The Approaches Big Organizations Adopted in Tackling Contemporary Issues - Dissertation Example

Legitimacy theory necessitates that organizations operate within the accepted boundary and norm in the particular jurisdictions they have found themselves in. As a matter of fact, organizations will avoid doing something illegal and illogical in order to demonstrate to the concerned parties in the society that they are favouring “legitimacy”. In such a manner, the desire to act legitimately will encourage providing accurate and useful accounting information concerning social and environmental.

This approach will not only give the stakeholders in the corporation reasons to believe that their investment would be profitable, but future shareholders will also increase their interest in investing in the corporations that demonstrate a high-level social responsibility. Chiu (2009) explains that shareholders, nowadays, are more concerned with the procedures of Corporate Social Responsibility in their companies so as to project the overall usefulness of such companies in the societies they serve.

Invariably, if a company does not win the trust of the people in the locality where it is established, such a company may lose customers’ patronage in the near future and eventually collapse. While providing these pieces of information, it is generally expected in a society that organizations should perform according to the laid-down principles in order to keep their status of “legitimacy”.Stakeholder TheoryThere are two major branches of stakeholder theory, but one of them is discussed in this paper.

The managerial branch of stakeholder theory is specifically applicable to the legitimacy phenomenon described above, whereby stakeholders are seriously concerned about the management processes leading to corporate social responsibility. Gary et al (1996) stated that powerful stakeholders are mostly to be concentrated upon by organizations. This is because powerful stakeholders are the people who have the right to control the resources which can be used to fulfill the organization’s objective in relation to the actualization of organizational policies.