How is Social Media Used in the Theory of Organizational Legitimacy & Organizational Reputation? A Comparative Study of Danske Bank and Jyske Bank’s Legitimacy and Reputation

Kristian Dam Mortensen

Student thesis: Master thesis


Before the rise of social media, organizational legitimacy and organizational reputation were passed mainly between people in conversations, through their personal experience or through media reporting. However, the rise of social media is changing how evaluative judgments about organizations are produced and disseminated in the public domain. Today, people can observe what their friends and social-media-celebrities are communicating about organizations and the organizations’ behavior. Therefore, the purpose of this master thesis is to explore how social media is used in the theory of organizational legitimacy and organizational reputation. What is then meant with “used in the theory”? The examination of how social media is used is two folded into an area of the theoretical changes of legitimacy and reputation as well as a deep dive into how to measure legitimacy and reputation. Measurement is important since what gets measured gets done. Thus, my motivation stems from an interest in investigating the possibilities to measure organizational legitimacy and organizational reputation through social media platforms. Theory The theories used in this master thesis is mainly legitimacy and reputation. However, I do not just take the first view on the theories that comes along as I: 1) Take a comprehensive review of the definitions of both theories, 2) describe the historical evolutions of the theories, 3) explore how researchers have operationalized the theories into several dimensions and 4) consider the relationship between legitimacy, reputation, image and identity. Hereafter, I describe the traditional ways of measuring legitimacy and reputation as well as explore the new ways of measuring the two theories with the use of social media data. Method This master thesis is built upon a comparative study of two Danish-based banks. These two banks have been carefully selected based on previous results of the banks’ legitimacy and reputation. There is a clear cut between the two banks as one has been the best performing organization of the financial sector, Jyske Bank, and the other has been the worst performing, Danske Bank. Furthermore, the worst performing bank has been exposed to extensive media coverage regarding money laundering which most likely has affected its relationship with the public In total, 500 comments from the two banks’ Facebook pages have been manually coded to reach insightful findings. A pre-structured codebook has been used to code each and every comment in the same way. The codebook included seven dimensions on reputation from Fombrun & van Riel (2007) and three dimensions on legitimacy from Suchman (1995) as well as sentiment analysis of the comments. Through the comparative study of the two Danish-based banks, I found that the bank with the best legitimacy and reputation from previous reports got the most support from Facebook users through positive comments. This was in line with the expectations. However, I also saw an interesting pattern in how the Facebook users commented on the Facebook posts from the banks. The topic that the banks chose to include in the post was to a very large extent also the topic of the comments. This meant that the bank involved in the money laundering issue only received heavy negative feedback on one post which involved the money laundering issue. Conclusion The conclusion is that the role of social media is rising in the theory of legitimacy and reputation. Research within both theories is slowly changing approach from the more stable to fluctuant, and control to contestation. The conclusion is also that it is possible to measure organizations’ legitimacy and reputation through Fombrun & van Riel (2007) and Suchman’s (1995) dimensions. However, the analysis also gave insights into the limitations of measurement on social media which should be considered in both theory and practice going forward.

EducationsMSc in Business Administration and Organizational Communication, (Graduate Programme) Final Thesis
Publication date2019
Number of pages83