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Counterproductive Syndrome Essay

1927 words - 8 pages

Chapter 8 – Systems oriented theories

1. Introduction
Rationale: Why corporate management might elect to voluntarily provide particular information to parties outside the organisation. (Page 250 & 251)

Gray, Owen and Adams (1996):
Legitimacy Theory and Stakeholder Theory are two theorietical perspectives that have been adopted by a number of researchers in recent years. The theories are sometimes referred to as “systems-oriented theories”.

Within a systems-based perspective, the entity is assumed to be influenced by, and in turn to have influence upon, the society in which it operates.

Within both legitmacy theory and Stakeholder theory, accounting disclosure polices are ...view middle of the document...

Bourgeois political economy – Gray, Kouhy and Lavers largely ignores these elements and, as a result, is content to preceive the world as essentially pluralistic.

Disclosure and Accounting report
Classical political economy tends to perceive accounting reports and disclosure as a means of maintaining the favoured positon of those who control scarce resources (captial), and as a means of undermining the position of those without scarce capital. “It focuses on the structural conflicts within society”.

Bourgeois political economy does not explictly consider structural conflicts and class struggles but rather ‘tends to be concerned with interaction between groups in an essentially pluralistic world.

It is this branc of Political Economy Theory from which Legitimacy Theory and Stakeholder Theory derive.

Chapter 8 – Systems oriented theories

3. Legitmacy Theory (page 253 to 258)
Legitimacy Theory asserts that organizations continally seek to ensure that they operate within the bounds and norms of their respective societies, that is, they attempt to ensure that their activities are perceived by outsdie parties as being “legitimate”.

These bounds and norms are not considered to be fixed, but rather, change over time, thereby requiring the organization to be responsive to the environment in which they operate.

Lindblom (1994) distinguishes between legitimacy which is considered to be a status or condition, and ligitimation which she considers to be the process that leads to an organization being adjudged legimate.

Legitimacy Theory relies upon the notion that there is a ‘social contract’ between the organization in question and the society in which in operates.
The ‘Social contract’ is the concept used to represent the multitude of implicit and explicit expectation that society has about how the organisation should conduct its operations.

Any social institution – and business is no exception – operates in society via a social contract, expressed or implied, whereby its survival and growth are based on:
1) the delivery of some socially desirable ends to society in general, and
2) the distribution of economic, social, or political benefits to groups from which it dervies is power.

It is assumed that society allows the organisations to continue operations to the extent that it generally meets their expectation. Legitimacy Theory emphasises that the organization must appear to consider the rights of the public at large, not merely those of its investors.

Failure to comply with societal expectations may lead to sanctions being imposed by society. For example, in the forms of legal restrictions imposed on its operation, and reduced demand for its products.

Chapter 8 – Systems oriented theories

3. Legitmacy Theory (page 253 to 258)
Action an steps taken by Organization to cope with Legitmacy

Downling and Pfeffer stats that organizations will take various actions to ensure that their...

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