Legitimacy through CSR disclosures? The advantage outweighs the disadvantages

Abstract

Although Switzerland is the hub of the global raw materials market, commodity trading companies went unnoticed by the Swiss public for a long time. Glencore Xstrata, which is now the third biggest company in Switzerland, had neither a PR division nor a spokesperson until 2011. It was thus the human resources manager who took delivery of the "Public-Eye-Award" in 2008, a "prize" for unethical business practices. Since then, the days of calm are over for these companies, with social movements and political initiatives striving for tighter regulation of the commodities sector. In particular, a campaign of the "Berne Declaration", a non-profit organization, has triggered more than 30 parliamentary initiatives (Sprecher, 2014; pp. 21-22). In 2013, three Swiss government departments jointly stated in the "Background Report: Commodities" that Switzerland expects CSR that goes beyond profitability and statutory requirements, for instance by participating in the "UN Global Compact" (FDFA, FDF, & EAER, 2013, p. 37). Alarmed by these recent developments, leading commodity trading companies like Glencore Xstrata have begun to communicate about CSR engagements-apparently in order to (re)gain legitimacy (Du & Vieira, 2012). This raises the question: Can commodity trading companies enhance legitimacy through CSR disclosures? PR and CSR research provide two contrasting answers to this question. On the one hand, CSR is regarded as a means for companies to gain legitimacy (Chen, Patten, & Roberts, 2008; Deegan, 2002; Dowling & Pfeffer, 1975). Podnar and Golob (2007) found empirical evidence that CSR is "a way for a company to gain the license to operate and goodwill in the public eye" (p. 336). For commodity trading companies this would mean that CSR disclosures are worth doing in order to enhance legitimacy. On the other hand, Morsing, Schultz, and Nielsen (2008) caution companies about the "'Catch 22 of communicating CSR": Although publics would expect companies to engage in CSR they nevertheless do "not appreciate" corporate communication about it (p. 108). Moreover, Ashforth and Gibbs (1990) warn companies with tarnished legitimacy about the "self-promoter's paradox": the lower the perceived legitimacy of a company, the more skeptical will publics be of legit-* Corresponding author.

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