The constraining role of the multidimensionality of organisational legitimacy on revenue model innovation in private, commercially funded news media in South Africa

Abstract

Despite organisational legitimacy being considered important for firm performance and enabling enterprises to attract and attain critical resources, it is unclear how its different and sometimes contrasting dimensions affect organisations pursuing revenue model innovation in contexts with competing legitimacy requirements. Using a qualitative approach, this multiple case study sought to answer the question: How do the multidimensionality and adaptability of organisational legitimacy interface with revenue model innovation in commercial news media in South Africa? It focuses on private, commercially funded full-service news organisations. Primary data from four case studies were gathered through semi-structured interviews. Further primary data were collected from participants, comprising regulators and industry experts, to corroborate the case study data. Additionally, secondary data from case studies and industry bodies included regulatory codes, editorial policies, and operating licences. The findings showed that, contrary to current notions of organisational legitimacy being a strategic resource or an asset that is instrumental for organisational growth and survival, its multidimensionality constrained how organisations pursued revenue model innovation, owing to diverse stakeholder requirements and competing legitimacy-signalling behaviours. Furthermore, the findings revealed that pragmatic, moral, regulatory, and cognitive legitimacy dimensions proved to be inflexible under conditions said to trigger their adaptability, that is, divestment and intrapreneurship, could not create conditions necessary to enable revenue model innovation. The study contributes to the theoretical foundations of revenue model innovation by fusing insights from the institutional theory and the activity system perspective, showing that revenue model innovation spans boundaries and is dependent on multiple actors with sometimes diverse interests. For managerial practice, the study highlights the need for an organisation-wide systematic approach to revenue model innovation that considers actors, partners, organisation-level and macro-level interdependencies, and moderators, and proposes an activity system-based approach to revenue model innovation for environments with competing stakeholder requirements.