This report will identify a crisis facing BP company, the Gulf of Mexico spill, and investigate how the organization response to the society. In this report, it will use Legitimacy theory to explain BP’s response to this event. Legitimacy theory can be treated as a explanation for voluntary corporate disclosures in annual report. As (Dowling&Pfeffer, 1975) says a corporation must act in congruence with norms and society value.
First of all, Legitimacy theory is based on the concept of substantive rationality and replies upon the notion of a social contract. This theory asserts that organizations seek to ensure that they operate within the bounds and norms of their ...view middle of the document...
Annual report will inform people how the organization performs and some options in the future development (Economic Times). Full information offered by annual report will give opportunity to deal perceptions of stakeholders. Chairman’s words summary the whole situation of organization. Moreover, the financing situation also can reflect the operations well or not under the influence of oil spill. It is certainly that there are some notes or graphs which can explain why it is and how it can be got.
In 2010, 2011 and 2012’s annual report, the Gulf of Mexico oil spill is written by using many pages. BP wants to make full use of annual report to promote impression management. Besides it, some one likes official announcements are also needed. Organization may list some new problems or measures about this event.
In the whole report, it will discuss different aspects about BP Company according to the annual report. It also can reflect whether BP is fit for the legitimacy theory or not. There are three categories will be discussed to analyze the corporate legitimacy which are text length, impression management and strategy.
Text length: In different years annual reports, the amount of pages are also different because of the Gulf of Mexico oil spill. In 2009, the annual report had 212pages, and then in next 2010 and 2011, the amounts of pages are much more than 2009 which are 272 and 282 respectively. In 2010 annual report, it related Gulf of Mexico oil spill at 34-40 pages. The key statistics and details things will be shown as (Appendix 1). In 2011 annual report, BP listed its efforts for compensation and environment protection (Table 1). So it is clear that BP disclosures its environmental norms and legitimacy to society.
BP EFFORTS IN 2011 |
“…Continuing the clean-up of the waters and shorelines impacted acrossThe Gulf of Mexico and the ongoing protection of fish and wildlife…” |
“…Supporting the economic restoration of impacted sectors of the GulfCoast economy through targeted support to the tourism and seafoodIndustries…” |
“…Continuing the funding of the $20-billion Deepwater Horizon Oil SpillTrust…” |
Sources from: 2011 annual report
Impression management: According to Sinha (2009), impression management is an active self-presentation to enhance its image. It has power to create a positive role of company, but also can break it. BP has made a bad effort on its reputation, thus it does not get out of trouble and republic in annual report for the responsibility. Only this it can be estimated legitimacy and restore reputation.
“…BP immediately took responsibility for responding to the incident, taking steps to remedy the harm that the spill caused to the Gulf of Mexico, the Gulf coast environment, and the livelihoods of the people in the region…”.(2010 annual report)
Strategy: To ensure the social legitimacy, BP decided to change investment strategy. BP suspends the Liberty item in...