Perceived voluntary code legitimacy: Towards a theoretical framework and research agenda

Increasingly within industries voluntary codes (standards) are being developed and subsequently used by firms to address social and environmental issues. On any particular issue multiple competing codes may be available for adoption by firms. Given a choice of codes, which ones will firms adopt? Building on existing institutional and economic research pertaining to voluntary codes this paper proposes a theoretical model as to why some codes are perceived as legitimate by firms and hence are widely adopted while others are not. This model proposes that, in addition to the role of the code's content, the characteristics of the adopting firm, and environmental factors, the origins of a voluntary code, including the characteristics of the developer creating it, the development process, and the opportunity for firms to engage in formalized ‘normative conversations’ regarding the code subsequent to its adoption, will influence whether potential firm adopters perceive the code as legitimating and hence decide to adopt it. Rather than code adoption simply reflecting institutional mimicry or a rational transaction by adopting firms this model suggests that both the creation and the maintenance processes surrounding codes play important roles in the perceptions of legitimacy and subsequent adoption of codes by firms.