A frequent paradigm used to explain social and environmental disclosure is legitimacy theory. The social contract between a company and the community is discussed in the legitimacy theory. The central claim of legitimacy theory is that if an organisation operates within the bounds of societal norms, it may exist. The company voluntarily exposes its social and environmental facts to uphold its credibility in society and foster a positive view of its commitment to social responsibility. Some research explains social and environmental disclosure using the legitimacy paradigm. If there is a disconnect between the firm and society, the firm's legitimacy will be in jeopardy. A move is taken by an organisation to close the "hole" in the value gap between the enterprise and society. For the company to be well-regarded, society must be a part of it. The tension between the company and society should hopefully be lessened by strong legitimacy. Threats to legitimacy can be handled ...
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