Legitimacy Challenged: James Hardie Industries and the Asbestos Case

Institutional theory suggests that organisational survival depends not just on material resources and technical information but also on an organisation's perceived legitimacy (Powell & DiMaggio, 1991). Aconferred status, organisational legitimacy is controlled by those outside the organisation and thus relies on the organisation '5 maintaining Q coalition of supportive stakeholders who have legitimacy-determining power (Pfeffer & Salancik, 1978). Organisational action and communication can build a legitimacy reservoir and defend such a reservoir in times of crises. This paper explores how the organisational actions and communication strategies of James Hardie Industries, in dealing with claims from past employees and customers regarding the company's products, have impactedon the organisation's legitimacy. Media reports will be examined using Suchman's (1995) three types of legitimacy-pragmatic, moral, and cognitive-to identify the main focus of organisational action in defending the challenge to its legitimacy. The implications of this challenge for future relationships between the organisation and key stakeholders will be examined.