the attributes; legitimacy, power and urgency. They define power as a relationship between social actors in which one social actor can let the other social actor do something that they normally would not do. For legitimacy they use the definition of Suchman (1995, p. 574), which is already mentioned in chapter one of this research. Mitchell, Agle and Wood (1997) state that a stakeholder has authority once these two attributes, power and legitimacy, are combined. They define urgency as an
“immediate call for attention” (pp. 865-866). The most important stakeholders have all three
attributes. The different combinations of the different attributes lead to eight different types of stakeholders as shown below in figure 3.
Figure 3: stakeholder typology
Source: Mitchell, Agle & Wood, 1997, p.874.
Referring back to the research question, it is important to notice that the assumption is made that all stakeholders possess the attribute legitimacy. This means that only the right side of the stakeholder typology figure of Mitchell, Agle and Wood (1997) will be used in this research. The different stakeholders of DNK can now be prioritized using the figure of Mitchell, Agle and Wood (1997). First of all, a distinction can be made between internal and external stakeholders. The internal stakeholders are the employees and the supervisory board. The external stakeholders are the government, the sponsors, the programming suppliers, the customers, the media and the cooperating partners. Here, the government, the sponsors, the programming suppliers and the customers can all be placed under the overarching group
“financial stakeholder”, as mentioned in chapter 2 of this research, because they financially support the organization. This leaves four kinds of stakeholders, namely internal stakeholders, financial stakeholders, media and cooperating partners.
The internal stakeholders can be seen as dominant stakeholders because they possess power and legitimacy but no urgency. According to Mitchell, Agle and Wood (1997) the dominant stakeholders are able to act upon their claims, rather than only forecast their intentions. The financial stakeholders can be seen as definitive stakeholders because they possess all three attributes. Mitchell, Agle and Wood (1997) state that “a stakeholder
possessing both power and legitimacy already will be a member of a firm’s dominant coalition and when such a stakeholder’s claim is urgent, managers have to give priority to that stakeholder’s claim” (p. 878). The media can be seen as dominant stakeholder because it possesses a lot of power when it comes to ‘making-or-breaking’ an organization. The cooperating partners of DNK can be seen as discretionary stakeholders because they have no power to influence the firm and no urgent claims (Mitchell, Agle & Wood, 1997).
In order to provide a good overview, table 1 below summarizes the aforementioned prioritization of the different stakeholders.
Stakeholder (group) Stakeholder type
Financial stakeholders Definitive
Internal stakeholders Dominant
Media Dominant
Cooperating partners Discretionary
Table 1: overview stakeholders and stakeholder types (prioritization)
3.2 Legitimacy
To answer the research question, it is important to have a clear understanding of the concept of legitimacy in the outlined context. As mentioned before, organizations need to be legitimate in the eyes of stakeholders in order to survive (DiMaggio & Powell, 1983). The stakeholders and their prioritization are described in the previous section. In this section, the concept of legitimacy will be further explained in order to answer the second sub-question.
In today’s society legitimacy plays an important role for organizations in the right to exist. The concept of legitimacy has various descriptions and approaches in the literature. In this section, it will first be explained what legitimacy is. Subsequently, it will be described from which sources an organization derives its legitimacy. The aim is to gain insight into how cultural organizations can obtain and guarantee legitimacy based on the literature. Finally, an explanation is provided about how legitimacy has evolved over time.
As mentioned before, a widely used definition of legitimacy is: “Legitimacy is the general perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs and definitions”
(Suchman, 1995, p. 574). According to Sonpar, Pazzaglia, and Kornijenko (2010), legitimacy is a precondition for the continuity and effectiveness of organizations and organizations aim to focus on the key stakeholders. These stakeholders have an influence on the institutional
environment, growth, and survival of a company, either directly or indirectly through communication or goodwill (Sonpar et al., 2010). It is important to take the media into account when identifying different stakeholders. Patten (2002) stated that increasing media attention for an organization can lead to increasing pressure from the other stakeholders. Various studies show that the external factor of media plays an important role in confirming or reducing legitimacy (Tilling, 2010; Gutiérrez-Rincón, 2014).
Legitimacy can be viewed from criteria at the social level, sector level or organizational level (Suchman, 1995). At the social level, the issue is whether the population recognizes a form of service as a fundamental social right or public interest. The sector level is about the way in which social services are arranged. Legitimacy at organizational level means that society recognizes and supports an organization. Legitimacy is an important indicator for good performance management of an organization (Wood, 1991; Weaver, Trevino & Cochran, 1999). Suchman (1995) indicates that, in addition to classification by level, there are different types of legitimacy and that legitimacy can have both a temporary and a permanent character.
Many studies especially ignore this last aspect of legitimacy. However, recent research supports the findings of Suchman (1995) (Sonpar, 2010).
According to Suchman (1995) there are three main types of legitimacy: (1) pragmatic legitimacy, (2) moral legitimacy, and (3) cognitive legitimacy. These dimensions contain the perception that the activities of organizations are desirable, pure and appropriate within the social system of norms and values, but they assume different behavioral dynamics. In practice, there are interactions between the dimensions. A further explanation of the different dimensions will be provided below, and a summary of these explanations can also be found below in figure 4. This figure has two dimensions. Suchman (1995) states that the first dimension divides the dynamics that focus on the organization’s actions from the dynamics that focus on the organization’s essence. Meaning that a distinction is made between the desirability and appropriateness of the organization’s functioning and the desirability and appropriateness of the organization’s being in itself. So, the first dimension shows the focus of legitimation (Suchman, 1995). He also states that the second dimension reflects the temporal texture of legitimation. Here, the dimension divides the dynamics that operate on an episodic basis from those that are continual.
The pragmatic dimension concerns the relationship of the organization with its most important stakeholders. The stakeholders judge the activities of the organization on the practical consequences for themselves. There are three subtypes: (1) exchange legitimacy, (2) influencing legitimacy, and (3) dispositional legitimacy. Exchange legitimacy is purely based on a material power - dependency relationship (Suchman, 1995; Emerson, 1962;
Pfeffer & Salancik, 1978). Influential legitimacy has a more social character. Here the environment gives legitimacy because it sees added value of the organization and because it feels that the organization is focusing on the greater interest of the stakeholders. Influential legitimacy may arise when an organization involves stakeholders in its policy or adopts standards of performance from its stakeholders (Suchman, 1995; Selznick, 1949).
Dispositional legitimacy means that the organization is viewed as an individual. It is important that the stakeholders see the organization as an organization with a good character, reliable, decent and wise (Suchman, 1995). Suchman (1995) stated that this form of pragmatic legitimacy can also have character traits that fit in with moral legitimacy. In figure 4, a subdivision is made between the episodic dynamics and the more lasting dynamics of dispositional legitimacy.
According to Suchman (1995) moral legitimacy is determined by the perception whether the activities of the organization are the right things to do, where the effect of the added value for stakeholders in not the most important but the norm. Here there are four subtypes: (1) legitimacy of output, (2) legitimacy of procedures, (3) legitimacy of structures, and (4) personal legitimacy. Output legitimacy is determined by the evaluation of output and consequences. So, organizations are judged on what they achieve, by the market or by higher authorities (Meyer & Rowan, 1977). Procedural legitimacy is determined by the evaluation of techniques and procedures (Scott, 1977). Legitimacy can then be acquired by embracing socially accepted techniques and procedures, provided that this is achieved in an acceptable way (Suchman, 1995). Structural legitimacy is determined by the evaluation of categories and structures (Scott, 1977). Stakeholders see the organizations as valuable if the structure is within the moral preference (Suchman, 1995). Structures are often transparent and visible in contrast to strategy, goals and results (DiMaggio & Powell, 1983). The last form of moral legitimacy concerns personal legitimacy. In this form of legitimacy, the charisma of individual leaders or important figures in the organization plays a major role, it influences the environment’s perceptions about the organization (Zucker, 1991).
Cognitive legitimacy means that an organization is the way it is expected to be by the environment or takes the right role and performs the right actions (Suchman, 1995). According to Suchman (1995) this means that an organization has to be recognizable, meaningful and understandable and it has to be in line with existing frames of mind and social norms. Suchman (1995) stated that organizations must prove that their activities are predictable, meaningful and inviting. Within this form of legitimacy, a distinguishing is made between comprehensibility and taken-for-grantedness. This distinction is also shown in figure 4, where comprehensibility
dynamic (Suchman, 1995). He also mentioned that taken-for-grantedness creates a situation of coherence and integral change, but that an organization often has little influence on this.
Figure 4: typology of legitimacy Source: Suchman, 1995, p. 584.
As mentioned before, DNK has four stakeholder groups, namely internal stakeholders (dominant stakeholders), financial stakeholders (definitive stakeholders), the media (dominant stakeholder) and cooperating partners (discretionary stakeholders). These different stakeholder groups of DNK can now be linked to the different types of legitimacy using the model of Suchman (1995). The financial stakeholders have a direct relationship with the organization concerning money and they have a direct influence on the i nterests and/or well- being of the environment. This means that the stakeholders will judge the activities of the organization on the practical consequences for themselves. So, it is expected that cultural organizations will try to create pragmatic legitimacy for the financial stakeholders, because pragmatic legitimacy concerns the relationship of the organization with the stakeholders with whom the organization have direct exchange relations for their own interests (Suchman, 1995).
Proposition 1: cultural organizations try to create pragmatic legitimacy for the financial (definitive) stakeholders.
Internal stakeholders will judge the organization on what they achieve, and they will evaluate the techniques and the procedures of the cultural organization. The cultural
organization will be seen as valuable, by these stakeholders, if the structure is within their moral preferences (Suchman, 1995). It is expected that cultural organizations will try to create moral legitimacy for the internal stakeholders, because moral legitimacy is determined by the perception of stakeholders whether activities of the organization are the right things to do, where the effect of the added value for stakeholders is not the most important but the norm (Suchman, 1995).
Proposition 2: cultural organizations try to create moral legitimacy for the internal (dominant) stakeholders.
The media can ‘make-or-break’ the organization with regard to the degree of meeting the expectations of taking the right role and performing the right actions, and the cooperating partners expect that the organization takes the right role and performs the right actions with regard to their own activities (Suchman, 1995). This means that these stakeholders judge an organization on if it is the way it is expected to be by the environment. So, it is expected that cultural organizations will try to create cognitive legitimacy for the media and the cooperating partners.
Proposition 3: cultural organizations try to create cognitive legitimacy for the media (dominant stakeholder).
Proposition 4: cultural organizations try to create cognitive legitimacy for the cooperating partners (discretionary stakeholders).
The question remaining is how they actually create these kinds of legitimacy with the different stakeholders. In order to answer the last three sub-questions, the concepts institutionalism and institutional complexity will be discussed in the next section, followed by some insights into different kinds of strategies that companies use to create legitimacy.
3.3 Institutionalism and institutional complexity
3.3.1 The different dimensions of institutions
A lot of research has been conducted into legitimacy through institutionalism (DiMaggio
& Powell, 1983; Suchman, 1995; Sonpar, 2010). The central principle in institutional theory is that organizations are significantly influenced by norms, values, convictions, rules and procedures (Scott, 2008). According to Vermeulen (2012), these are what give the organization structure and order and they are often perceived as taken for granted. Scott
(2008) defines institutions as “multidimensional social structures that consist of regulatory, normative and/or cultural - cognitive elements that provide stability and meaning, and direct the behavior of actors” (p.429). The regulatory dimension of institutions means that institutions can regulate the behavior of individuals and organizations by means of rules that are formal and compelling and are linked to a form of enforcement or sanctions (Vermeulen, 2012). The normative dimension of institutions concerns values and norms in a particular society, industry or organization (Scott, 2008). In order to obtain legitimacy, organizations align their activities with the prevailing norms and values (Vermeulen, 2012). The cognitive dimension of institutions refers to shared reference frames that arise during interaction processes within organizations (Scott, 2008). Organizations might change their organizational practices if the social structures with regard to the organization change. Meaning that the organization responds to the different kind of pressures from different stakeholders (Tsamenyi, Cullen &
Gonzalez, 2006). So, the different changes in the organizational practices are actually attempts of the organization to create legitimacy for the external parties (DiMaggio & Powell, 1983).
3.3.2 Institutional complexity
As stated before, stakeholders have a great influence on the institutional environment, growth and survival of organizations (Tilling, 2004). According to Sonpar (2010) legitimating behavior of organizations is prevalent in the institutional theory and necessary for three reasons. First, it reduces the need for information processing by managers as institutional values and standards are fixed. Second, it ensures continuous support and access to the necessary resources of the key stakeholders. Third, it facilitates the organization’s right to exist.
Legitimacy is a problematic concept within institutional theory for a number of reasons.
The theory has a passive approach to managing legitimacy as opposed to the opinion of Oliver (1991). Oliver (1991) states that differences in the context of the environment may influence the extent of legitimacy-seeking behavior. So, according to her, managing legitimacy needs a more active approach. In addition, the possible temporality of legitimacy is not taken into account despite the fact that the theory implies that the power of institutional norms may vary after a while (Suchman, 1995). Finally, organizations operate in an environment where the various external parties exert various pressures on organizations from different norms and values. These different institutional norms and values may be incompatible, at which point complex negotiations might be needed. The theory does not sufficiently address this complexity, especially with regard to legitimacy (Greenwood, et al., 2011). In the cultural context, there are different stakeholders exerting different pressures from different institutional
norms and values on the cultural organizations. Meaning that these cultural organizations have to deal with institutional complexity.
As mentioned before, there is institutional complexity when organizations are confronted with conflicting and incompatible requirements of various stakeholders (Greenwood, et al., 2011). The starting point in institutional theory is that external pressure is exerted on the organization and the external pressure increases when the organizations grows in size (Oliver, 1991). Each stakeholder acts from its own frame of reference, with its own standards and values system (Thornton & Ocasio, 1999; Friedland & Alford, 1991). In such a situation, an organization will serve the various institutions and stakeholders in a strategic manner such that they provide it with legitimacy (Oliver, 1991). Once certain companies merge (DNK, 2017; Theater Castellum, 2017), the organization grows in size (Oliver, 1991). This means that the different parts of the organizations also need to take the requirements of the stakeholders of the other part of the organization into account. Such cooperation might even create more institutional complexity that the cultural organization has to deal with (Greenwood, et al., 2011).
The interests of different stakeholders are represented from different perspectives, which can create tensions. A lot of research has been conducted into how changing requirements of the existence of multiple contradictory requirements affect organizations (Van Gesten & Hillebrand, 2011; Pache & Santos, 2010). However, there is almost no research conducted into how organizations respond to institutional complexity (Greenwood, et al., 2011). Many studies focus on specific activities of organizations (e.g. personnel policy) and as a result only a small part has been investigated (Pache & Santos, 2010). By looking at isolated activities of organizations, responses to institutional complexity at the organizational level have remained underexposed in the literature (Greenwood, et al., 2011). The requirements from the external stakeholders of organizations change over time and organizations can continuously anticipate on these changes in order to preserve and strengthen their legitimacy (Van Gestel & Hillebrand, 2011).
Unlike Oliver (1991), Pache and Santos (2010) consider conflicting institutional pressure as a specific case of institutional pressure and they seek to extent the typology of organizations' reactions to this pressure from Oliver (1991). At the level of the organization, they look at how the organization responds to conflicting requirements in practice and not to individual activities of organizations as a reaction, as in many previous studies. Their research focuses on four organizations, in a different context than this research, that struggle with
research showed that these organizations were able to combine the different activities that contribute to legitimacy for multiple stakeholders. Criticism on the study of Pache and Santos (2010) is that they ignore the external factor of media, of which several studies have shown that it has a significant influence on the legitimacy of an organization (Gutiérrez-Rincón, 2014).
To conclude this section and answer the last two sub-questions, it became clear that there is a relationship between institutional complexity, stakeholders and legitimacy in theory.
Because different stakeholders might have different requirements and expectations towards an organization, creating institutional complexity. In addition, legitimacy must be created for all the different stakeholders in order to survive (DiMaggio & Powell, 1983). When different cultural organizations decide to cooperate or merge, the institutional complexity could increase because the number of different stakeholders with mutually incompatible requirements and expectations might increase. This can make it more difficult to create legitimacy for all the different stakeholders. Meaning that the cooperation of different cultural organizations can have an influence on the relationship between institutional complexity and legitimacy.
3.3.3 Strategies to deal with institutional complexity
As mentioned before, the organization’s right to exist lies in the legitimacy of its stakeholders. This is why it is of great importance that organizations are able to strategically anticipate on the changing requirements in their environment. Oliver (1991) has shown in her research that organizations anticipate differently on changes. According to her, several factors influence the choice for a strategy. In her view, the starting point here is that an organization applies one strategy. Kraatz and Block (2008) mention the elimination of institutional requirements, dealing with each requirement separately and finding a balance between the requirements or the development of new institutional orders. The way how organizations can actually apply these strategies does not become clear from the research by Kraatz and Block (2008). This research tries to find an answer to which strategies cultural organizations apply in order to obtain legitimacy with the stakeholders in a context of institutional complexity. The strategies of Kraatz and Block (2008) will be used as a guideline in the attempt to answer the research question.
Proposition 5: the strategies used by cultural organizations in order to create the different types of legitimacy for the different stakeholders, in a context of institutional complexity, are still unclear.
3.5 Conceptual model
The literature study showed that an organization needs to obtain legitimacy from its stakeholders in order to survive. According to Suchman (1995) organizations can apply different strategies to obtain, maintain and repair legitimacy. Suchman (1995) also stated that by approaching the environment of cultural organizations from different stakeholders, the different dimensions of legitimacy will be integrated. Legitimacy strategies by Suchman (1995) can be deduced from the theory of strategic reactions to institutional pressures from Oliver (1991) and Kraatz and Block (2008). However, legitimacy changes over time, external requirements change in the development of a specific institutional environment such as that of, for example, cultural organizations. Various researchers have proven that organizations are capable of actively responding to changes in their environment. By properly mapping out the different institutions or stakeholders with their requirements towards an organization, the organization could be able to strategically anticipate to changes in their environment. The theory shows that it is important to be consistent in the response to the stakeholders in order to obtain, maintain or repair legitimacy (Massey, 2001). This research focuses on the strategies that cultural organizations apply in relation to their accounting processes in order to create and obtain legitimacy in a situation of institutional complexity.
The following conceptual model is based on the five aforementioned propositions:
Figure 5: conceptual model
4. METHODOLOGY
In this chapter the research methods will be explained. Furthermore, the way how the gained data is analyzed will also be discussed. A qualitative research will be conducted in order to answer the research question, which will be further explained in the next section.
4.1 Qualitative research
Qualitative research involves exploring and clarifying a theme or issue, whereby data of qualitative nature is predominantly used (Saunders et al., 2008). The goal of a qualitative research is to describe and interpret research problems of certain situations, events or persons. The research question forms the starting point of the chosen method (Saunders et al., 2008). This research seeks to supplement the Neo Institutional Sociology by further exploring the concept of legitimacy in relation to strategic behavior and by giving more insight into organizational behavior in a situation of institutional complexity. In addition, this research seeks to enrich and give more depth to the theory by discussing the context of Dutch cultural organizations, a context that has not got a lot of attention in the existing literature. According to Eisenhardt (1989) case studies are a good method to use for exploratory research.
Therefore, this study will be conducted as a single case study.
The study focuses on Dutch cooperating cultural organizations. That is why the cultural organization DNK; cinema, theater and library in one, in the north of the Netherlands is selected. The main unit of analysis in this research are the employees in the organization with the closest connection to the (external) stakeholders of the organization because they can provide the most information about the strategies used to create legitimacy towards these stakeholders. Blumberg, Cooper and Schindler (2014) state that a case study normally does not generate enough data to be able to generalize the results, but the data from a case study is normally enough to gain new insights about a particular subject. These new insights can then be used for providing some propositions for further research related to the same topic (Blumberg et al., 2014).
Interviews, observations and archival sources are commonly used for qualitative research (Eisenhardt, 1989). Eisenhardt (1989) states that it is useful to incorporate various data collection methods because this provides stronger evidence. Therefore, the data collection of this research consists of semi-structured in-depth interviews and a document analysis, which will be further discussed in the next sections.
4.1.1 Interviews
According to Blumberg et al. (2014), semi-structured in-depth interviews are a good way to collect data. Semi-structured means that the interviewer sets up some main questions based on the ground that the interviewer wants to cover during the interviews (Drever, 1995).
According to Drever (1995) this can be called the general structure. The interview itself will lead to the detailed structure of the interview, while the interviewees have a fair degree of freedom in their expression (Drever, 1995). The questions of the semi-structured in-depth interviews (appendix 1) are based on the conceptual model and the theories about stakeholders of Mitchell, Agle and Wood (1997), legitimacy of Suchman (1995), institutional complexity of Pache and Santos (2010), and strategies of Kraatz and Block (2008). When designing the interview questions, it was tried to cover all the aspects of the conceptual model (see chapter 3) by using all four aforementioned theories. This way, a consistent basis was built for the interviews. The interview questions are divided into five blocks, one for introduction, one for stakeholders, one for legitimacy, one for institutional complexity and one for strategies. The question block about the stakeholders was designed and used in order to check if all stakeholders of DNK mentioned in chapter 2 of this research were correct and complete. The questions about legitimacy were designed and used to investigate what kind of legitimacy has to be created for the different stakeholders according to the interviewees. The questions about institutional complexity were designed and used in order to test if DNK actually has to deal with this kind of complexity. The last question block about strategies was designed and used to examine the strategies that are used by DNK in order to create legitimacy for the different stakeholders. By adding the questions to the appendix, it is possible for others to redo the research. This way, the results of this research and a subsequent research can be compared, and perhaps more knowledge can be added to the literature.
Furthermore, it was tried to ensure the reliability of this research by being consistent in using the same questionnaire for all the interviews (Yin, 2003).
As indicated before in chapter 2 of this research, the single case study will be conducted at DNK. The main unit of analysis for this research, as stated before, are the people with the most knowledge about the requirements of the different stakeholders of their company. These people are expected to have the most knowledge about the strategies used to create legitimacy for the different stakeholders, which is needed to answer the research question. It was expected that theoretical saturation would appear after the tenth interview, which is why ten employees were interviewed for this single case study. All interviews were held in Dutch and conducted in a two-week period in April 2018. An overview of interviews is provided below in table 2. To be able to provide the transcripts, all interviews were recorded with permission from the interviewees.
Interview Code Position Reason for selection: (Expected to have knowledge about the stakeholders shown in figure 2)
I1 Manager market and
development *
Government, supervisory board, media, cooperating partners, customers and employees I2 Manager public service and
facilities *
Government, customers, supervisory board and employees
I3 Controller * Government and supervisory
board
I4 Label programmer**theater * Programming suppliers,
cooperating partners, employees and customers
I5 Strategic policy advisor * All
I6 Chairman works council Employees
I7 Member works council Employees
I8 Director * All
I9 Label programmer ** library and team manager education
*
Government, cooperating partners, employees and customers
I10 Label programmer ** cinema and team leader cinema *
Programming suppliers, employees and customers Table 2: interview-overview
* Positions which can be found in the organogram at page 11 of this research.
** Label programmers are the managers that engage with all the content of the theater/cinema/library. So, which performances/movies/books are purchased and when they are played/shown.
The results from the transcripts are described and analysed per question-block by taking all the different answers of the interviewees together and summarize them. This way, a overview was provided of the different answers about the same topic and the conceptual model, based on the propositions (see chapter 3 of this research), could be tested. During the interviews, an attempt was made to find the different strategies that DNK uses to create legitimacy for their stakeholders.
4.1.2 Documents
As mentioned before, it is useful to incorporate various data collection methods because this provides stronger evidence (Eisenhardt, 1989). This is why a document analysis was also conducted in addition to the semi-structured in-depth interviews. The use of document analysis methods assumes that the documents contain information about the phenomenon to be studied, in this case the different stakeholders and their requirements (Bailey, 1994). Mogalakwe (2006) states that a document is a written text, made by individuals or by groups with a specific purpose, based on specific assumptions that are presented in a specific style to fit that purpose. The researcher must also be aware of this when analyzing these documents (Payne & Payne; 2004). The document analysis consisted of the annual reports of 2015 and 2016, the subsidy conditions of 2017, a customer survey of the library, some online reviews of the cinema and theater visitors, and some online newspaper articles about DNK. The documents used are all publicly available documents, which were found by searching on the internet, because it was not possible to receive any internal documents.
These documents were used to examine if the stakeholders, mentioned in chapter 2 of this research, are correct and complete, and it was used to get more insight into the different requirements from the different stakeholders.
5. RESULTS
In this chapter the research findings will be presented. This chapter is divided in five sections. The first four sections are based on the conceptual model of chapter 3 and the questionnaire of the semi-structured in-depth interviews from this research; stakeholders, legitimacy, institutional complexity and strategies. For all these sections, the results from the document analysis will be presented first, followed by the results from the semi-structured in- depth interviews. The last section of this chapter will elaborate on the propositions of this research.
5.1 Stakeholders
In this section the results about the stakeholders will be described and analyzed. An attempt was made to examine if the stakeholders mentioned in chapter 2 of this research are correct and complete. In addition, it was also examined if the prioritization of the stakeholders, based on the theory of Mitchell, Agle and Wood (1997) as mentioned in chapter 3 of this research, is correct.
5.1.1 Document analysis
As mentioned before, the overarching goal of the organization is to continue to exist.
In order to do so, an organization needs money and positive publicity. So, an interesting finding in the annual reports is that the government (municipality) is one of the biggest stakeholders of the foundation due to the amount of subsidies DNK receives from them, which are almost 85% of the total earnings. Furthermore, the sponsorship is the smallest financial support area of only 1,8% of the total earnings. This means that the other 13% of the total earnings comes from the own revenues of the foundation. So, it can be said, based on the annual reports and the theory of Mitchell, Agle and Wood (1997) as mentioned in chapter 3 of this research, that the government and the customers possess the most power because there is a lot at stake for the organization due to the financial support. Another finding is that the media (Dagblad van het Noorden, 2018) writes, on average, two times a week about DNK. This means that the media can also be seen as a big stakeholder of DNK, because the media could ‘make-or- break’ the organization with their positive or negative articles about DNK. So, the media also possesses the attribute power. The annual reports were already used for chapter 2 of this research and the other documents can be linked to these annual reports, because the other documents concern the stakeholders as shown in the annual reports. So, according to the analysis of the documents, the stakeholders as mentioned in chapter 2 of this research are correct and complete. The document analysis did not provide more insight into the levels of legitimacy, power and urgency of the different stakeholders.
5.1.2 Interviews
It was asked if the interviewees thought that the stakeholders, as mentioned in chapter 2 of this research, are correct and complete. During the interviews it became clear that a number of stakeholders need to be added to figure 2 of chapter 2 of this research. This means that the stakeholders, as mentioned in chapter 2, were correct but not complete. First of all, the suppliers. The programming suppliers were already mentioned in chapter 2 of this research, but the suppliers of the catering industry and for maintenance were not included in figure 2. These suppliers should be included according to the director, the manager public service and facilities, and the label programmer cinema (I2; I8; I10) because they need a good relationship with these suppliers in order to get their catering right and in order to keep the building representative. Second, the social partners should also be included (I2; I9). Social partners are defined as the law enforcement or welfare workers (I2). These social partners need to be included because the organization needs these stakeholders “to prevent disturbances” (I2). Third, the co-users of the building, De Nieuwe Kolk, (I2; I8) and the local residents of the building should also be included, “the organization has a special relationship with these stakeholders concerning the cooperation in and around the building” (I2). Finally, the sponsor Rabobank should also be included (I3; I8). Despite the fact that the organization does not really have to account to the sponsor, as mentioned in chapter 2, “the organization also needs legitimacy there” (I8). This new information leads to the following figure (figure 6;
extension of figure 2 indicated in red):
Figure 6: overview of the stakeholders of DNK (extension of figure 2).
In order to examine if the prioritization of the stakeholders is correct, as mentioned in chapter 3 of this research, it was asked if the organization needs to account to the different stakeholders and if the different stakeholders had any form of power or urgency. This means that the results about the prioritization are based on the knowledge and perceptions of the interviewees. The results of these questions are shown below in table 3 and will be further discussed below. As mentioned before in chapter 4 of this research, not all the interviewees were expected to have knowledge about all the different stakeholders. So, table 3 will show the number of potential interviewees with knowledge about that stakeholder followed by the number of interviewees that actually mentioned which attributes (legitimacy, power and/or urgency) that stakeholder does possess.
Stakeholder Legitimacy Power Urgency # Potential interviewees with knowledge
about this stakeholder
# Actual interviewees with knowledge about this stakeholder
and mentioning possession of
attributes
Government X X X 6 5
Supervisory board X X X 5 2
Media X X 3 3
Social partners X - 2
Cooperating partners
X 5 2
Suppliers (catering and maintenance)
X
-
2
Co-users building X - 2
Local residents X - 2
Sponsor X 2 1
Programming suppliers
X X 4 3
Customers X X 7 5
Employees X X 9 5
Table 3: results stakeholder attribute possession
❏ Stakeholders possessing all three attributes
“The municipality certainly has a lot of power, because we depend on them financially.
Whoever pays, determines” (I8). This means that the organization “simply has to comply with the tasks that are imposed on them in order to get the subsidy” (I9). These quotes show that the government possesses legitimacy, power and urgency because the organization needs to do as the government (municipality) asks and the organization needs to account to the municipality in order to get its subsidies. This means that the organization really needs the municipality in order to survive, considering that the subsidies are almost 85% of the total earning of the organization.
According to the director, the supervisory board also possesses legitimacy, power and urgency because “they have the final word” (I5). Meaning that the organization needs to account for their actions towards the supervisory board because the supervisory board needs this information in order to decide if the organization has to change their actions. One interviewee stated that they “only meet once or twice per year with the supervisory board” (I3).
However, the director stated that “the supervisory board really does ask for immediate attention sometimes” (I8). So, based on the quotes of the director, it can be stated that the supervisory board also possesses all three attributes.
❏ Stakeholders possessing legitimacy and power
The customers and the employees also possess legitimacy and power but no urgency;
“customers have a lot of power. We need to do what the customer asks, otherwise the customers will no longer visit us.” (I3). This quote shows that the customers do possess legitimacy and power in the sense that the organization needs to do as the customers ask to ensure that they keep visiting the organization. Meaning that the organization ensures the financial support as mentioned before. But the customers do not possess urgency, because
“not every individual complaint or wish from the customers requires immediate attention”. The following quote shows that the employees also possess legitimacy and power, but no urgency;
“There are certain things that a management does not do without permission from the works council. If we do not agree with something, then we have to talk with each other until we can find a certain agreement. So, the employees have influence on the organization” (I6). So, the employees need legitimacy in order to keep them happy because “the employees are the face of the organization towards the other stakeholders” (I8) and together they possess the attribute power once they require something from the organization. However, similar to the customers, they do not possess real urgency because not every individual requirement asks for immediate attention.
The media also possesses legitimacy and power, as shown in the following quote; “The media definitely has power, because the media can make or break a company” (I8). This means that the organization needs to create legitimacy for the media because the media has the power to damage the organization once its actions are not as the media expects them to be. Yet, the media does not possess urgency because they do not always call for immediate attention; “it is important to give them love and manage the relationship”, but that is not the first priority of the organization.
“The programming suppliers have considerable power in the theater because the theaters are not organized together, and the agent ships actually have a sort of monopoly. So, we are sometimes forced to buy things or buy things under certain conditions, w hich I would rather see differently” (I2). This quote shows that the programming suppliers for the theater have a lot of power and also possess legitimacy, but the same counts for the programming suppliers for the cinema; “We are really dependent on the programming suppliers because we have no other choice than them, compared to the other suppliers of catering and maintenance”
(I10). The relationship with these programming suppliers needs to be managed, in other words legitimacy has to be created and maintained because these programming suppliers can have a major influence on which performing arts and movies the organization can show to their customers. Despite the fact that the programming suppliers have some sort of monopoly, they do not call for immediate attention because the label programmers of the organization eventually decide what shows or movies they want to purchase, and they still have a choice between a few different programming suppliers with different requirements. This means that not all the individual requirements of the programming suppliers ask for immediate attention and, thus, they do not possess the attribute urgency.
❏ Stakeholders only possessing legitimacy
Compared with the programming suppliers, the suppliers of catering and maintenance do not possess any power or urgency, because the organization has many more choices between the different suppliers. Meaning that the organization does not need to fulfill any requirements from a certain supplier because there will always be another one with different, more manageable requirements. Nevertheless, the organization still needs to create legitimacy for these stakeholders because “the organization has different contracts with their suppliers of catering and maintenance” (I10). Meaning that the organization still needs to account for their actions towards these suppliers.
The social partners, the cooperating partners, the co-users of the building, the local residents and the sponsor do all, just like the suppliers of catering and maintenance, only possess the attribute legitimacy. They do not have a real influence on the business management of the organization and they do not call for immediate action. The label
