Understanding Legitimacy Theory and its Significance
The content of the provided article is about the huge amount of loss faced by Mark Zuckerberg, the founder of Facebook, due to the Cambridge Analytica scandal. The article shows the recent failure of Facebook to achieve the desired financial goals and milestones due to major data privacy issues in regions of Europe, Myanmar, Sri Lanka and others. In order to overcome this situation, Facebook has been working on the issue like data privacy of the users along with the inclusion of meaningful content. The main aim of this analysis is to explain this issue of Facebook in the lights of an appropriate accounting theory to get to an appropriate decision.
The presence of different kinds of theories can be seen to analyze the organizations issue and Legitimacy Theory can be considered as one of them. All over the world, most use of legitimacy theory can be seen in the social as well as environmental accounting areas. According to the concept of legitimacy theory, legitimacy can be considered as a widespread insight or assumption on the fact that the actions of the business entities are desirable, appropriate or proper within some socially developed mechanism of norms, beliefs, values as well as definitions (Burlea & Popa, 2013, p. 1579). It implies that legitimacy theory is the mean for supporting the business organizations to implement as well as develop voluntary social and environmental disclosures with the aim to accomplish the social covenants so that they can ensure their survival in the agitated and unstable environment (Rogowski, 2015). In addition, this theory states that it is considered as the failure of an organization when its activities do not comply with the moral values of the society. Hence, in order to ensure its existence, an organization is needed to provide the required justification with their social and economical actions so that it does not endanger the existence of their society in which it operates (Bitektine & Haack, 2015, p. 49). The next part of the analysis takes into consideration the analysis of different dimensions of legitimacy theory in order to make the correct decision.
It can be seen from the earlier part of the study that Facebook has been suffering from issue related to privacy of personal data of the users as a result of Cambridge Analytica scandal; and this issue can be explained in the lights of legitimacy theory. According to legitimacy theory, the actions of an organization need to be as per the norms, values and beliefs of the society; and it indicates towards the responsibility of Facebook to use the personal data of the users in the most responsible manner in order to maintain the aspect of confidentiality (Fernando & Lawrence, 2014, p. 149). At the same time, as per the content of legitimacy theory, the business activities or actions of an organization must respect the moral values of the society in order to avoid organizational failure. However, in the case of Facebook, all these regulations or principles of legitimacy theory have not been maintained (Hummel & Schlick, 2016, p. 455). The article states that Mark Zuckerberg has requested the user not to use Facebook due to the Cambridge Analytica scandal. Moreover, Facebook had to implement strict new rules in Europe due to the data privacy issue. It can also be observed that the data content policy in Myanmar and Sri Lanka led to violence. In the presence of all these issue, the failure of Facebook to operate under a socially constructed system can be seen. Apart from this, the social media company has also failed to respect the moral values of the society as a result of data privacy and content issue that led to the failure of the organization for some time.
Conclusion
The above discussion indicates towards the importance of legitimacy theory in order to ensure the survival of the business organizations in the society. However, the analysis of the case of Facebook shows the fact that the famous social media company has failed to maintain their legitimacy by involving some major issues like the breach of data privacy of the data of the users, inappropriate content in the news feed and others. Hence, in order to avoid these issues, Facebook had to implement some strict regulations in some of their operating areas.
References
Bitektine, A., & Haack, P. (2015). The “macro” and the “micro” of legitimacy: Toward a multilevel theory of the legitimacy process. Academy of Management Review, 40(1), 49-75.
Burlea, A. S., & Popa, I. (2013). Legitimacy theory. In Encyclopedia of corporate social responsibility (pp. 1579-1584). Springer, Berlin, Heidelberg.
Fernando, S., & Lawrence, S. (2014). A theoretical framework for CSR practices: integrating legitimacy theory, stakeholder theory and institutional theory. Journal of Theoretical Accounting Research, 10(1), 149-178.
Hummel, K., & Schlick, C. (2016). The relationship between sustainability performance and sustainability disclosure–Reconciling voluntary disclosure theory and legitimacy theory. Journal of Accounting and Public Policy, 35(5), 455-476.
Rogowski, R. (2015). Rational legitimacy: A theory of political support. Princeton University Press.
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