Abstract: Despite a proliferation of research on legitimacy, the ‘grey area’ that lies between legitimacy and illegitimacy remains undertheorized. Responding to calls for further research, we clarify the construct of legitimacy and extend legitimacy theory by providing a conceptual framework for analyzing the legitimacy‐illegitimacy continuum. First, we propose three novel legitimacy states between legitimacy and illegitimacy – conditional legitimacy, unknown legitimacy, and conditional illegitimacy – and elaborate on the distinct qualitative characteristics of the five legitimacy states. Second, we offer a model of the dynamics of legitimacy state change and the (in)stability of the issue‐specific reference framework that is used to judge them. Third, we explain how our legitimacy states bridge the research streams on legitimacy judgment formation and legitimation strategies. By doing so, we integrate these research streams and enumerate discursive strategies for each state. Our article contributes to a more robust understanding of both how legitimacy states can be conceptualized and analyzed in future research and how they can be dealt with in managerial practice.

Abstract: This study advances organizational legitimacy research by examining the microlevel mechanisms through which evaluators form propriety beliefs. Building on legitimacy-as-perception research, which posits that evaluators rely on validity cues to make judgments, we argue that individual evaluators draw on broader and more nuanced sets of information than previously accounted for. Specifically, we theorize how coexisting but distinct validity cues, namely authorization and endorsement, combine with evaluators’ microlevel perceptions of an organization’s categorical fit to shape propriety beliefs. Across two factorial survey experiments (n = 1,866), perceived categorical fit emerged as the strongest and most consistent predictor of propriety beliefs. While validity cues shape propriety beliefs, their effects are far from uniform. 

Our findings reveal that cue valence matters and that the complex interplay of validity cues distinctly influences propriety beliefs. This research contributes to legitimacy-as-perception literature by offering a more granular perspective on how propriety beliefs are constructed from diverse informational cues. By introducing categorical fit as a novel explanatory mechanism, we extend existing theory and encourage further investigation into how it influences microlevel legitimacy perceptions and how various combinations of validity cues shape evaluations of organizational legitimacy.

Abstract: Contested business practices are often difficult to evaluate because they send multiple, often conflicting signals about their appropriateness. Some cues may suggest that a practice is useful, legal, or widely accepted, whereas others may suggest that it is risky, harmful, or socially opposed. Existing legitimacy research has typically examined validity cues through source-based classifications, namely, authorization and endorsement, and has more often considered such cues in isolation than as part of wider evaluative arrangements. This study shifts the analysis of validity cues from source-based to type-based classifications by focusing on cues corresponding to four major legitimacy types: normative, pragmatic, regulatory, and cognitive. It argues that when evaluators confront multiple validity cues simultaneously, propriety judgments depend not only on the presence of those cues, but also on their relative weight, on whether they are consistent or contradictory, and on whether they align with evaluators' personal values. These dynamics are examined in the context of fracking through four heterogeneous cues: public opinion, economic impact, regulatory setting, and venture longevity. Using conjoint analysis in a novel application to microlevel legitimacy research, the study analyzes 3,952 evaluations by 247 participants in France and Spain. 

Findings show that evaluators assign different weights to type-based validity cues, with economic impact exerting the strongest influence, followed by public opinion and regulatory setting. We introduce cue congruence to legitimacy theory, defined as the extent to which multiple validity cues convey aligned evaluative signals about the legitimacy of a subject, and show that positively congruent combinations generate higher propriety judgments, negatively congruent ones generate lower judgments, and incongruent combinations generate more intermediate ones. Moreover, we introduce cue-value congruence, that is, whether cue combinations align with evaluators' personal values, and show that evaluators high in environmentalism are less influenced by cues that conflict with their values. The study therefore explains how legitimacy judgments emerge from multiple cues considered jointly and shows that conflicting cues generate intermediate propriety beliefs, consistent with a grey area between clear legitimacy and clear illegitimacy at the microlevel.

Abstract: This study contributes to the legitimacy literature by investigating the perceived appropriateness of legitimation strategies used by controversial organizations. Focusing on the French foie gras industry, we adopt a mixed-method approach combining interviews and conjoint experiments to analyze how legitimacy is not merely an organizational attribute but a dynamic relationship between industry actors and their evaluators. We examine five legitimation strategies and highlight how evaluators’ perceptions are shaped by their individual attributes, specifically environmental values and media skepticism. 

Our findings show that certain strategies favored by the industry may be perceived as inappropriate, thereby obstructing or even counteracting legitimacy enhancement. Crucially, evaluators' characteristics significantly moderate their assessments, underscoring the need for organizations to understand the values and orientations of their audiences. This research advances legitimacy theory by emphasizing that effective legitimation depends not only on strategic action but on the alignment between organizational efforts and evaluators’ value frameworks.

Abstract: Despite the growing importance of entrepreneurship as a pathway to economic mobility, ethnic minority entrepreneurs continue to face persistent disadvantages in access to capital, particularly following business failure. This study examines how ethnic stereotypes and evaluators’ ethnic identity shape perceptions of funding-worthiness for Latinx entrepreneurs relative to White non-Latinx entrepreneurs in the United States. Using a full-profile conjoint experiment comprising 12,496 evaluations from 781 evaluators, we provide evidence of systematic ethnicity-based disparities in post-failure funding assessments. Latinx entrepreneurs are evaluated as less funding-worthy than White entrepreneurs, even when objective financial indicators such as the level of debt indicate comparable or lower financial risk. These findings suggest that favorable financial attributes do not fully offset ethnicity-based disadvantages in evaluations.

We further show that the ethnic identity of evaluators conditions these evaluations. Shared ethnic identity does not mitigate ethnicity-based disparities in perceived funding-worthiness. Instead, Latinx evaluators evaluate Latinx entrepreneurs less favorably than White evaluators. Together, these findings show how post-failure funding evaluations are shaped by embedded ethnic hierarchies, reproducing inequality in entrepreneurial finance. By identifying how ethnic stereotypes and ethnic identity jointly influence funding assessments, this study advances research on ethnic minority entrepreneurship and contributes to business ethics scholarship by clarifying mechanisms through which systemic inequality is sustained in evaluative decision-making.

Abstract: Recent advances in research have shed light on why and how community-based enterprises (CBEs) emerge. Nevertheless, little is known about the underlying factors that contribute to their success over time. This lack of attention is intriguing, given CBEs’ widespread proliferation as an instrument for socioeconomic development. We contribute to the CBE literature by applying and extending socioemotional wealth (SEW) to the CBE context. Our findings demonstrate how the presence of community socioemotional wealth (CSEW) enables CBEs to achieve enduring success. Beyond the presence of SEW's five traditional dimensions, we identify two new dimensions (empowerment and holistic mission) unique to CBEs. When jointly present, these seven dimensions explain how CSEW creates a favorable terrain for the CBE to succeed.