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The networked enterprise and legitimacy judgments: why digital platforms need leadership

Chong Wang (School of Economics and Management, Northeast Electric Power University, Jilin City, China.)
Peter Wilson Cardon (Department of Business Communication, University of Southern California, Los Angeles, California, USA.)

Journal of Business Strategy

ISSN: 0275-6668

Article publication date: 20 August 2019

Issue publication date: 30 October 2019

976

Abstract

Purpose

In recent years, scholars, business practitioners and consultants frequently talk about building the networked enterprise. The purpose of this paper is to examine the connections between networked enterprises, organizational legitimacy and organizational performance.

Design/methodology/approach

A survey was developed that measured the following aspects of a networked enterprise: employees who network and communicate extensively via internal digital platforms across their organizations; leaders who actively use internal digital platforms to communicate with employees; leaders who actively communicate with stakeholders via external digital platforms; and an innovation culture. The survey measured the following forms of legitimacy judgments: moral; instrumental; and relational. Altogether, 501 executives and managers were surveyed (207 executives, 147 senior managers and 147 managers) in mid-to-large sized (over 500 employees) companies.

Findings

The analyses showed strong statistical significance for nearly all relationships. Internal communication on digital platforms, networked employee communication and an innovation culture all contributed to moral, instrumental and relational legitimacy. Leadership communication on external digital platforms (social media) was not a significant contributor to moral or relational legitimacy but was a significant contributor to instrumental legitimacy. Higher organization legitimacy was correlated with higher profit growth.

Practical implications

Leaders and communicators should prioritize a networked enterprise in several ways. They should actively communicate with employees on internal digital platforms. To be absent on internal digital platforms is a significant missed opportunity by leaders to build organizational legitimacy. Further, leaders and communicators should actively promote networked communication among employees as much as possible. Finally, leaders and communicators should communicate, model and reward an innovation culture.

Originality/value

There are no known scholarly studies that accomplish the following: empirically examine a model of networked enterprises comprised of vertical and horizontal communication and an innovation culture; and make connections between leadership communication on digital platforms in networked enterprises with legitimacy judgments. The large sample of contemporary executives and managers bolsters the strength of the findings.

Keywords

Acknowledgements

This research was partially supported by the Natural Science Foundation of China [grant numbers 71702029, 71772117, 71472119]; the Postdoctoral Science Foundation of China [grant number 2018M631840]; Social Science Foundation of Jilin Province Education Department [grant number JJKH20180455SK] and Innovation Program of Shanghai Municipal Education Commission (2019-01-07-00-09-E00078).

Citation

Wang, C. and Cardon, P.W. (2019), "The networked enterprise and legitimacy judgments: why digital platforms need leadership", Journal of Business Strategy, Vol. 40 No. 6, pp. 33-39. https://doi.org/10.1108/JBS-04-2019-0073

Publisher

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Emerald Publishing Limited

Copyright © 2019, Emerald Publishing Limited

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