From Innovation to Legitimacy

Innovative Activity as Legitimation Strategy in the Nonprofit Sector

Nonprofit Organizations (NPO) usually operate in highly instiutionalized fields. In these fields legitimacy is a key feature for organizations to survive and persist (Strang and Meyer 1994). According to New Institutional Theory, organizations derive their legitimacy from having structures, procedures, techniques etc. that are seen as appropriate, rational, adequate and necessary (Meyer and Rowan 1977; Suchman 1995). Being innovative could be used as a technique to gain legitimacy, to look attractive to funders and stakeholders. In fact, Osborne (1998) found out in his study about the innovative capacity of voluntary nonprofit organizations that Innovation is (…) a tactic to gain legitimacy with these organizations, rather than, necessarily, an end in itself (p52). Moreover, innovation is not only a technique but a product, a process, sometimes only rhetoric, and an attitude which is […] manifested in ideals of modern Western societies" (Brandl and Bullinger 2009). In the last decades innovation diffused in all areas of life and mutated to a highly desirable good. Admittedly, it seems that the attribut "innovative" is preferred to effective or efficient problem-solving of social issues in society. This development is also represented in the emergence of Innovation Awards and calls for project grants or support programs (e.g. EQUAL).

In this study we analyse the role of innovation as a strategy in legitimation management in nonprofit organizations, which is postulated but there is neither an elaborate concept nor empirical studies. Consequently, we focus on the following research question: How do nonprofit organizations engage in innovative activities to gain or maintain organizational legitimacy? Pfeffer et al. (1978) see legitimacy as an operational resource that organizations extract from their environment to reach their goals. Consequently, a high level of management control over the legitimation process has to be considered. For that reason legitimation is purposive and calculated (Suchman 1995). We agree with Pfeffer et al. (1978) in assuming that nonprofit organizations can actively formulate and implement strategies to gain or maintain organizational legitimacy.

Discursive foundation of innovation and legitimacy

Legitimation and innovation rest on discursive practices between the nonprofit organization and its internal and external stakeholders (Suchman 1995; Elsbach 1994). These discursive practices are mainly performed by organizational accounts. Accounts are specific mechanisms organizations use to communicate or advertise their legitimating characteristics to audiences capable of granting legitimacy (Elsbach 1994: 59). The existence, the form and the content of accounts show the status of an organization. The language used in accounts is the key in analysing innovation and legitimation processes (Meyer 2004). This study considers written organizational self-representation. Annual reports and activity reports from Austrian nonprofit organizations, which are mainly engaged in social services are analysed. By focusing on organizational accounts, the data analysis will be accomplished in two steps. Firstly, we conduct a quantitative content-analysis searching for the substance of organizational accounts used in organizational self-representations of 113 NPOs. Secondly, we will analyse 11 selected organizations deconstructing the accounts using discourse analysis (Potter and Wetherell 1987) to recognize legitimation strategies. The aim of this study is to explore the construction of accounts to gain or maintain legitimacy by recoursing on innovativenes. Therefore we perceive the organization as an actor, which applies intentionally innovative activity as a tool of legitimation management. The findings allow deeper insights into how innovative activities serve as legitimation strategies.

Project duration: 2005 bis 2011

Project team: Anahid Aghamanoukjan, Michael Meyer, Renate Buber