Company legitimacy and Sustainable Operations: The Case of Apparel Manufacturers of Sri Lanka

Abstract

In the highly sustainability conscious business environment, organizations face the pressure of their stakeholders to carryout sustainable operations. In this context organizations take many sustainability measures to make themselves socially responsible. Literature suggests that the power of the stakeholder determines the extent to which an organization adheres to stakeholder requirements due to their dependence on such stakeholders. Therefore whether the behaviours of organizations towards sustainability could be treated as ‘socially responsible’ and whether they really fulfill the social contract they have entered into, become questionable. A qualitative study was carried out based on in depth interviews with senior managers of four apparel manufacturing and exporting firms of Sri Lanka to investigate how organizations in a developing country fulfill their social contract towards sustainability in international operations since these firms operate with powerful international customers. The thematic analysis conducted based on the interview data of the apparel manufacturers of Sri Lanka reveal a similarity in the results to what has been identified in literature in relation to the manner manufacturers respond to stakeholder requirements. The extent to which they meet the requirements of their stakeholders has been confined to just a legal requirement to satisfy the powerful customers. Although there was legitimacy in their behavior it raised doubts for the researcher about the fulfillment of the social contract through this behavior since these manufacturers were not concerned about certain aspects of sustainability which the customers were not interested in. One such main factor was the sustainability of their suppliers. These findings inform policymakers the need to educate the apparel exporters of their responsibility towards sustainability because the social acceptability that comes with legitimacy may be more important than economic viability. The contribution of this study to knowledge is in terms of how the dependence of manufacturers in developing countries, influence their adherence to stakeholder requirements.