The corporation and the community: Credibility, legitimacy, and imposed risk


  • Isadore Rosenthal

    1. The Risk Management and Decision Process Center of the Wharton School, 1300 SH-DH, The University of Pennsylvania, Philadelphia, PA 19104-6366
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  • Presented at the Los Alamos National Laboratory, April 19, 1991. The author wishes to acknowledge the contributions of his former co-workers at Rohm & Haas. They are too numerous to name individually. Of course the author is solely responsible for any errors in fact or reasoning put forth in this paper.


Large segments of society no longer trust firms or government in regard to pronouncements on what is safe. Because of this distrust, particularly in regard to the chemical industry, the public has questioned many firms right to operate in their community and demanded and obtained increased rights for individuals to intervene directly in decisions by firms that might affect them.

Chemical firms must establish or restore their credibility and social legitimacy in order to maintain their social franchise to operate. At a minimum, this requires an understanding how the firm's stakeholders view the firm's imposition of risks on them and their families and the engagement of these stakeholders in discussions about the firm's products and operations and the risks attendant on its presence in the community. Some chemical firms have formed community advisory councils as a way of accomplishing this rapproachement. However, they have found that a community council may have its own agenda, forcing the firm to provide information and deal with issues it would have preferred to avoid.