Page 117 - SUSTAINABILITY ISSUES & COVID-19

2. LITERATURE REVIEW

2.1 Legitimacy Theory
According to Deegan (2019), legitimacy theory assumes that managers need to ensure that their organization appears
to be aligned with community expectations to maintain the organizations’ success. If the expectation is fulfilled, the
organization will be attributed to being “legitimate.” A legitimate organization sustains its access to resources needed
for conducting the business and generate income (Deegan, 2019). In this theory, legitimacy is not inherent, and
organizations need extra effort to comply with societal expectations, for example, using better disclosure (Mathews,
1997). If an organization fails to meet the contract, it would have sanctioned by society; for example, their access to a
necessary resource will be restricted, including labor and reducing demand for its good or services. Thus, managers are
expected to immediately take corrective actions to sustain organizations’ legitimacy, such as improving the quality of
its disclosure and maintaining alignment between organizations’ and communities’ social values (Deegan, 2019).

2.2 Social Media Governances
Social media is a platform that enables users to generate and share content (Kaplan & Haenlein, 2010). Social media
users might also receive and give responses to the content provided by him/herself and others in real-time. Social
media offers three distinct features (DeNardis & Hackl, 2015): the intermediation of user-generated content, the ability
to interact between users and direct engagement with contents, and articulating a network connection with other
users. There are many social media platforms; however, Facebook, Twitter, and youtube are the most popular.

With the growing number of organizations social media accounts, the organization will have fewer barriers to
disseminating financial and nonfinancial disclosure through social media (Alexander & Gentry, 2014). According to
Blankespoor, Miller, and White (2013), the organization that disseminates information via twitter have increased market
liquidity because their performance is more visible to investors. Despite all those advantages, social media also has
disadvantages if they are used irresponsibly. Firstly, organizations cannot control the flow of information (Alexander &
Gentry, 2014). Secondly, Social media users can affect an organization’s reputation, goodwill, and brand (AON, 2019).
Therefore, an organization needs a strategy to use social media for sharing good news and defends the organization’s
reputation when bad news comes. Organizations with a good reputation will be accepted as a part of society (Etter
et al., 2019) because society, as evaluators in social media discourse, perceives that organization has conformed to
expected standards and norms (Ruef & Scott, 1998). This evaluator’s judgment might influence public opinion and
construct organization legitimacy. Therefore, social media has an essential role in shaping organizations’ legitimacy.

Social media governance (SMG) is a framework that regulates the actions of the members of an organization within
the social web (Linke & Zerfass, 2013). The framework is a combination of rules, strategic use of resources, skills and
training, and organizational culture and structures. Firstly, regulatory frameworks are the first step of the governance
process because they set the standard and rules when utilizing social media. Secondly, Social media activities capture
the frequency of social media use by the organization’s employees. Thirdly, social media strategies exist when an
organization performs strategies regarding social media. Lastly, social media skills show that employees have the
necessary technological skills to utilize social media correctly.

2.2.1 Social Media Governance and Organizational Legitimacy
As expressed in legitimacy theory, only legitimate organizations can gain the resources needed to conduct their
operations. Thus, legitimacy needs to be periodically evaluated because it fluctuates by internal or external events
(Derakhshan, Mancini, & Turner, 2019) that potentially harm organizational reputation. There are several methods
to measure organizational legitimacy, for example by using social media (Etter et al., 2019; Golob et al., 2013), direct
interview (Derakhshan et al. (2019), four dimensions of legitimacy (Vergne, 2011), or by examining social context or
specific firm characteristics (Deegan, 2019). However, in the era of Web 2.0, the measurement of legitimacy by social
media is considered the most practical because of the better access to the data (Etter et al., 2019). Also, the output can
be scored into a number to track the fluctuation of its legitimacy.

116 International Conference on Sustainability
(5 Sustainability Practitioner Conference)
Th