Institutional and Emotional Dynamics on the Dark Side of Legitimacy: The Case of Anti-corruption at SMEs

Abstract

We explore the dark side of legitimacy, i.e., situations when legitimacy is largely taken-for-granted while negative consequences for society are not revealed. We build on a case study of anti-corruption at small and medium sized enterprises (SMEs). Normally, SMEs do not receive much public attention and are not scrutinized. As a result, their legitimacy is not contested, but taken for granted. By contrast, MNCs often have problems with societal approval due to higher public scrutiny, NGO activism, and frequent scandals reported in the media. We identify that, typically, SMEs seek to maintain and justify their status-quo of taken-for-granted legitimacy by applying a set of rationalizations (e.g., “we are too small to matter”; “if everybody else does it...”). We argue that such SMEs avoid anti-corruption policies and public surveillance to deliberately “stay off the anti-corruption radar”. Surprisingly though, our inductive study reveals that there are two dynamic paths away from the dark side of legitimacy, and that emotions tend to be a crucial trigger for such dynamics. We thus contribute to the institutional theory literature by arguing that emotions, both positive and negative, are crucial for developing theory on institutional change in the absence of clear or dominant institutional pressures.