Global Compact International Yearbook 2013
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(
buffering), whereas others do so to truly engage with these
stakeholders (bridge). In the context of managing legitimacy, we
expect that with respect to both internal and external boundary
spanning, bridging is preferred to buffering because it enables
the organization to switch legitimacy strategies seamlessly when
appropriate, without appearing inconsistent.
The analysis of both empirical cases shows increased boundary-
spanning activities, yet major differences exist with regard to
the type of boundary spanning on the internal and external
dimension. Company A uses boundary spanning to bridge
between external organizations and to buffer from internal
critique; Company B focuses on external buffering, that is, the
company tends to avoid interactions with external stakehold-
ers, while emphasizing internal bridging. We explain these
differences with the different leadership styles and different
corporate histories. Company A’s leadership continuously
pushes the company to adopt a collaborative approach in
order to advance the company’s sustainability strategy. This
includes regular exchanges with critical external stakeholders.
The CEO of Company A argued: “Well, first of all, I think that
you need to have dialogue in order to understand what the
critical issues are. If you don’t engage with your critics, you
will never find out what their point of view is.”
The CEO’s vision also drives the sustainability agenda. Inter-
nally, organizational structures and procedures were set up
to ensure the proper implementation of the leader’s vision.
These implementation structures, however, are centralized
and designed to support the top-down strategy. They leave
little room for critical reflection or decision making by sub-
ordinate organizational members. The leadership’s vision
is fully supported, however, because past experiences with
legitimacy crises have proven that the engagement with
external stakeholders is most effective for repairing and
maintaining legitimacy.
Company B, in contrast, only reluctantly opens up their
decision-making processes to critical external stakeholders.
Their sustainability strategy was defined internally by key
managers and presented to a friendly audience of consultants
and experts for feedback. The CEO endorses the process but
does not publicly appear as a leader on sustainability topics.
When asked why their sustainability strategy does not feature
more prominently in corporate communications, corporate
representatives refer to their “humble Swiss business culture.”
They also point to corporate scandals from the past that still
haunt the organization. Internally, however, multiple platforms
provide forums for interdepartmental exchange on how best
to respond to heterogeneous stakeholder requests.
In our academic work, we further discuss the theoretical and
practical implications of these research findings.
Managing corporate legitimacy with the Global Compact
Companies that are exposed to public scrutiny are typically
aware of the risks associated with losing their corporate legiti-
macy. They develop antennas sensitive to societal expectations
and engage in boundary-spanning activities to better assess
the adequateness of their actions.
Participating in the Global Compact provides ample opportu-
nities for boundary spanning. However, to avoid a backlash
for corporate legitimacy, corporations need to respond to the
Global Compact’s critics who argue that the initiative allows
for “blue / green washing.” To benefit from participation in
the Global Compact, corporations must show full engagement
with the initiative’s learning platform, contribute to its further
development, and engage with its stakeholders (bridging).
Public trust in business is at a low point, and engaging in
isolated CSR projects or polished PR campaigns as a quick
fix to appease stakeholders will not suffice to restore it. Es-
tablishing the organizational prerequisites for managing
corporate legitimacy, however, provides a basis for juggling
conflicting stakeholder demands in highly complex business
environments.
Agenda
Stakeholder Management
Dr. Dorothée Baumann-
Pauly earned her doctoral
degree at the University
of Zurich and is currently
working as a consultant
and project manager for
AccountAbility.
Prof. Dr. Andreas Georg
Scherer is Professor of
Business Administration
and Director of the Instit-
ute of Organization and
Administrative Science (IOU)
at the University of Zurich.