Legitimacy for Sustainability: A Case of A Strategy Change for An Oil and Gas Company

Abstract

This study introduces and validates a measure of a company’s institutional profile for sustainability. It uses institutional theory as a lens to understand the factors that legitimize the adoption of renewable energy activities in an oil and gas company. The three institutional dimensions used in this study are regulative, normative and cognitive, which aimed to measure legitimacy in an oil and gas company under a sustainable change. Survey-based research was carried out among employees to test this theory. Moreover, structural equation modeling was used to test the model fit, validate the measures, and test the four hypotheses. The results showed that regulative and normative pillars play the main role in legitimating renewable energy practices in our case company. The findings provide researchers and companies with a valuable resource for exploring legitimacy in order to understand what makes companies legitimize new sustainable activities that are outside the companies’ core business.