Community’s evaluation of organizational legitimacy: Formation and reconsideration

With the aim of delving into the legitimacy formation mechanisms used by communities to make judgements about project organizations, this research studied the local community and surrounding environment of four oil extraction projects located in three developing countries. The results of the cross-case analysis suggest that communities' negative perceptions from government and media can influence their judgement of organizational behaviour. Additionally, this research proposes that local communities' anticipation of the consequences of protesting against the organization can make them decide not to take any action. According to institutional theory, when community individuals arrive at a legitimacy verdict about an organization, their future perceptions will mainly be influenced by this decision rather than conscious consideration of the conditions. Accordingly, this research recommends that organizations aiming to recover their reputation need to adopt compensation activities with a substantial influence on the improvement of conditions. It is only in such conditions that communities will consciously evaluate organizational legitimacy. Trivial changes in organizational behaviour will only result in adding new evidences in support of the illegitimacy of organizations.