Legitimacy Theory of Accounting and Importance of CSR

Legitimacy Theory is very much essential in understanding the organisation's behaviour which helps in developing and executing the social responsibility policies and then evaluating the outcomes. It treats corporate environmental and social performance and revelation of this info which is a way to complete the organisation's social objectives that helps in recognising objectives. The sustainability of this theory is based on the administration practice that links conventional norms and values with today's ethics. Legitimacy is compulsory to act, to give something legal force, to approve. Legitimacy is a unspecialised perception or a premise that company's activities are suitable or coveted in social system of beliefs, norms, values and definitions. The primary assumption of this theory of Legitimacy is the belief that the firm sways the society in which it functions and at that time the company is also socially swayed which is the reason it's working is similar to a type of social declaration which focuses on maintaining and obtaining acceptance of the society. This acceptance of the activities of the firm are certainly crucial in the CSR epoch. The theory of legitimacy is seldom applied to Accounting solutions for internal needs of management. There is very less data about the significance of social responsibility accounting in the view point of management legitimacy. It was told by Burlea and Popa that the theory of Legitimacy can affect the financial and economic performance of the firm as it will render many internal controversies of the multi-dimensional construct of legitimacy, which will sway the passage from legitimacy to illegitimacy and from illegitimacy to legitimacy. Legitimacy theory in accounting is referred as the development of the social responsibilities and it's social responsibilities in order to understand the organisation behaviour. This theory helps organisation in recognising the social responsibilities and focuses on implementing and developing those responsibilities in the organisation. This includes the importance of the Corporate social responsibility(CSR) in the organisation and how the legitimacy theory plays vital role in understanding the accounting management of the organisation. Corporate social responsibility is referred as the contribution of the organisation in the development and the welfare of the society. CSR these days is considered as the important practice in the organisation as it helps in the development of the society in which organisation is operating. Legitimacy theory helps in understanding the information about the organisation regarding the performance of corporate in social and environmental and helps in deciding the way through which organisation can achieve it's goals and objectives and helps in sustaining in the external environment.

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Legitimacy theory is further explained as the organisation influencing the society in which it operates and the influence on the organisation in terms of social as it focuses on maintaining the social relation between the society and the organisation. Legitimacy theory plays vital role in the development of organisation and in the management accounting of the organisation. Legitimacy theory helps in implementing the management accounting in the organisation as it helps in implementing the social policies which is based on the analysis of financial data and non-financial data. This theory helps in determining the management accounting of the organisation in order to develop it's sustainable aspirations and effect of the external environment such as social, economic, environmental on the organisation. It is also used to evaluate the potential of the organisation which is focused on the socially responsible and helps in evaluating the change in the long-term. Legitimacy also helps in management accounting to determine the objectives of the organisation related to the social responsibility policy and how organisation is affected by the internal and external environment. It helps in developing the management accounting system to understand the information in terms of financial and non-financial.

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Legitimacy theory helps in implementing the objectives of planning and controlling as it is developed to sustain in the environment as adopting the socially responsibility strategy which is helps in sustaining the environment. Legitimacy theory helps in management accounting which helps in developing the financial and non-financial information which helps in determining the effectiveness of the organisation. Legitimacy theory helps in deciding the path of sustainable development of the organisation by implementing and developing the strategies on the basis of financial and non-financial information. Legitimacy theory is used to develop the social goals and implementing the strategies in order to achieve social goals as it helps organisation in sustaining the market and focuses on developing the image by understanding the internal and external environment. Legitimacy theory impacts the management accounting of the organisation as it helps in determining the resources of the organisation and focuses on utilising the resources in sustaining in the market.

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