This study examined the voluntary compliance of corporations to societal pressures exerted by one type of stakeholder--shareholders. Specifically, from an organizational legitimacy perspective, the study investigated corporate responses to societal expectations voiced in shareholder resolutions--a formal mechanism for social shareholder activism. The study consisted of three empirical studies. First, using a large dataset, Study 1 analyzed shareholder resolutions filed by institutional shareholders at U.S. publicly traded corporations between 1997 and 2011. Second, in Study 2, grounded in the concept of organizational legitimacy, two theoretical models were developed and tested to explain and predict corporate responses to societal expectations of shareholders voiced in the resolutions. Finally, Study 3 examined a case study that explored the implementation of proposed changes by one corporation as a response to a withdrawn social shareholder resolution.

At an issue level, the study found that institutional shareholder activists primarily addressed environmental issues in the social resolutions. Shareholder demands for increased communication on the corporate social responsibility issues were prevalent in the withdrawn social resolutions. At a sponsor-level, the study found that, one institutional type of shareholder activists--public pension funds--had the most leverage in inducing withdrawal agreements as well as in imposing changes in target corporations. At a corporate-level, the study found that corporate environmental commitment was a strong predictor of the probability of reaching withdrawal agreements with sponsoring shareholders and achieving a high implementation level of a social resolution after the withdrawal agreements. In addition, industry classification of a target corporation was found to be a predictor of the implementation level of a proposed change. Further, the case study showed that, after the withdrawal of a social resolution that asked the target corporation to issue a sustainability report on company responses to the climate change issue, the target corporation indeed implemented a series of structural, procedural, and communication-based changes to conform to the societal demands of social shareholder activists.

The study suggested that organizational legitimacy offers a useful theoretical lens through which organizational conformity to societal expectations and norms can be explained in today's complex society. By applying the concept of organizational legitimacy to a unique setting of social shareholder activism, the study proved the value of the concept for future research in public relations.