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Sustainable Development and the Market Logic

hands lined up on a tree bark

Institutional logics, which encompass assumptions, values, beliefs, and rules that guide people’s behaviors and provide meaning to their social reality, have been identified as fundamentally important latent variables, affecting individuals’ goals, attitudes, and actions. The relationship between institutional logics and organizational legitimacy remains largely unaddressed in organizational theory and management research. We explore how individual evaluators, primed with a particular institutional logic, react to organizational signals sent by a firm's product/service pricing and by its engagement in corporate social responsibility (CSR) activities. Such an exploration allows us not only to shed light on how institutional logics contribute to the diversity in evaluators’ judgments of firms’ legitimacy but, more importantly, also to gain insight into institutional logics as complex socio-cognitive structures and explore their constitutive elements.

In three experimental studies, we identify how the activation of a market logic or a family logic in evaluators’ minds moderates the effect of pricing and CSR engagement signals on their judgments of legitimacy of a firm, as well as on their behavioral intentions.

An unexpected finding from our study was that, while participants primed with the family logic reacted positively to a CSR engagement signal sent by the firm but remained indifferent to a market-based premium-pricing signal, those primed with the market logic reacted positively to both premium-pricing and CSR engagement signals, suggesting that CSR engagement forms part of their understanding of the market logic. This suggests that CSR engagement forms part of our understanding of the market logic. An important managerial and educational implication for this finding is that the goals of CSR and sustainable development are likely to be better met not by attempting to invoke some socially oriented logic in business settings, where contextual cues for the activation of such logics are scarce, but rather by redefining the understanding of the market logic (the most prevalent logic in business settings) in such a way that CSR and sustainability considerations form an integral part of it. To learn more, see the full article:

Bitektine, A. & Song, F. (2022). On the Role of Institutional Logics in Legitimacy Evaluations: The Effects of Pricing and CSR Signals on Organizational Legitimacy. Journal of Management. DOI: 10.1177/01492063211070274 (external link) .