Question

a) What is a social contract and how does it relate to organisational legitimacy? (6 marks, maximum 300 words)

b) Explain two ways organisations can use corporate disclosure policy to maintain or regain organisational legitimacy? (4 marks, maximum 200 words)

With reference

Answer 1

Answer:-

1) ●A social contract is used to describe how business interacts with society.

●It relates to the explicit and implicit expectations society has about how businesses should act to ensure they survive into the future. ●A social contract is not necessarily a written agreement, but is what we understand society expects.

●While the relationship between society and business is explained by the social contract, organizational legitimacy describes the state in which an organization has met the terms of the social contract.

2)

●

a)Seek to educate and inform society about actual changes in the organisation’s

performance and activities

(b) Seek to change the perceptions of society, but not actually change behavior

(c) Seek to manipulate perception by deflecting attention from the issue of concern to

other related issues

(d) Seek to change expectations of its performance

Disclosure can be used as a technique in each of these strategies. An entity might provide

information to offset negative news that may be publicly available. They could also use

disclosure to draw attention to strengths or to down play information about negitive activities.