Being All Things to All Customers: Building Reputation in an Institutionalized Field
| Author | Arild Wæraas,Hogne L. Sataøen |
| Date | 01 April 2015 |
| Published date | 01 April 2015 |
| DOI | http://doi.org/10.1111/1467-8551.12044 |
Being All Things to All Customers:
Building Reputation in
an Institutionalized Field
Arild Wæraas and Hogne L. Sataøen1
UMB School of Economics and Business, Norwegian University of Life Sciences, PO Box 5003, 1432 Ås,
Norway, and 1Stein Rokkan Center for Social Research, Nygardsgaten 5, 5015 Bergen, Norway
Corresponding author email: arild.waraas@umb.no
This paper seeks to draw empirical attention to the relationship between legitimacy and
reputation in institutionalized fields. Norwegian hospitals find themselves in a strongly
institutionalized field and do not want to differentiate from each other, despite seeking a
favorable reputation. In order to acquire insights into the conditions that prompt organi-
zations to reject differentiation, we carried out qualitative interviews with the hospitals’
communication directors. Three sets of justifications for not differentiating emerged
from an inductive analysis of these interviews. Differentiation is not adapted to the
universalistic needs of the hospitals, not in accordance with solidarity norms, and not a
pragmatic solution. The analysis suggests that the hospitals face a trade-off between the
contradictory demands of similarity and difference and hence legitimacy and reputation:
They renounce the advantage of a unique reputation (i.e. competitive advantage) in order
to retain the benefits of conformity (i.e. legitimacy). Implications of these findings for our
understanding of the relative salience of legitimacy and reputation and the dynamics
between them are discussed.
Introduction
Reputation management efforts in institutional-
ized fields constitute activities in a context where
tensions between legitimacy and reputation are
likely to reveal themselves in practice. While com-
petition forces organizations to seek competitive
advantage by building a unique reputation, the
need for legitimacy generally requires them to
seek conformity. It follows that both concerns,
although crucial for organizational survival and
success, are difficult to pursue simultaneously. If
an organization seeks to build a reputation that is
different from its peers, its legitimacy may be
jeopardized, depending on the type and degree of
differentiation (Deephouse, 1999). Conversely, if
it seeks conformity, its competitive ability may
suffer. Thus, does reputation building in an insti-
tutionalized field imply downplaying legitimacy
requirements? Or, does the preservation of
organizational legitimacy prevent the building of
a unique reputation?
Despite a burgeoning literature on reputation
and legitimacy, also in the British Journal of Man-
agement (Brammer, Millington and Tavelin,
2009; Delgado-Garcia, de Quevedo-Puente and
Diez-Esteban, 2013; He and Baruch, 2010; Helm,
2013; Lähdesmäki and Slltaoja, 2010; Musteen,
This research received financial support from the Nor-
wegian Research Council (project number 177475). Pre-
liminary versions of this paper were presented at the 2011
EGOS Colloquium in Gothenburg, the Scancor seminar
at Stanford University, and the department seminar at
Uppsala University’s Department of Business Studies.
We thank the participants for valuable comments. Pre-
vious versions of this paper also benefited from input
from Maja Lotz, John W. Meyer, Turid Moldenæs,
Francisco O. Ramirez, Richard W. Scott and Guje
Sevón. We also thank the anonymous BJM reviewers for
their advice and encouragement. Special thanks to Juha
Laurila who commented extensively on this paper.
© 2013 British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4
2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.
British Journal of Management, Vol. 26, 310–326 (2015)
DOI: 10.1111/1467-8551.12044
Datta and Kemmerer, 2010; Walsh, Bartikowski
and Beatty, forthcoming; Walsh et al., 2009;
Zyglidopoulos, 2005), most empirical studies have
largely ignored these questions, addressing instead
either legitimacy or reputation. Theoretical
groundwork has discussed conceptual differences
between the two constructs (Bitektine, 2011;
Deephouse and Carter, 2005; Deephouse and
Suchman, 2008; King and Whetten, 2008), but
little empirical progress has been made with
respect to our understanding of the relative sali-
ence of legitimacy and reputation and the dynam-
ics between them (see Deephouse and Carter
(2005) for a quantitative exception). As a result,
there is a need to understand these concerns in
more detail and especially in an empirical light.
Without examining empirically how organizations
handle legitimacy and reputation requirements
simultaneously, this issue runs the risk of remain-
ing an unresolved chicken-and-egg conundrum of
‘which comes first’ – legitimacy or reputation.
In this research we analyse Norwegian hospi-
tals’ strategic thinking concerning issues of con-
formity and difference, as offered by the hospitals’
communication directors, under the assumption
that their justifications reveal assessments of the
relative importance of legitimacy and reputation.
If these recently market-exposed hospitals prior-
itize a unique reputation over conformity,
knowing why they do so is valuable given the
significance of conformity for legitimacy. Con-
versely, if they favour conformity, knowing why
differentiation is downplayed is important given
the assumed significance of a unique reputation
for competitive advantage. In either case, the
interviewees’ justifications are likely to have theo-
retically interesting implications for our under-
standing of the relative salience of legitimacy and
reputation as well as how they are handled simul-
taneously. The guiding question for our research
is how the hospitals justify their position, and
what the implications are of their justifications for
the relative importance of reputation and legiti-
macy. By considering these implications, we hope
to strengthen our understanding of the dynamics
between legitimacy and reputation within institu-
tionalized fields. We do so, first, by reviewing
existing literature, second, by addressing our
methodological approaches, third, by presenting
empirical findings, and finally by discussing the
contributions of our findings for theory and
research.
Theoretical observations
The following theoretical section serves two pur-
poses. First, it presents the concepts that guide the
empirical analysis: legitimacy and conformity,
followed by reputation and differentiation.
Second, it shows that reputation and legitimacy
are contradictory concerns and highlights some
shortcomings in the existing literature that our
research seeks to address.
Legitimacy and conformity
An important feature of strong organizational
fields is the development of shared meaning
systems or institutional logics (Alford and
Friedland, 1985; Friedland and Alford, 1991;
Greenwood et al., 2011; Thornton and Ocasio,
2008; Thornton, Ocasio and Lounsbury, 2012).
These logics are symbolic constructions that con-
stitute ‘organizing principles’ by defining the
boundaries, identities and interactions between
field members (Friedland and Alford, 1991, p.
248). When these organizing principles are strong
and stabilizing, field members operate under
strong expectations of conformity (Meyer and
Rowan, 1977; Scott, 2008). Failure to conform
makes the organization a ‘stranger’ and not
acknowledged as ‘one of us’ (cf. Czarniawska
and Wolff, 1998). Legitimacy, which refers to ‘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’
(Suchman, 1995, p. 574), is crucial for survival
and success.
The tendency of emphasizing linkages between
conformity and organizational legitimacy is
typical for the institutional tradition of organiza-
tional analysis (e.g. Dacin, 1997; Deephouse,
1996; DiMaggio and Powell, 1983; Glynn and
Abzug, 2002; Lawrence, 1999; Oliver, 1991; Scott,
2003). As noted by Deephouse and Suchman
(2008), ‘legitimacy is fundamentally homogeniz-
ing’ (italics in original). Empirically, the relation-
ship between conformity and legitimacy is
confirmed by Deephouse (1996), Westphal,
Gulati and Shortell (1997), Glynn and Abzug
(2002), and Deephouse and Carter (2005), among
others. Deephouse and Suchman (2008, p. 54)
observe that ‘almost anything can be the subject
of legitimation’ and thus produce conformity,
© 2013 British Academy of Management.
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Being All Things to All Customers
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