On the Role of Institutional Logics in Legitimacy Evaluations: The Effects of Pricing and CSR Signals on Organizational Legitimacy

Abstract

The relationship between institutional logics and organizational legitimacy remains largely unaddressed in organizational theory and management research. We explore how individual evaluators primed with a particular institutional logic react to organizational signals sent by a firm's product/service pricing and by its engagement in corporate social responsibility (CSR) activities. In three experimental studies, we identify how the activation of a market logic or a family logic in evaluators’ minds moderates the effect of pricing and CSR engagement signals on their judgments of legitimacy of a firm, as well as on their behavioral intentions. An unexpected finding from our study was that, while participants primed with the family logic reacted positively to a CSR engagement signal sent by the firm but remained indifferent to a market-based premium-pricing signal, those primed with the market logic reacted positively to both premium-pricing and CSR engagement signals, suggesting that CSR engagement forms part of their understanding of the market logic.