| The signaling theory of legitimacy is based on the signaling theory in economics and the strategic perspective of organizational legitimacy. When evaluating audiences discount a particular organization based on certain characteristics, the latter can use valid signals of legitimacy to communicate its adherence to the requirements of the stakeholders. The evaluating audiences' discount is called "organizational liability." Two main types of liabilities have been identified - internal (based on characteristics inherent to the organization) and external - based on characteristics of the environment itself. Organizational liabilities are the determinants of the process of legitimation, which in this case represents the process of accumulation of valid signals of legitimacy. |
Updated 07/09/2013