Accounting Theory of Legitimacy

The move is aimed at rebuilding trust and collective engagement with the authorities and society. Corporate Social Responsibility is critical to business success. Part B The legitimacy theory involves the generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions (Tilling, 3). The theory seeks to promote the need for business to structure their activities in line with developing voluntary social and environmental disclosure in adherence to their social contract. The achievements of organizational objectives are dependent on how it relates to the local people and environment to maintain legitimacy. The activities that threaten the environment such as the leakage in the ammonium nitrate plant. The environment is shared by people and requires organizations to take cognizance of the need to maintain high standards of preservation which do not endanger the lives of people.

The legitimacy of an organization is threatened by occasions where they fail to meet the public expectation (Frynas, and Yamahaki, 262). For instance, pollution of the environment is undermining the social integrity of the people necessitating conflict as was the case with Orica. Actions such as communication and public disclosure go a long way towards covering legitimacy gaps that make it difficult for an organization to enhance cohesion with the local people (Lanis, and Richardson, 82). "Organizational legitimacy: Social values and organizational behavior. " Pacific sociological review 18. Fernando, Susith, and Stewart Lawrence. "A theoretical framework for CSR practices: integrating legitimacy theory, stakeholder theory and institutional theory. " Journal of Theoretical Accounting Research 10. "Some thoughts on legitimacy theory in social and environmental accounting. " Social and Environmental Accountability Journal 24.