Abstract
There is an increasing concern about the value contributed by firms to the society as a whole. Transnational companies are particularly being questioned; therefore, legitimation for this kind of corporations is demanded. This chapter analyses four delegitimizing factors: negative added value, negative equity, tax evasion and moral hazard associated to potential situations of bankruptcy. Three legitimizing factors will also be analysed: added value distributed to stakeholders, value distributed by “non-market” mechanisms and emotional value generated to different stakeholders of the entity. Since the lack of legitimation affects large companies to a greater degree, two hypotheses related to the size of the firms have been tested. The first has to do with a larger presence of delegitimizing factors in large firms. The second analyses a smaller distribution in this sort of firms of value generated to stakeholders that are not shareholders assessed by means of the social efficiency ratio (SER). The obtained results allow for identifying whether the criticism towards large firms is supported by objective factors (confirmed hypothesis) or subjective ones (rejected hypothesis) and consequently whether the transnational companies should base their action plans of social legitimation on strategy or on communication.
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Notes
- 1.
In the economy of well-being, there are two essential theorems: the first one declares that any competitive balance (Walsarian) leads to an efficient situation in Pareto’s sense. This theorem is generally considered as the analytic confirmation to Adam Smith hypothesis of the “invisible hand”. The second one, less important in our case, is counter-reciprocal to the first one and declares that any efficient assignation (optimal Paretian) can be obtained by means of a competitive balance.
- 2.
Number of companies with negative equity /volume of negative equity (Urionabarrenetxea et al., 2016).
- 3.
Taxes /number of companies (Gutierrez-Goiria et al., 2017).
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Acknowledgements
The authors are grateful to reviewers of Springer. This work is part of the research group ECRI “Ethics in Finance and Social Value” at UPV/EHU(GIU15_10 and US17/24) and it is supported by FESIDE.
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Retolaza, J.L., San-Jose, L., Pruñonosa, J.T. (2018). Legitimizing and Delegitimizing Factors of Firms in Society: Is It a Problem of Communication or Strategic? An Approach Based on the Distributed Social Value as the Key Factor for the Organizations’ Social Legitimacy. In: Díez-De-Castro, E., Peris-Ortiz, M. (eds) Organizational Legitimacy. Springer, Cham. https://doi.org/10.1007/978-3-319-75990-6_10
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