Legitimacy through CSR disclosures? The advantage outweighs the disadvantages

• The developed CSR dilemma model synthesizes direct positive effects and indirect negative effects of CSR on corporate legitimacy.
• Socio-psychological constructs examine how CSR information is processed and evaluated.
• Structural Equation Modeling (SEM) allows to analyze direct and indirect effects of CSR on legitimacy in one model.
• Corporate legitimacy is measured by a new scale.
• The results show that CSR communication has a positive effect on corporate legitimacy despite stakeholder skepticism.

On the one hand, CSR is regarded as a means to strengthen legitimacy; on the other hand, stakeholders might become skeptical and distrust CSR disclosures. We develop a model by assuming that CSR disclosures both directly increase and indirectly decrease a company’s legitimacy. The experimental study (N = 233) tests this CSR dilemma model by using three CSR disclosures of a commodity trading company as the stimuli, ranging from low to high communicated CSR engagement. The SEM reveals that the extent of communicated CSR has a positive effect on corporate legitimacy despite a high degree of stakeholder skepticism.