Legitimacy is a central concept within organization studies and it is widely accepted that being granted legitimacy is crucial for organizations in today’s society. Legitimacy is known to be based on rationality which during the course of research development has come to include not only technical aspects, but also socially constructed factors affected by stakeholder’s personal values. Moreover, it is known that there are multiple dimensions of legitimacy and that organizations are evaluated based on method of operation, output and goals, and vision. These can be judged differently by stakeholders in the same field, arriving at possibly contradictive legitimacy judgements regarding the same organization. However, we are not familiar with if the context in which an organization operates affects the legitimacy judgement made by its stakeholders. This thesis therefore aimed to study how the context an organization operates in can affect the legitimacy judgement with a comparative case study. The study shows that the operational context in itself can be a factor in the evaluation of the organization. It also indicates that different contexts can cause different and contradictive legitimacy judgements among the stakeholders even though the operational task and output is essentially the same.

This study links ethical leadership theory to the implementation of improved leadership practices and examines whether ethical leadership characteristics actually exist, particularly in highly operational environments. The study analyses how ethical leadership can be embedded by process, by applied leadership (role modelling), and by changing culture and climate. The conclusion reveals that all three approaches are needed for an implementation and depend on middle managers, otherwise no organisational transformation is possible. The research design of this qualitative study analyses data from 100 in-depth interviews using inductive categorisation, aiming to retrieve deep, rich and unprompted data from a highly developed and advanced production facility. The ethical leadership characteristics, and evidence specific influences on leadership behaviour, revealing 14 perceived leadership issues resulting in a leadership climate which negatively influences motivation, performance, and corporate culture. These issues were found to be responsible for deteriorating work climate, motivation, morale, and team spirit. Particularly favouritism, inequalities, shouting, blaming, internal competition and unclear strategies ruin motivation, employee health, and co-operation. Concerning the implementation of a better suited leadership culture, a research framework model is developed, integrating transformational change and leadership. Findings document that the influence of middle managers acting as role models seems to be greater than research suggests. Key findings also show that individual leadership development without changing the corporate realities is not sufficient to implement ethical strategies. Neglecting to actively control the leadership climate can have devastating effects even for very successful operations. Considering the pressure of goal attainment in highly operational areas, an absence of unethical behaviour can already be seen as a success for leaders. Finally, a change process sequence for shaping leadership climate was identified. These research results are highly relevant for organisations and leaders wishing to be engaged in improving their leadership quality.