There are various accounting theories which give an insight into a number of issues in an organization. Such theories may include, the stakeholder theory, legitimacy theory and institutional theory among others. In the report, the selected theories are the stakeholder theory and the legitimacy theory. The Accounting and Business Research Taylor& Francis Online and Auditing and Accountability Journal, Accounting, Accountability, and Performance journals have been chosen for the report to aid in providing an understanding of the concepts of the two theories as is indicated in the report below. It can be argued that the stakeholder theory entails looking at the different relationships in the organization and the stakeholders .The stakeholder theory emphasizes on looking into the major concerns of the different stakeholders.IT looks into the various concerns of the stakeholders because they determine the performance of an organization. The legitimacy theory, however revolves around providing information to the different interested parties on the fundamental activities and actions of a particular organization relating to the social and environmental issues as will be discussed below in details.
The stakeholder theory is a vital accounting theory in every particular organization. The main focus of this theory is on the relationships between the stakeholders and the organization based on the interests and concerns of the stakeholders. According to the stakeholder theory, often it is necessary to take into account the various needs of the particular stakeholders and this entails treating them with dignity by respecting their decisions which could be of benefit to the particul
ar organizations (Jensen, 2017 p.75).
The key application areas of the stakeholder theory include the non-profitable organizations and the voluntary associations among others. Additionally, the accounting displayed by a particular organization has certain functions which they do in that particular organization and this is according to the stakeholder theory. For example, the accounting information avails adequate information on the relevant activities of a particular organization including the performance levels of the firm to various stakeholders (Miles, 2017 p.445). Further, the stakeholders often have an access to various categories of information which are considered to be relevant to them and this is through the accounting information of the particular organization. It is also a key role of the accounting information.
Accounting, Accountability and Performance Journal
Based on the information provided by this particular journal, the goal of the stakeholder theory is to ascertain the different ethical morals and norms of a community and this entails the acknowledgment of a variety of stakeholders including their needs, interests, and requirements (Shaukat, Qiu and Trojanowski, 2016 p.580). An organization which intends to survive for a long time has to acknowledge the existence of various stakeholders in the society such as the customers, employees, suppliers, government, public and law regulators among others and this is because, they have a lot of influence on the various activities of an organizations (Dias, Rodrigues and Craig, 2016 p.660).
Stakeholders are defined as certain individuals and groups who influence the decisions made in different organizations for the purpose of carrying out certain activities which are fundamental to the success of that particular organization. The other objective of the stakeholder theory is on relationship powers of the stakeholders such that it addresses such powers and this is attributed to the fact that the relationship powers have a great influence on the legitimacy of a particular organization (Watson, 2015 p.10).
Accounting and Business Research Taylor & Francis Online
Internal Marketing Communication and Stakeholder Theory
According to Cooper (2017 p.90), generally, a two-way communication has often been used to run a successful internal marketing strategy. The growth and huge profits generated by an organization are generally due to an effective satisfaction of the customers which is based on their loyalty to the particular organization. The internal marketing can be used as a tool for developing a service culture of an organization.
Apart from taking into account the different interest of the customers, it is important to look into the particular concerns and interests of the employees and this is due to the fact they greatly impact on the performance of the particular organizations by improving daily on such performances (Yakovleva, 2017 p.30). According to this journal, it defines the stakeholders as those groups of individuals who have the fiduciary relationship with particular organizations and hence there is the need to satisfy the interest of the various stakeholders such as the media, community, government, shareholders, suppliers and the employees among others.
Also, according to the stakeholders’ theory, the stakeholders are certainly important components of an organization who should be involved with the activities of an organization such as the execution of the various policies. Such policies are however important during the correction of a variety of deficiencies especially in the performances of the particular company (Schaltegger and Burritt, 2017 p.700).
The above accounting theory focuses on the different actions and activities of a various firms and those activities are mainly concerned with the environmental and social issues of a particular society. The key element which the legitimacy theory depends on is the social contracts such that the law requires of the different organizations to carry out their primary activities within the accepted ethical morals which does no harm to a community surrounding the organization. For an organization to become successful in a particular society, it has to take into considerations the ethical conducts and actions which entirely depends on the requirements of the social contract. The legitimacy of an organization is a display of the presence of a social contract which exists between the society and organization (Luger, Mammen and Haleblian, 2015 p.100). Such a legitimacy is an essential element which aids in sustaining the particular organization for a very long time. All the activities of an organization must be done in a way which reflects a value system consistent with that of the particular community. It is therefore prudent that the organizations take into account all the rights of everyone including the shareholders to survive indefinitely.
The organizations use different approaches to obtain their legitimacy level. One key way through which the organizations obtain their legitimacy is by providing relevant information to the society on the various changes which have been made in such an organization especially in their operations and activities. The change of different perceptions of the community based on the vital activities of an organization results in gaining of legitimacy by the particular organization (Fernando and Lawrence, 2014 p.155). Another technique used by firms with the aim of maintaining legitimacy is by a change of the various opinions of the community by drawing away their focus to issues which do not relate to the particular organization at hand. Some of the issues could be relating to the correlation between the society and the organization and this could be based on the different goals, for example, the information which may be negative to the public interest and hence may slow the growth of the particular organization.
Accounting and Finance John & Sons, Inc.
According to Martínez?Ferrero, Garcia?Sanchez, and Cuadrado?Ballesteros, (2015 p.55), the main attention of this accounting theory entails the assessment of various firms their level of performances. The legitimacy theory considers the different reactions and actions of the organizations on the basis of financial disclosures pertaining to certain matters such as the social and environmental activities of that particular firm.
The different activities relating to the social and environmental elements must be disclosed by an organization and this is to be done to the public since they determine a lot the performance level of a firm (Rivera, Muñoz and Moneva, 2017 p.485). Several techniques have often been employed by the organizations to manage their legitimacy level in the eyes of the public. Such approaches, however, are based on the selection method of a particular information and the language used for disclosure of information to the general public. For example, an organization can manage its legitimacy level b through the disclosure of forthright information to a particular community and this usually relates to matters on the activities of the organization which displays the prevailing circumstance of events existing in the organization. The other technique entails, non-disclosure of the forthright information to the community and this constitute the failure to provide information on the existing situation in the community.
Accounting, Auditing and Accountability Journal
The main goal of legitimacy theory according to the journal is on the voluntary disclosure of accounting information which is critical for the success of any particular organization. The voluntary disclosure is part of the legitimization process. The sole purpose of the legitimacy theory is to take into account the various perceptions of interested groups who are competing for different resources in the community and this aids an organization to achieve most of its fundamental goals with the aim of sustainability (Deegan, 2014 p.265). According to the legitimacy theory, all the organizations should carry out their activities based on the norms and ethical morals of a society.
The legitimacy level of a firm is a typical view on the firm by different individuals in the community and this is based on their operations. The norms, beliefs, and values of a particular society must be considered by a particular organization when carrying out their activities so as to maintain their legitimacy level (Michelon, Pilonato, Ricceri and Roberts, 2016 p.10). There are a variety of techniques used by the organizations with the aim of maintaining their level of legitimacy. Such methods depends on the legitimacy gap threat. When a variety of expectations of the stakeholders have not been met due to the different activities of an organization, the threat of the legitimacy gap will occur in the organization.
There is also the need to improve on the legitimacy level of an organization and therefore various organizations have devised certain techniques of enhancing their legitimacy. A key technique used by the organizations involves the exhibition of how effective certain methods, outputs and goals are and this is done by availing adequate information to the society with the aim of changing their perception about the activities of such particular organization. The other technique is by manipulating the expectations of a particular community and this entails the alignment of such expectations with the goals, methods, and outputs of the particular organization (Anessi-Pessina, Barbera, Sicilia and Steccolini, 2016 p.500). Lastly, the organizations can maintain their legitimacy through a change of the outputs, methods, and goals to conform to the expectations of a particular community (García?Sánchez and García?Meca, 2017 p.150).
A way of changing such a perception n is by providing certain fundamental information relating to such changes made in a particular organization. A key benefit of the legitimacy theory is that it is a motivation tool used in various organizations to direct the efforts of different employees towards the common objectives of the organization especially those in the accounting information.
In summary, based on the journals, it can be concluded that the legitimacy theory and the stakeholder theory can be used as a key motivational tool to enhance social disclosure. A key purpose of the toe theories is that they tend to look into the corporate social disclosure which is an essential aspect of any particular organization and this is because a good corporate social disclosure results into the success of an organization. The primary focus of the stakeholder theory is on the acknowledgment and respecting the rights and interests of the different stakeholder in the organization since they have a lot of impact on the activities and thus the success of the particular organizations. For the legitimacy theory, it is one of the accounting theories which takes into account the disclosure of accounting information and such information usually relates to the societal and environmental activities of a particular organization. It is prudent for all the organizations to take into account the above mentioned accounting theories since they influence the various activities of the particular organization.
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Miles, S., 2017. Stakeholder theory classification: A theoretical and empirical evaluation of definitions. Journal of Business Ethics, 142(3), pp.437-459.
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