Corporate communication in a post-privatization context: managing image to
construct legitimacy
The case of a Romanian oil company
Abstract
The purpose of this paper is to show how Petrom, a newly privatized oil company in Romania
uses corporate communication to construct its legitimacy in a context characterized by repeated
allegations of corruption concerning the privatization process, voiced through the media. The
paper takes the view that legitimacy is socially constructed (Suchman, 1995), being a process
deeply embedded in the socio-economic context in which it occurs (Ahonen, 2009). Moreover,
we argue that corporate legitimacy is continuously created and re-created through corporate
communication. This paper adds to a less explored field of research – corporate communication
in the context of transitional economies. It involves the detailed examination of the narrative
disclosures contained in Petrom’s annual reports along with self-produced press releases and
interviews with management in the national media, during the four years following its
privatization. This analysis is accompanied by a comprehensive documentation of the social and
political context based on online press articles. The company used a variety of strategies to assert
its legitimacy in the post-privatization context, as a direct answer to negative media coverage. It
is argued that the final aim of corporate communication is to create or maintain a positive image
of the company’s social and economic performance. Whether the company chooses to alter its
behaviour, change audiences’ expectations or work directly on its image, the pressure is to
communicate, to engage in a social dialogue. Media has an important part in this process as it
mediates the symbolic “dialogue” between the company and its audiences.
Keywords: Case study, Corporate communication, Legitimacy, Media, Privatization, Transition
Paper type: Case study
1
2
Introduction
Deephouse and Suchman (2008, p. 49) consider that even if the term legitimacy was used “from
the dawn of organization theory”, research on legitimacy emerged slowly, and was treated more
at the theoretical level than as “empirical property”. During the last two decades research on
legitimacy saw a prolific growth both in theoretical approaches (Ashforth and Gibbs, 1990;
Suchman, 1995; Suddaby and Greenwood, 2005) and empirical approaches (Bansal and Clelland,
2004; Cho and Patten, 2007; Cohen and Dean, 2005; Sine et al., 2007; Durand and McGuire,
2005; Lamertz and Baum, 1998). While most of this research is concerned with the study of
companies from developed economies, we want to extend this previous research by reflecting on
legitimacy strategies in a transition, post-communist economy.
In this paper, a case study approach is taken to shed light on the legitimacy strategies deployed
by the Romanian oil-company OMV PETROM S.A (hereafter, Petrom), following its
privatization in 2004. Specifically, we want to explore how the interaction between media, press
releases and annual report constructs legitimacy. Privatization is a major event in the existence of
a company (Ogden and Clarke, 2005) and hence it brings an increased need for legitimacy; this
can be defined as demonstrating that the new organization of the company is ”desirable, proper,
or appropriate within some socially constructed system of norms, values, beliefs, and definitions”
(Suchman, 1995). Petrom is the biggest oil company in Central and Eastern Europe and
following privatization it became part of the Austrian multinational company, OMV, which
makes it an interesting case for studying legitimacy issues (Geppert, 2003; Kostova and Zaheer,
1999).
The present case study was chosen not necessarily for being representative, but more importantly
because it gave us the opportunity to study legitimacy theory in a challenging environment,
deriving from a unique combination of factors. On one side, an unstable environment (postprivatization in a transition economy), and on the other, reliable reporting practices, as a result of
knowledge transfer from the parent company, OMV during the restructuring process which
followed privatization. As noted by Cooper and Morgan (2008, p. 161), case studies are
particularly appropriate to understand situations of “discontinuity and disequilibrium”, as well as
the interaction between legitimacy concerns of companies with the media and political circles
(Hopwood, 2009).
We analyzed the company’s corporate annual reports for the period 2004-2007 (4 years) as well
as Petrom’s self-produced press releases for the same period. Furthermore, our paper offers an
analysis of media discourses based on articles published online between December 2004 and
3
December 2007. This analysis is based on the view that legitimacy building is a “highly
contextual processes, deeply embedded in the socio-historical specificities of the locations where
they occur” (Ahonen, 2009, p. 301). It highlights the impact of the media discourses in
challenging the legitimacy of the privatization process and how legitimation strategies bare the
influence of the Romanian social and political context.
Based on the content analysis of the annual reports we identified four main categories of
disclosure potentially used by the company to build its legitimacy, compliance with standards,
taking pragmatic actions, acting as a socially responsible company and self-assessment strategies.
These four categories were subsequently refined based on the analysis of the corporate releases
and online press articles. The analysis found that the corporate communication of a company
played an important legitimizing role. It is argued that the final aim of corporate communication
is to create or maintain a positive image of a company’s performance. As noted by Hopwood
(2009, p. 437), the companies “can also have an interest in using reporting to facilitate the
construction of a new and different image of the company”. Whether the company chooses to
alter its behavior, change the audiences’ expectations or work directly on its image, the focus is
to communicate by engaging in a social dialogue. Media has an important part to play in this
process as it mediates the symbolic “dialogue” between the company and its audiences.
The remainder of the paper is organized as follows. The first section situates the paper within the
legitimacy framework through providing a short review of corporate legitimation strategies of
communication as well as of the role played by the media in the legitimation process. The second
section sets the context of our case study. The third section presents the research methodology
and the following section presents the analysis of the corporate communication in close
connection with the context of the study. Finally, the main findings are summarised and
discussed in the last two sections of the paper.
1. Theoretical framework
1.1.Legitimacy theory and legitimacy strategies
Legitimacy has long been considered as an important organizational resource (Dowling and
Pfefer, 1975; Meyer and Rowan, 1977; Ashforth and Gibbs, 1990; DiMaggio and Powell, 1991).
Suchman (1995, p. 574) defines legitimacy as “a generalized perception or assumption that the
actions of an entity are desirable, proper, or appropriate within some socially constructed system
of norms, values, beliefs, and definitions”. Suchman sees legitimacy as possessed objectively,
but assessed subjectively by each audience. Furthermore, legitimacy ”is socially constructed in
4
that it reflects a congruence between the behaviours of the legitimated entity and the shared (or
assumedly shared) beliefs of some social group” (p. 574).
Most of the previous research on legitimacy focused on the use of the annual reports and socially
responsible disclosures as a tool to legitimize organizations. The main purposes of pursuing
legitimacy are to facilitate the attraction of economic resources and to gain social and political
support necessary for viability (Pfeffer and Salancik, 1978; Singh et al., 1986; Suchman, 1995;
Ogden and Clarke, 2005). Stratling (2007) suggests, based on the study of corporate annual
reports of large energy companies, that managers recognize the need to socially legitimize the
firm’s operations, especially in order to ensure the continuation of the supply of a resource
considered vital to its survival (Deegan, 2002). As shown by several researchers, corporate social
responsibility disclosure is commonly used by companies as a legitimizing tool (Cho and Patten,
2007; Patten, 1992; Stanton and Stanton, 2002; Van Staden and Hooks, 2007). However, this
legitimation process, as warned by many researchers, may transform disclosure into a
“legitimation device” (Gray and Bebbington, 2000, p. 16) and the annual reports into
“instruments of impression management” (Arndt and Bigelow, 2000, p. 501).
There is evidence showing that the largest companies generally offer a better quality of
disclosure (Vuontisjarvi, 2006) and that they are likely to use the annual reports to communicate
information on environmental performance and social involvement (Clarke and Gibson-Sweet,
1999). Moreover, corporate social disclosure might occur as a response to media and external
pressure and is particularly related to environmentally sensitive industries (Patten and Nance,
1998; Patten, 2002; Deegan and Gordon, 1996; Cho and Patten, 2007; Cho, 2009). This
reinforces our choice of using Petrom as the subject of our case study.
Different strategies of legitimacy can be identified, depending on the type of organization,
environment characteristics, audience, and the nature of the conflicts. Dowling and Pfeffer
(1975), Lindblom (1994) and O’Donovan (2002) identified different types of strategies used by
legitimacy-seeking organizations. Thus, the organization may:
-
seek to educate their stakeholders about the organization’s intentions/actions to improve
its performance;
seek to change external expectations about their performance;
seek to change the stakeholders’ perceptions on the organizational event (but without
changing the organization’s actual performance);
manipulate attention away from the issue of concern.
Even though each of the above strategies may be carried out by publicly disclosing information
(Lindblom, 1994; Dowling and Pfeffer, 1975), it is worthwhile distinguishing the key elements
in each strategy. In the case of the first strategy, the company will be changed and
5
communication about these changes will be disclosed. The second legitimacy strategy aims to
alter public expectations about the company’s actions. For instance, the company may educate
the public on the risks of oil transportation as well as on the positive impact of using oil on our
standards of living (O’Donovan, 2002). The third and the fourth strategies do not assume a
change from the organization nor from its stakeholders’ expectations. These strategies focus on
the content and form of the communication in order to alter the image of the company. For
example, organizations may disclose information previously unknown to the relevant public with
regards to favourable attributes/actions of the company. Moreover, it may draw attention to the
company’s strengths or divert attention to other issues, such as awards won, involvement in
community’s issues etc. This article focuses on the managing of the image as a legitimizing
strategy.
1.2.Threats to organizational legitimacy: the role played by the media
The link between the coverage of issues in the media and annual report disclosure strategies
undertaken by organizations to legitimize their activities has been scrutinized in the following
works (Brown and Deegan, 1998; Deegan et al., 2002; Samkin and Schneider, 2009). It has been
found that the media play a dual role in the legitimation process. On the one side, they are a rich
institutional indicator of society evaluation and therefore provide a measure of organizational
legitimacy (Baum and Powell, 1995). On the other side, media reports not only reflect, but also
actively shape and influence public opinion (Brown and Deegan, 1998; Fombrun, 1996;
Hoffman and Ocasio, 2001). On the second issue, there is an entire body of literature grounded
on media agenda-setting theory. The main postulate of this theory is salience transfer. Salience
transfer is the ability of the news media to bring into forefront issues of importance from their
news media agendas to public agendas. “Through their day-by-day selection and display of the
news, editors and news directors focus our attention and influence our perceptions of what are
the most important issues of the day” (Mccombs, 2004, p. 1). Deegan et al. (2002) found that the
issues which received the most attention in the media had the greatest number of disclosures in
the annual report. They also found evidence that management would disclose positive
information in response to unfavourable media coverage. A similar conclusion was reached by
Brown and Deegan (1998) who, dwelling on legitimacy and media agenda setting theories,
showed that higher levels of media attention are significantly associated with higher levels of
annual report environmental disclosures and that organizations increase disclosure in response to
negative press coverage.
As Petrom is one of the biggest Romanian companies it enjoys large press coverage and as we
will demonstrate in the following sections, the media not only maintained the public’s attention
6
the disputes surrounding privatization, it also represented the arena where the dialogue between
Petrom and political power took place.
To summarize this section, we could say that the legitimacy construction is a social practice and
the main means of developing it is through communication. The final aim of this communication
is to create or maintain a positive image of the company’s performance.
2. Context of Petrom’s privatization
Privatization has been a significant feature on the political and economic scene in Romania since
the fall of the communist regime in 1989. As such, Romania provides a rich background for
privatization studies, as all forms of privatization were used in the transition process towards a
market economy (management and employees buyouts, mass privatization, initial public
offering, direct sales to investors). Considered a market reform instrument in western economies,
privatization represents a major challenge for former centrally planned economies in their
transition to market economy. Usually, the privatization process is associated to positive
economic results. In many cases, especially in developing and transition economies, concerns
have been raised about the privatization process, both in terms of the price paid for the assets and
the resulting effect on the local economy. Stories about corruption abound (Bjorvatn and
Soreide, 2005). The case of Petrom follows this typical path, as illustrated below by our analysis.
However, if literature on corruption and privatization often relates to resource allocation
(O’Relley, 2006; Puntillo, 1996), foreign direct investment (Cuervo-Cazurra, 2008) or
governance issues (Li, 2005), the purpose of the present paper is to outline the strategies used by
Petrom to promote its legitimacy, in a context characterized by repeated allegations of corruption
concerning the privatization process voiced through the media.
We regard privatization as a process set up on a wider time horizon, and therefore the
construction of a longitudinal case study is needed. As Ahonen (2009) argues, research on
legitimation strategies needs to take a processual, historical perspective in order to give an
accurate account of the practices of legitimation. The context in which Petrom evolved following
post-privatization was highly political in the sense that the legitimation process became “a
struggle over meaning and power to influence those meanings” (Ahonen, 2009, p. 301). The
privatization of Petrom1 began in 1995 and was halted and resumed several times during the
following years, mainly because of the corruption allegations surrounding the affair. The final
round of the privatization process took place in 2004 where the Austrian oil company OMV won
the bid. The contract was signed in a delicate moment, as Austria was preparing to take over the
EU presidency. Privatization of state-run companies has been regarded as a prerequisite for
7
International Monetary Fund (IMF) loans as well as European Union membership (as stated in
the 20052 Center for Public Integrity report).
In December 2004, Petrom became part of the Austrian company, OMV Group, the leading oil
and gas firm in Central and Eastern Europe. Prior to its sale to OMV in 2004, nearly all of the
country’s oil assets were controlled by state-run Petrom. The company is traded on the Bucharest
Stock Exchange and has a market capitalization as of February 2011 of 5.08 billion EUR being
one of the biggest and most influential in the Romanian economy. At the time of the
privatization, Petrom held a monopoly on the country’s oil reserves, refineries (Arpechim and
Petrobrazi) and had the largest network of gas stations in the country. The privatization left the
monopoly largely unchanged and thus, created “a wide discrepancy” with the model of private
sector companies operating in market economies (Ogden and Clarke, 2005). It should be noted
that this model appeared all the more idealized considering Romania’s past as a centrally planned
economy and its enthusiastic embrace of capitalism. Petrom’s necessity to legitimate itself
became stringent in the years post-privatization given the lack of support from the new
government, who kept questioning the correctness of the privatization contract signed under the
previous government and the profusion of mass-media articles criticizing the privatization
process.
In consequence, privatization entailed two main issues highlighted by our research. First, the
transfer from public to private ownership not only involved significant changes in the
composition of stakeholders, but also highlighted the fact that the new management could not be
left to pursue the interests of the new shareholders exclusively (Ogden and Watson, 1999). This
became apparent in the disputes around the privatization process and the pressures to reduce the
prices of gas and oil in the years after the privatization. Second, as the new main shareholder was
a foreign company and moreover, the energy industry was a sensible domain with major impact
on the national security, the company’s legitimacy suffered serious challenges which were
voiced in the mass-media. The analysis of media articles highlighted the context-embeddeness of
the legitimation process. Nationalist and populist discourses were used by politicians to
challenge the legality and the opportunity of Petrom’s privatization.
Having set the theoretical framework and the context we will go on to present the methodology
and the results of our study, focusing on the data sources, the method of analysis and the
presentation and discussion of the findings.
8
3. Research methodology
3.1. Data sources
The present case study was designed as an “extreme case” (Cooper and Morgan, 2008, p. 165)
with the aim to examine the boundary and the conditions of the legitimacy theory. This type of
case study, as noted by these researchers, “works on the principle that much of value can be
learned by looking at outliers or even deviant cases” (Cooper and Morgan, 2008, p. 165).
Two main data sources were used for the present case study. First, we collected and examined
the company’s corporate annual reports and its self-produced press releases (Corporate news) for
the period 2004-2007 (4 years). Refer to Annex 1 for the table presenting the evolution of the
number of corporate press releases. In a first phase, the annual reports were analyzed for the
content analysis (qualitative and quantitative). The managements’ reports for the years 20042007 were used in order to highlight any information that could serve legitimation purposes. The
four years following privatization were considered a sufficient period of time to allow studying
the information disclosed by the company in order to legitimate itself. There are no annual
reports previous to 2004, as the company only prepared financial statements. The last year
considered in our analysis was 2007 because by 2008 a significant change in the form and
structure of the annual reports was visible (a Corporate Social Responsibility report being
released separately), which signalled a new stage in the corporate communication. Second, the
present paper draws on a comprehensive collection of online articles that were available
regarding Petrom’s post-privatization years. The analysis of media discourses on the privatized
company is based on articles published online between December 2004 (Petrom’s privatization)
and December 2007 which were retrieved during May 2007 and July 2011.
The media sources used for the study are: Adevarul, BBCRomanian.com, Capital, Curierul
National, Evenimentul Zilei, Hotnews, Mediafax.ro, Romania Libera, Ziarul Financiar.
Excepting BBCRomanian.com, Hotnews and Mediafax.ro, all the other online sources are also
published in paper version. They are the leading journals in Romania. With the exception of
Capital, which appears weekly, all the others are dailies. Only Capital and Ziarul Financiar are
dealing mostly with economic issues, the rest being general. In the websites’ online database
search, we used Romanian search words: Petrom, privatizare (privatization), and a truncated
word search with the Romanian word privat* and the name of the company, Petrom. We also
went through the articles manually since not all articles were relevant for our topic (for example,
the stock exchange evolution of Petrom’s shares). In the preliminary phase, we obtained several
thousand articles. For example, the search in the Ziarul Financiar database returned no less than
9
2,072 results and after close scrutiny, we only selected for our analysis 300 (11 appeared in
2004, 52 in 2005, 70 in 2006 and 167 in 2007).
While acknowledging that media articles are not always reliable sources and not always free of
bias, we believe that they nonetheless highly influence the public opinion and represent at the
same time the stimuli and the feed-back for Petrom’s legitimation strategies of communication.
This case study intends to open the way for the analysis of the Romanian companies’ corporate
communication which represent a rich and under-explored source of data in management
research.
3.2. Data analysis. Content analysis
The first step was to perform a content analysis (Bryman and Bell, 2003; Thietart et al., 2003) of
the annual reports, as this has been traditionally the main data used to study the legitimacy
strategies of organizations (see Brown and Deegan, 1998; O’Donovan, 2002; Tilling and Tilt,
2009 etc.). Our purpose was to highlight the existence of a dialogue between the company and
media as important in the process of building legitimacy. We therefore included in our analysis
Petrom’s press releases which are more accurate in timing compared to annual reports in
response to press coverage. As we have shown, most of the previous research on legitimacy
focused on the use of the annual report as a tool to legitimize organizations. However, analyzing
only the annual reports would have meant to ignore the lag effects as they are published once a
year (cf. Brown and Deegan, 1998).
We proceeded to the content analysis of Petrom’s annual reports for the post-privatization
period (2004-2007) in order to identify information that could pertain to communication
legitimacy strategies, as presented in legitimacy literature, but also emerging from a quick
scrutiny of company’s press releases for the same period. The information was grouped into 16
relevant topics. These topics were partly derived from the literature review, partly derived from
the particular context of our case study (refer to the context of Petrom’s privatization) and partly
inspired by the structure of the annual reports. A particular attention was given to the definition
of the topics, so as to increase the reliability of the content analysis. The process implied
developing additional classification rules, when specific questions were raised, with a constant
care for coherence in classification. A final general consensus between the two coders was
reached, based on discussion.
A quantitative content analysis of the annual reports accompanied the qualitative analysis.
The unit of analysis was the clause. The clauses could be related to more than one topic and thus
counted more than once. About 2,500 units of analysis were identified, following a crossnumbering protocol, and allocated to the corresponding topic. We used a manual treatment for
10
the classification of disclosures in the annual report, and a semi-manual treatment for the
numbering (the filters, the subtotals and the grand total were automatically generated). Moreover,
we used cross-numbering to increase the reliability of our research and classification. The titles,
tables, images, and graphics were not taken into account, nor was the localization of the
information. For the results of the quantitative content analysis please refer to Annex 2.
The main topics, as proven by our content analysis of the annual reports and press
releases were: compliance with standards, taking pragmatic actions, acting as a socially
responsible company and self-assessment strategies.
Compliance with standards. As shown by Suchman (1995) cognitive legitimacy is a
powerful tool of legitimation as the company attempts to communicate/construct identification
“with symbols, values, or institutions which have a strong base of social legitimacy” (Dowling
and Pfeffer, 1975, p. 127). In Petrom’s case, we found that compliance with the parent
company’s’ (OMV) standards along with compliance with national and international (European)
norms concerning quality, for example, were one of the most used forms of legitimation.
Taking pragmatic actions. Pragmatic actions are the main type of legitimacy strategies
used by corporations and it has the biggest weight in the annual report’s disclosures. The themes
included under pragmatic actions specifically concerned privatization and restructuring. These
were: corporate governance, aimed at an improved corporate communication with all the
stakeholders and the creation of a corporate governance code; development of the business;
investments; price policy; quality improvement; restructuring, reorganization and modernization;
and other economic, financial and technical information. All this information followed the main
pattern of constructing legitimacy by underlining past accomplishments and announcing future
changes (based on Suchman, 1995).
Acting as a socially responsible company. As shown by the literature review, the
disclosure of corporate social responsibility information is recognized as a powerful legitimating
tool. Thus, projecting a caring image is critical to building an organization’s legitimacy (Key and
Popkin, 1998; McWilliams et al., 2006). The main sub-themes identified under “acting as a
socially responsible company” concerned employee relations and health and safety issues as well
as issues such as: environmental concerns and community involvement (philanthropic actions). It
was shown that the latter represents more a tool of legitimation than a measure of corporate
social responsibility (Chen et al., 2008).
Self-assessment strategies. If the three previously presented categories based the
legitimacy building process mainly on the disclosure of information, the present category takes a
more pro-active stance in dealing with (de)-legitimacy. Thus the company’s management gives
up the seemingly neutral tone adopted in the rest of the annual reports in order to put forward the
11
company’s strategy, focused on outlining its strengths and how they foresee solving important
problems; expressing self-confidence; and taking a defensive stance by directly responding to the
pressure and attacks from the media. In the context of this strategy, we see an emerging
collective “we”, not only for the company’s management, but also for employees. This “we”
seems to be endowed with a staunch self-confidence in the company’s future and strengths.
4. The construction of legitimacy in the post-privatization context: interplay between
company’s communication and negative press coverage
The three controversial issues identified in the media are introduced here as a precursor to the
discussion on the communication strategies used by Petrom to manage its organizational
legitimacy in light of the extensive negative publicity it experienced post-privatization. These are
“legality/opportunity of the privatization process”, “monopoly and rising prices” and “Petrom
and its impact on the Romanian society”. Thus, we present the interaction between media
discourses, company’s press releases and annual reports in order to throw light on the legitimacy
building processes.
Legality/opportunity of the privatization process
Following the change of government after the 2004 elections, the newly formed
Romanian Government, as a result of suspicions expressed in the media, decided to verify
Petrom’s privatization contract. In the context of a fragile political coalition represented by a
liberal Prime Minister and a social-democrat President, the privatization contract emerged as a
highly disputed document and an instrument of political pressure, as we will show in the next
paragraph. One of the most contested aspects of the privatization contract was the sale price,
which was thought to be too low, to the detriment of the Romanian state (Gardianul, September
12, 2005; Adevarul, April 26, 2006; Capital, July 7, 2006; Evenimentul Zilei, November 22,
2006). Critiques concerning the selling price appeared in the press immediately after the
privatization in 2004, climaxing towards the end of 2006. Additionally, as the press repeatedly
emphasized, OMV also enjoyed special conditions concerning ecological taxes, royalties and
exemption from tax for reinvested profit. The privatization was, in most people’s opinion, a bad
decision for Romania (Gardianul, September 12, 2005; Hotnews, September 26, 2006; Capital,
February 12, 2007):
As a matter of fact, the state is giving back OMV the first rate paid for the Petrom shares.
12
The second rate did not even go to the Budget, being an increase in the capital
(Gardianul, September 12, 2005).
By the end of the year 2005, the Romanian President joined the debate, publicly criticizing the
privatization process and Petrom’s pricing policy (BBCRomanian.com, October 12, 2005;
Hotnews.ro, November 16, 2005). On June 21, 2006, the economic and financial weekly Capital
revealed that Petrom’s market value was deliberately undervalued by the consortium of
consultants who prepared the company for privatization back in 2004. Capital concluded that the
faulty prognosis conducted by the consultants led to Petrom being sold to the Austrian group
OMV at half the price of its intrinsic value (also in Adevarul and Romaniandaily.ro, April 26,
2006).
In answer to repeated attacks in the media concerning the legality of the privatization
contract (Evenimentul Zilei, Ziarul Financiar, November 14, 2006 – “Romanians pay for
Petrom’s profits”), and in their attempt to legitimate the new organization of Petrom, the
management of the company stated in a press release (issued in November 2006 during a press
conference in Vienna) that the signing of the privatization contract was done after open
negotiations between specialists and closely watched by the IMF, the World Bank and the
institutions of the European Union (BBCRomanian.com, November 17, 2006 – “Prime Minister
against the renegotiation of Petrom’s privatization contract”). The statement concerning the
legality and transparency of Petrom’s privatization also appeared in the annual report of the same
year:
Let me assure you once more on this occasion as I have done already several times during
the course of the last few months that Petrom’s privatization was not only a competitive
process but also one handled in a very professional and transparent manner, being closely
followed by various international institutions such as the European Union and the
International Monetary Fund (Annual Report 2006).
Moreover, calls to boycott the products of OMV-Petrom began spreading on the Internet
(Evenimentul Zilei, November 22, 2006). It is this context that Petrom’s management made use
for the first time of the annual reports as a defensive tool in order to answer to the negative press
coverage of the year 2006, a year when the intensity of the attacks increased exponentially:
During the year 2006, Petrom and OMV were exposed for reasons beyond our control to
a highly critical press and political environment in Romania (Annual Report 2006).
The use of this less common response illustrates the intensity of the pressure coming from the
media and the government. Moreover, Petrom’s CEO recognizes in a press interview that the
13
hardest moment since she took office in 2005 were to stand up to the press campaign with regard
to the privatization issue (Evenimentul Zilei, December 22, 2006). As shown by the content
analysis of the annual reports (see Annex 2), Petrom attempts to legitimate the privatization of
the company by emphasizing the extent of investments, restructuring and reorganizations
processes, but also how privatization brought about the development of the business as well as
improvements in the quality of the products. The same emphasis is to be noted in the company’s
press releases:
At the moment of privatization, the situation in which the company was required a great
deal of investments, new technologies and a modern business approach so that it should
be able to develop its potential in terms of securing the oil and gas reserves of Romania.
Before privatization, the lack of the necessary cash flow for investments determined the
decline of the reserves replacement rate, not competitive costs and quality, out of date
technologies that were causing environmental problems and no actual option for
international expansion (Corporate news, November 17, 2006).
For a long time, the existence of secret clauses in the privatization contract of Petrom had
aggravated the situation giving birth to suppositions concerning the content of those clauses. It
was only in November 2006, following the meeting of the country’s Supreme Council of
Defense that the Romanian President decided to make the contract public (Declaration of the
Department of Public Communication of the Supreme Council of Defense, November 21, 2006 3).
Although the privatization is shown in the media as being detrimental to the Romanian state
because the clauses in the contract were negotiated by corrupt officials, the management of the
company underlines the benefits brought along by the legal privatization of Petrom for a mass of
stakeholders and not only for its shareholders:
At this time, I would like to highlight the fact that Petrom is the largest Romanian
company, with the largest contribution to the state budget and its economic development
after privatization has brought and will bring substantial benefits to all stakeholders,
including the Romanian state (Corporate news, November 22, 2006).
As can be seen from the above declarations, Petrom’s management seeks to legitimize the new
ownership and organization of Petrom, while the mass-media and the government seek the
opposite. Thus, the media agenda was set to emphasize negative events. For example, Rindova et
al. (2006) have pointed towards the “dramatized reality” created in the media around
contemporary organizations, based on what “may be otherwise factually accurate information
about firms in ways that stress certain facts and meanings and underplay others” (p. 57). A
strategy often used by Petrom’s management is to contrast the poor state of Petrom before
14
privatization with that post-privatization. Petrom’s annual reports from the years 2005 and 2006
abound in declarations that underline the hiatus existent between the gloomy situation before
privatization and the bright future of Petrom as a result of the privatization. Multiple declarations
in the company’s press releases underline the advantages brought along by the privatization. The
investments play an important part in the declarations of the management of the company, as a
means to legitimate the new ownership. As part of the privatization contract, investments
constantly appear in the annual reports and in corporate news. In 2004, the assertions regarding
future investments were dominant, whereas in the following years achieved investments and
plans of investments occupy a similar part in the company’s reports. Petrom’s public releases
focused on underlining the company’s importance for the Romanian economy and the significant
benefits of its privatization:
“The financial impact of the privatization is obvious. The company’s profitability has
improved and Petrom continues to generate and to benefit from the necessary cash flow
for investments which will secure the sustainable development of the company”, said
Mariana Gheorghe, CEO of Petrom (Corporate news, November 17, 2006).
In a conference held in Vienna in November 2006, in answer to repeated attacks in the press,
OMV’s CEO gave assurances that the investments in Petrom are to stay in Romania. The
management of the company is thus trying to silence media discourses which imply that the
privatization contract gave away too much control over the country's national resources to a
foreign company:
“In each of the next two years, OMV will invest in Petrom one billion euros and not even
a penny will leave the country, everything will be invested in the Romanian economy”,
declared W. Ruttenstorfer, CEO of OMV (Wall-street.ro, December 7, 2006;
BBCRomanian.com, November 17, 2006 – “Prime Minister against the renegotiation of
Petrom’s privatization contract”).
Moreover, the management’s discourses seem to imply that the disputes surrounding Petrom will
ultimately harm the general welfare of the Romanian people:
“I trust that all disputes in this period will consider the wellbeing of Romanians, as my
concern goes towards the employees and shareholders of Petrom”, said Mariana
Gheorghe, CEO of Petrom (Corporate news, November 22, 2006; also in Curierul
National, November 24, 2006 - “Privatization with premeditation”).
15
Towards the end of 2007 there have been proposals to repeal the privatization law with
politicians on both sides joining in the debate (Romania Libera, November 10, 2007;
Evenimentul Zilei, November 18, 2006). The main target of the attack on the privatization
contract was the low level of royalties for the exploitation of the Romanian oil reserves
(Mediafax.ro, October 5, 23, 2007; Reuters, December 4, 2007; Romania Libera, December 5,
2007; BBCRomanian.com, Dailybusiness.ro, December 6, 2007).
Monopoly and rising prices
The rising prices of fuels after the privatization was one of the main aspects that caused disputes
between the political establishment and Petrom. Following the privatization when OMV became
the main shareholder, the company introduced a new pricing policy:
Petrom introduces a new pricing policy reflecting competition on the market, similar to
the one in European Union countries. From now on Petrom's prices will have a dynamic
evolution based on the international oil products quotations as well as competition on the
market.” (Corporate News, January, 21, 2005, declaration of the CEO)
Prices appear as a highly sensitive issue in the post-privatization context; the government
repeatedly pressured Petrom’s management with the demand to consider Romania’s economic
and social situation when establishing prices. The government also argued that the prices should
be reduced because Petrom is extracting most of its oil in Romania and the extraction costs are
lower than in other countries (Curierul National, September 17, 28, 2005). In response, the
company tried to justify the price increase on two bases – aligning prices to international
quotations and increasing profitability (Annual report 2005).
As reported by the press, the government pressured the company to decrease prices by using the
privatization contract and by alerting the Competition Council (Evenimentul Zilei, September 14,
2005 – “Petrom changes chaotically oil prices”). During 2005 the following scenario occurred:
-September 5 - Petrom raises the price of petrol by 700 lei per litre
-September 7 – another raise in the petrol price (900 lei/l)
-September 9 – The Romanian President intervenes to the Competition Council. Petrom
cancels the last price raise.
-September 13 – the Romanian President announces that Petrom’s privatization contract
(signed by the former Government) will be “reviewed”. Petrom decreases the price by another
16
800 lei/l.
The management of the company denied that the price decreases had anything to do with
political pressures (Curierul National, September 15, 2005). Declarations about the price policy
also appear in press releases during the years 2005 to 2007. The management of the company
responds to critiques by emphasizing that their prices are relatively low compared with the rest
of Europe:
Romania’s fuel prices thus remain in the lower half of the European market. […] Petrom
cannot ignore international prices and it also cannot offer crude oil below market prices
[…] (Corporate news, September 14, 2005).
It is especially interesting the use of the modal verb “cannot” implying that their price policy is
not only a matter of internal decision, but mostly a matter of complying to international standards.
It is a way of justifying why the national context was not taken into account.
In this context, it became apparent that the fact that Petrom was a privately own company had
not sunk into public conscience. During the first few years after privatization, the press pressured
Petrom to put public interest first, the fact that the company was perceived as thriving on the
exploitation of national resources did not help its cause. The transfer from public to private
ownership not only involved significant changes in the composition of stakeholders, but also
highlighted the fact that the new management could not be left to exclusively pursue the interests
of the new shareholders (Ogden and Watson, 1999). In 2005 and 2006, Petrom was repeatedly
asked by the Government to find a solution so that the pricing structure of oil products on
internal and external markets reflected the fact that Romania has internal oil resources with low
extraction cost (Curierul National, September 17, 28, 2005; Curierul National, February 1,
2006). Additionally, against the background of severe floods affecting Romania in 2006, the
Romanian President summoned oil companies to adjust their price policies:
“[…] it is important in this difficult period for Romania, as a result of damages provoked
by repeated floods, the rises and unforeseeable oscillations of the international oil price,
the oil companies should contribute through their price and sales policy to the
accomplishment of the objectives stated in the development program, including the
reduction of inflation and of the external payment deficit” (Gandul, May 5, 2006).
Towards the end of 2006 when, as shown previously, Petrom was the target of intense criticism.
Petrom’s management, through Government pressure, agreed to contribute to a special
governmental fund which would subsidize the increase in the gas prices paid by the population
17
(Cotidianul, December 6, 2006 – “Romania is a winner after the privatization”). The press
releases issued by Petrom subsequently emphasize the close collaboration with the Romanian
Government for the benefit of the population hit by the price rises:
Petrom cooperates closely with the Romanian Government to identify solutions to
alleviate the social effects that can appear as a result of the future alignment to the
European Union energy market. […] Today, representatives of Petrom and the Romanian
Prime Minister continued discussions to set up a fund that could contribute to achieve
that objective (Corporate news, November 21, 2006).
In its communication regarding price policy, Petrom positions itself as a customer-oriented
company. Moreover, it emphasizes transparency about the price changes as part of this customer
orientation.
Because Petrom applies a moderate and cautious prices policy, Petrom’s average prices
are among the lowest prices in Europe. Petrom regards it as its obligation vis-à-vis its
customers to communicate the price changes. As a customer oriented company, Petrom
exercises the highest transparency possible and thus remains the only operator of filling
stations to publish its price changes (Corporate news, January 26, 2007).
Petrom and its impact on the Romanian society
Social responsibility is a major part of the legitimacy strategy of Petrom, as the amount
of disclosure increases substantively over the four years (see content analysis in Annex 2), and is
completed by a dedicated section on the company’s web site, and the creation of a department of
Corporate Social Responsibility (CSR) in 2008.
The content analysis of the annual reports showed how before 2005, the annual report did not
contain a section dedicated to CSR. Company communication focused on issues concerning the
health and safety of employees along with general statements about the protection of the
environment. Beginning in 2005 Petrom begins starts disclosing information on its community
involvement. Arguably, this is the impact of OMV’s communication practices as well as the
result of a communication strategy which aims to build a community-friendly image for Petrom:
"We are a responsible company, perfectly aware of the importance required by health,
safety and environment; Petrom is a company which has always been involved and will
continue to be part of the community life, through actions developed for persons in need",
18
said Mr Gheorghe Constantinescu, CEO of Petrom (Corporate News, May 26, 2005).
The company is aware of the responsibility it has towards to the community and takes
action in this direction through the involvement in far reaching social projects. The direct
actions of Petrom are a part of short term programs, which aim at helping those in need,
after the floods (Annual report 2005).
The role of the company, as defined by the company’s management, is to educate the community,
through setting high standards and becoming a responsible citizen:
We want to become not only a role model for the business community but also a
responsible “citizen” of the community we are living in (Annual Report 2006).
As one of the largest companies in Romania we are aware of the impact of our activities
on the Romanian society and we assume this important role by bringing our contribution
to increasing the people’s confidence in the EU integration process, by applying high
business standards, health and safety measures, both internally and externally, and by
developing related projects (Annual Report 2006).
As OMV is a foreign entity along with the fact that the energy industry is a sensible domain with
major implications on national energy security, the company’s legitimacy suffered serious
challenges. Due to the sensitivity of the industry and the monopolistic position of Petrom
concerning the oil extraction, political disputes were often focused around the necessity to assure
the energy independence of the country. The “Petrom problem”, as illustrated by the media,
frequently overlapped populist and nationalist discourses regarding Romania’s energy security.
As a result, the management of the company had to recognize the strategic importance of Petrom
for the Romanian economy and to repeatedly give assurances that the country’s interest is
upheld:
What is important is Petrom. How the company performs is of utmost performance for
Romania and for the Romanian economy. […] The past years have shown that the impact
of the privatization is a favourable one not only for the company but for Romania as well.
(Corporate News, November 17, 2006).
Investments appear as an important theme in statements made by the company’s management as
a means to legitimate new ownership:
We have increased investments by 163% compared to last year and we will continue
doing so at a similarly high pace, in order to secure the sustainable development of the
19
company and thus bring our contribution to securing the energy supply for Romania
(Annual report 2006).
As noticed from the above quotations, Petrom’s management tries to reassure the public that the
general welfare of Romanians is considered. They are obviously trying to unsettle nationalist and
populist discourses circulating in the media and pointing out the fact that Romania’s energy
security depends on a foreign company.
The press releases are full of expressions such as: benefit, best interest, and wealth of Romania
and of the Romanian people. The focus is on showing that the best interest of all stakeholders is
considered.
The benefits are not limited to the distribution of a larger profit among all shareholders
but also to bigger contributions to the state budget and investments of over 3 bn. Euro.
The investment effort - which is probably the largest budget allocated by a company in
the energy sector - will be mostly used within and for Romania (Corporate News,
statement from Petrom CEO, November 21, 2006).
Petrom, as part of the OMV Group, has the potential to become an important player on
the regional energy market. We are aware of our economical and social responsibility and
the increase of energy security for Romania is and will remain a priority for Petrom. As
before, we want to contribute directly to the creation of the country’s energy supply
security (Corporate news, November 22, 2006).
The annual reports adopt the same rhetoric which recognizes Petrom’s major role in the
Romanian economy and its commitment to being a responsible company:
The transformation and modernization of Petrom not only encompasses the company
business, but also its role in the Romanian society. Consequently, management’s effort
was also focused on transforming Petrom into a truly socially responsible company,
involved in various areas of social development (Annual report 2007).
Environmental and work accidents, controllable or uncontrollable risks, lack of total compliance
with international accounting standards sometimes appear in the annual reports. However, as a
general trend, the amount of disclosure on weaknesses and mistakes decreases from 2004 to
2007. Manipulation of the environment could also be identified, for example if we compare the
declarations concerning environmental issues from the company’s communication with the facts
reported by the media. In 2006 the maximum fine was imposed nine times on Petrom for
violation of environmental protection laws (Curentul, October 20, 2006) and in May 2007 one of
the two refineries of Petrom was temporarily closed down by the Romanian Authority of
20
Environment Protection because of its lack of conformity to environmental standards. The
company seems to be obfuscating negative events by not reporting them in the annual reports or
by summarily presenting them. For instance, the only mention in the 2005 annual report of
environmental incidents is:
In 2005 there were a number of reported environmental incidents. These were mainly
related to pipe leakages from old and corroded pipelines that affected primarily the soil
and surface water (Annual report 2005).
The closing down of the Arpechim refinery in May 2007 is mentioned as: “The environment
agency suspends the operating permit of Arpechim Refinery; the shortfalls raised by the
authorities were addressed during the subsequent two months, leading to full legal compliance
and the restoration of the permit in August” (Annual Report 2007). However, in the annual
report there is no mention of the fact that Petrom has fallen behind with the carrying out of the
investment program, as a Petrom’s official asserted in an interview with Ziarul Financiar (May
30, 2007 -“Petrom: the closing down of the refinery won’t have a major impact on the results”).
Nor does the Suseni incident (oil spillage in a river), which is mentioned in a corporate press
release from March 19, 2007, appear in the 2007 annual report. Moreover, the tone of reporting
on reporting on these negative events is rather neutral, the use of the passive voice is preferred
and the impression is that the management does not take responsibility for these events.
We have shown at this point that following its privatization, Petrom evolved in a critical
environment, which increased the company’s need to assert its legitimacy through all means. The
rationale of our research is thus to outline the main strategies used by Petrom in order to assert its
legitimacy following privatization.
Discussion
This section presents a discussion of the empirical material in two directions. On the one side, we
outline the legitimacy strategies used by Petrom in order to create or maintain a positive image of
the company. On the other side, we try to show how the Petrom’s corporate communication
(press releases and corporate news), often in response to negative media coverage, play an
important role in constructing the margins of the annual reports.
Strategies to build a positive image for the company
21
When examining a company’s legitimation strategies we should try to understand how its image
is dealt with because image is the final target of legitimacy strategies.
Attempting to alter stakeholders’ perception (image) of the corporation by altering the
company’s behaviour (Taking actions to conform to stakeholders’ image of the company)
This could be considered a pragmatic or substantive type of legitimacy (cf. Suchman, 1995) as
its aim is to fill the gap between the company and its image by taking real measures/actions to
conform to the stakeholders’ expectations. Petrom’s cooperation with the authorities in
temporarily decreasing prices and contributing financially to the constitution of a fund to
subsidize the increase in gas prices correspond to this type of strategy.
Attempting to alter stakeholders’ perception (image) of the corporation without altering the
company’s behaviour
Staying fair to itself (Raising awareness)
This type of strategy aims to alter the stakeholders’ expectations about the company by educating
and informing the public. For example, it may aim to raise awareness concerning the fact that
Petrom’s performance will improve the welfare not only of the company’s shareholders, but also
of its other stakeholders (e.g. the public). Another example is to educate the public with regards
to the fact that Petrom is already acting accordingly to the legal standards. This is demonstrated
in the case of price increases in order to correspond with the European demands and also in
invoking the IMF and the World Bank in order to prove the legality of the privatization process.
Attempting to manipulate the company’s image
We have found that Petrom manipulates company’s image by using two main tactics. The first is
to increase disclosure of positive events in order to try to offset negative press coverage; the
second is to make use of rhetorical devices in order to deflect attention from some issues towards
others.
The first type of strategy aims to alter the image of the company for a certain category of
stakeholders by using, for example, marketing tactics instead of taking actions or altering the
behaviour of the company. This is generally done by increasing disclosure of positive
actions/facts, such as charitable actions or investments. Moreover, communicating on the
compliance with generally accepted norms or standards is a powerful source of legitimacy.
22
The second type of strategy aims to manage legitimacy by using rhetoric devices to manipulate
the company’s image. The difference between these two strategies is that in the first case the
target is the communication’s content with an emphasis regarding the amount disclosed. In this
second case the focus is on the form of the communication and especially the use of symbols,
rhetoric devices in order to persuade the audience. As we have pointed out, Petrom often makes
use of emotional rhetoric in order to redirect attention. They also seem to minimize negative
effects, giving them little space in the annual reports. This strategy may often result in the
construction of a company’s image which distorts the reality. The company may go so far as to
offer a misrepresentation of the company by avoiding disclosure of negative events or lying and
counterfeiting information. As put by Tilling and Tilt (2009), the company may go as far as not
being totally sincere about its activities that are of concern to the “relevant publics”. Such is the
case when Petrom obfuscates the Suseni incident (oil spillage in a river) in the 2007 annual
report.
As noted by Suchman (1995), legitimacy is a perception and as such contains a large degree of
subjectivity. Given that the main means of constructing legitimacy is through communication, it
is important to examine the whole process through the relationship between image and its
referent, that is the relation between the image of the company and the underlying organizational
reality.
Dwelling on Baudrillard’s (1994) four successive phases of the image's relationship to the
referent, as presented by Macintosh et al. (2000), we could consider “taking actions to conform
to stakeholders’ image of the company” and “staying fair to itself” as being the first phase, that is
the image is a good appearance of the object which it faithfully and transparently reflects. With
“manipulating the company’s image” we pass to a second stage in which the image masks and/or
denatures the reality and therefore is a poor or distorted image. In the third phase,
“misrepresentation of the company”, the image masks the absence of the reality, and thus does
not have a correspondent in the reality (Macintosh, 2002). There may also be a fourth phase, one
in which the image has no rapport with, nor any resemblance, to any reality. We are then
entering an order of “hyperreality”, as Baudrillard puts it. This “refers to the current condition of
postmodernity where simulacra are no longer associated with any real referent and where signs,
images and models circulate detached from any real material objects or romantic ideals”
(Macintosh et al., 2000).
The ancient dilemma of the corporate discourse – substantive or symbolic – goes to the core of
legitimizing corporate action. This leads to a confrontation between the social values associated
to the actions of the corporation, and social norms (Day and Woodward, 2004). It is actually
unavoidable that the companies’ quest for profit clashes at least from time to time with other
social values (Neu et al., 1998). However, as companies are embedded in their social
environment, their survival and prosperity find themselves directly influenced by this
23
environment (Branco and Rodrigues, 2008). In terms of discourse, this leads to the confrontation
of corporate communication with media discourses, and this confrontation represents the
backbone of our study. As we will see in the following sections, we find that a simple content
analysis of the annual reports is not sufficient, as we intend to explain corporate legitimacy by
relating corporate discourse to pressures and incentives coming from the social environment. As
we have shown, following privatization and liberalization of oil prices, Petrom has faced
ongoing threats to its legitimacy coming from the Government and mirrored by the mass-media.
Although the possession of legitimacy is usually a case of more or less rather than either/or
(Ogden and Clarke, 2005), the above evidence suggests that the post-privatization Petrom has
not achieved the legitimacy they sought. Currently, the situation is unchanged with an
exacerbation of contestations since the beginning of the crisis.
Constructing the margins of the annual reports
This single case study was designed as an “extreme case” (Cooper and Morgan, 2008, p. 165)
with the aim to examine the boundary and the conditions of the legitimacy theory. The case
study spans the period from the company’s privatization in 2004 to 2007. It involves the detailed
examination of the narrative disclosures contained in the annual reports, including its selfproduced press releases (corporate news), over the period of the study. The latter were included
because they represent a more accurate response to press coverage than the annual reports, as our
purpose was to highlight the existence of a dialogue between the company and media as vital in
the process of building legitimacy. Focusing our analysis only on the annual reports would have
meant to ignore the lag effects as they are published annually (cf. Brown and Deegan, 1998).
Furthermore, examining corporate news is interesting because it allows studying how the context
(through the media coverage) is mirrored in the annual reports. Actually, traces of the corporate
news released in response to negative public coverage could be found in the company’s annual
reports only months later. Thus, a number of controversial themes which appeared in the online
media between December 1st, 2004 and December 31st, 2007 and which subsequently appeared
in the company’s press releases of the time could be traced through the annual reports.
Moreover, parts of the press releases find themselves recycled in the annual reports. This shows
that the annual reports are not a construction of only the company but rather a co-construction
with the public and the media, mediated by the use of the press releases. However, the annual
reports mirror only partially the context which finds itself more faithfully reflected by the press
releases.
Conclusion
24
This paper adds to a less explored field of research – corporate communication in the context of
transitional economies. Furthermore, this is one of the first studies to examine the relationship
between narrative disclosures in annual reports and legitimacy in transition economies. The
paper extends our understanding of how organizations make use of the narrative portions of the
annual report as well as press releases when trying to counteract/neutralize negative press
coverage in the pursuit of organizational legitimacy.
The present case study was chosen not for its representativeness, but more importantly for its
exemplarity, which gives us the opportunity to analyze and document the post-privatization
disclosure behaviour of multinational corporations in Romania.
As the social conflict around the privatization of Petrom intensified, we noticed a greater focus
on moral legitimacy strategies, covering topics such as: community involvement, environmental
issues, employees' health and safety, though pragmatic strategies remained dominant. Based on
quantitative findings we could draw the conclusion that the company increased its socially
responsible disclosures. The obvious scope is to try to build a different, more “human” image of
the company in stark contrast with the image built by the media: of a foreign company, taking
advantage of its customers and of a privatization detrimental to the Romanian state. This is a
context of change, of transition, of European integration and privatization, with great pressure
coming from the Government, mass media and public.
We built our case study as a comprehensive review of Petrom’s post-privatization context in
order to illustrate both the pressure coming from the environment and the answer given by the
corporation through its corporate communication.
Annex 1. Number of corporate press releases (Corporate News)
Years
Number
2004
5
2005
65
2006
56
2007
57
Petrom began to issue press releases in July 2004 (prior to its privatization).
25
Annex 2
YEARS
TOPICS
compliance
Showing
with
standards
-group standards
-national/international standards
Taking pragmatic actions
-corporate governance
-development of the business
-investments
-prices
-quality improvement
-restructuring, reorganization and
modernization
-other economic, financial and
technical issues
Acting as a socially responsible
company
-employee relations
-environmental issues
-health and safety
-community involvement
Self-assessment strategies
-presenting the corporate strategy
-defensive tactics
-self-confidence
TOTAL
2004
10
2005
2006
2007
21
18
11
0
4%
0%
4%
54%
0%
9%
8%
5%
0%
60
24
36
331
15
33
29
11
6
10%
4%
6%
56%
3%
6%
5%
2%
1%
34
14
20
443
21
67
44
16
18
4%
2%
2%
55%
3%
8%
5%
2%
2%
23
11
12
537
55
85
31
9
7
3%
1%
1%
63%
6%
10%
4%
1%
1%
38
16%
166
28%
143
18%
173
20%
39
17%
71
12%
134
17%
177
21%
44
7
18
17
2
54
12
6
36
235
19%
3%
8%
7%
1%
23%
5%
3%
15%
100%
124
20
35
27
42
80
33
29
18
595
21%
3%
6%
5%
7%
13%
6%
5%
3%
100%
204
54
31
53
66
128
53
27
48
809
25%
7%
4%
7%
8%
16%
7%
3%
6%
100%
116
17
22
38
39
179
89
26
64
855
14%
2%
3%
4%
5%
21%
10%
3%
7%
100%
10
127
1
The core activities of Petrom are exploration and production of crude oil and natural gas, refining of crude oil,
production and sale of petrochemicals and marketing of petroleum products.
2
Source: The Center for Public Integrity, http://www.icij.org/Content.aspx?src=searchandcontext=articleandid=598
3
Source: Declaration of the Department of Public Communication of the Supreme Council of Defense, November
21, 2006, http://csat.presidency.ro/index.php?page=cpandcp=23
26
References:
Ahonen, P.: 2009, 'The World Has Changed': Discursive Struggles over an Industrial Shutdown in the
Media, a Case from the Finnish Pulp and Paper Industry. Competition and Change, 13(3): 289-304.
Ashforth, B.E., Gibbs, B.W.: 1990, The double-edge of organizational legitimation. Organization
Science, vol. 1, no. 2, pp. 177-194.
Bansal, P., Clelland. I.: 2004, Talking Trash: Legitimacy, Impression Management, and Unsystematic
Risk in the Context of the Natural Environment. Academy of Management Journal, 47(1), pp. 93-103.
Baum, J. A. C., Powell, W. W.: 1995, Cultivating and institutional ecology of organizations: comment on
Hannan, Carroll, Dundon and Torres. American Sociological Review, vol. 60, pp. 529–538.
Baudrillard, J.: 1994, Simulacra and Simulation. Ann Arbour, Michigan: University of Michigan Press.
Bjorvatn, K., Soreide, T.: 2005, “Corruption and privatization”, European Journal of Political Economy,
Vol. 21, no. 4, pp. 903-914.
Branco, M. C., Rodrigues, L. L.: 2008, Factors Influencing Social Responsibility Disclosure by
Portuguese Companies, Journal of Business Ethics, vol. 83, no. 4, pp. 685–701.
Chen, J.C., Patten, D. M., Roberts, R. W.: 2008, Corporate Charitable Contributions: A Corporate Social
Performance or Legitimacy Strategy?, Journal of Business Ethics, vol. 82, no. 1, pp. 131-44.
Cho, C. H., Patten, D. M.: 2007, “The role of environmental disclosures as tools of legitimacy: A research
note. “Accounting, Organizations and Society, vol. 32(7-8): 639-647.
Cho, C.: 2009, “Legitimation Strategies Used in Response to Environmental Disaster: A French Case
Study of Total S.A.’s Erika and AZF Incidents”, European Accounting Review, Vol. 18, no. 1, p. 33-62.
Clarke, J., Gibson-Sweet, M.: 1999, ‘The Use of Corporate Social Disclosures in the Management of
Reputation and Legitimacy: A Cross Sectoral Analysis of UK Top 100 Companies’, Business Ethics: A
European Review 8(1), pp. 5–13.
Cohen, B. D., Dean, T. J.: 2005, “Information Asymmetry and Investor Valuation of IPOs: Top
Management Team Legitimacy as a Capital Market Signal”, Strategic Management Journal, Vol. 26, no.
7, pp. 683-690.
Cuervo-Cazurra, A.: 2008, ‘Better the devil you don’t know: Type of corruption and FDI in transition
economies’. Journal of International Management, 14 (1): 12-27.
Day, R. and Woodward, T.: 2004, “Disclosure of information about employees in the directors” report of
UK published financial statements: substantive or symbolic?”, Accounting Forum, Vol. 28, pp. 43-59.
Deegan, C., Gordon, B.: 1996, “A Study of The Environmental Disclosure Practices of Australian
Corporations”, Accounting and Business Research, Vol. 26, No. 3, Summer, pp. 187 - 199.
27
Deegan, C.: 2002, “Introduction: The legitimising effect of social and environmental disclosures – a
theoretical foundation”, Accounting, Auditing & Accountability Journal, Vol. 15, No. 3, pp. 282 – 311.
Deephouse, D. L., Suchman, M.: 2008, “Legitimacy in Organization Institutionalism” in The SAGE
Handbook of Organizational Institutionalism, Edited by Royston Greenwood, Christine Oliver, Kerstin
Sahlin and Roy Suddaby, Sage Publications.
DiMaggio, Paul J., and Powell W. W.: 1991, “Introduction.” Pp. 1-38 in The New Institutionalism in
Organization Analysis, Walter W. Powell and Paul J. DiMaggio, eds. Chicago: University of Chicago
Press.
Dowling, J. B., Pfeffer, J.: 1975, Organizational legitimacy: Social values and organizational behavior.
Pacific Sociological Review, 18(1), 122-136.
Durand, R., McGuire, J.: 2005, “Legitimating Agencies in the Face of Selection: The Case of AACSB”,
Organization Studies, Vol. 2, no. 2, pp. 165-196.
Geppert, M.: 2003, "Sensemaking and politics in MNCs: a comparative analysis of vocabularies within
the global manufacturing discourse in one industrial sector", Journal of Management Inquiry, Vol.12,
No.4, pp. 312-329.
Hopwood, A.G.: 2009, Accounting and the environment. Accounting, Organizations and Society, vol.
34(3-4), pp. 433-439.
Hoffman, A., Ocasio, W.: 2001, Not all events are attended equally: Toward a middle-range theory of
industry attention to external events. Organization Science, vol. 12, pp. 415–434.
Key, S., and Popkin, S.: 1998, Integrating ethics into the strategic management process: Doing well by
doing good. Management Decision, 6(5), 331—338.
Kostova, T., Zaheer, S.: 1999, “Organizational legitimacy under conditions of complexity: The case of the
multinational enterprise”, Academy of Management Review, vol. 24, pp. 64-81.
Lamertz K, Baum J.: 1998, The legitimacy of organizational downsizing in Canada: an analysis of
explanatory media accounts. Canadian Journal of Administrative Sciences 15: 93–107.
Li, S.: 2005, "Why a poor governance environment does not deter foreign direct investment: The case of
China and its implications for investment protection." Business Horizons 48: 297-302.
Macintosh, N., T. Shearer, D. Thornton, and Welker, M.: 2000, Accounting as Simulacra and
Hyperreality: Perspectives on Income and Capital. Accounting, Organizations and Society, vol. 25, no. 1,
pp. 13-50.
Macintosh, N.: 2002, Accounting, Accountants and Accountability: Poststructuralist Positions. London,
UK: Routledge.
Matten, D., Crane, A.: 2005, “Corporate Citizenship. Toward an extended theoretical conceptualization”,
Academy of Management Review, vol. 30, no. 1, pp. 166-179.
28
Mccombs, M.: 2004, Setting the Agenda: The mass media and public opinion. Malden, MA, Blackwell
Publishing Inc.
McWilliams, A., Siegel, D. S., and Wright, P. M.: 2006, Corporate social responsibility: Strategic
implications. Journal of Management Studies, 43(1), 1-18.
Meyer, J. W., Rowan, B.: 1977, Institutionalized organizations: Formal structure as myth and ceremony.
American Journal of Sociology, 83, 340-363.
Neu, D., H. Warsame and Pedwell, K.:1998, ‘Managing Public Impressions: Environmental Disclosures
in Annual Reports’, Accounting, Organizations and Society, 23(3), pp. 265–282.
O’Donovan, G.: 2002, Environmental disclosures in the annual report: Extending the applicability and
predictive power of legitimacy theory, Accounting, Auditing and Accountability Journal 15(3), pp. 344371.
Ogden, S., Clarke, J.: 2005, “Customer disclosures, impression management and the construction of
legitimacy; Corporate reports in the UK privatized water industry”, Accounting, Auditing and
Accountability Journal, vol. 18, no. 3, pp. 313-344.
Ogden, S., Watson, R.: 1999, Corporate Performance and Stakeholder Management: Balancing
Shareholder and Customer Interests in the U.K. Privatized Water Industry, Academy of Management
journal, Vol. 42, No. 5, pp. 526-538.
O’Relley, E.: 2006, “Privatization and some economic and social consequences: Higher incomes, greater
inequalities”, The Social Science Journal, vol. 43, no. 3.
Patten, D.M.: 1992, ‘‘Intra-industry environmental disclosures in response to the Alaskan oil spill: a note
on legitimacy theory’’, Accounting, Organizations and Society, Vol. 17 No. 5, pp. 471-5.
Patten, D.M. and Nance, J.R.: 1998, ‘‘Regulatory cost effects in a good news environment: the intraindustry reaction to the Alaskan oil spill’’, Journal of Accounting and Public Policy, Vol. 17, pp. 409-29.
Patten, D.: 2002, The relation between environmental performance and environmental disclosure: A
research note. Accounting, Organizations, and Society, 27, 763–773.
Pfeffer, J. and Salancik, C.: 1978, The External Control of Organizations: A Resource Dependence
Perspective. New York: Harper and Row.
Pollock, T. G. and Rindova, V. P.: 2003, Media legitimation effects in the market for initial public
offerings. Academy of Management Journal 46(5): 631–642.
Puntillo, R.: 1996, “Mass Privatization in Poland and Russia: The case of the tortoise and the hare?”,
Journal of Emerging Markets, 1,1:7-28.
Rindova, V. P., T. G. Pollock, Hayward, M. L. A.: 2006, ‘Celebrity Firms: The Social Construction of
Market Popularity’, Academy of Management Review, 31(1), 50-71.
29
Singh, J., Tucker, D., and House, R.: 1986, Organizational Legitimacy and the Liability of Newness.
Administrative Science Quarterly, 31, 171-193.
Sine, W.D., David, R.J., and Mitsuhashi, H.: 2007, “From plan to plant: Effects of certification processes
on the likelihood of entrepreneurs reaching operational startup”. Organization Science 18: 578–594.
Stanton, P., Stanton, J.: 2002, “Corporate annual reports: Research perspectives used”, Accounting,
Auditing and Accountability Journal, vol. 15, no. 4, pp.478 – 500.
Suchman, M. C.: 1995, Managing Legitimacy: Strategic and Institutional Approaches. Academy of
Management Review, 20(3): 571-610.
Suddaby, R., Greenwood, R.: 2005, “Rhetorical Strategies of Legitimacy”, Administrative Science
Quarterly, Vol. 50, Issue 1, pp. 35-67.
Van Staden, C., Hooks, J.: 2007, “A comprehensive comparison of corporate environmental reporting and
responsiveness”, The British Accounting Review, vol. 39, no. 3, pp. 197-210.
30