The role of formal institutional agents in building legitimacy: insights from the personal protective equipment industry

Purpose Our paper examines how formal institutional agents influence the legitimacy of companies in a highly regulated industry. We focus on the Brazilian personal protective equipment (PPE) industry because its characteristics are particularly suited to this investigation. Companies are subject to isomorphic pressures imposed by regulatory demands they must comply with for successful market entry, and the institutional environment plays a significant role in shaping organizations’ strategic decision-making. However, customer purchasing decisions are often influenced by price rather than by an organization’s performance in pre-certification testing. Design/methodology/approach We conducted a case study, holding 13 semi-structured interviews with key stakeholders, including PPE manufacturers, their suppliers and customers, representatives from formal institutional agents, industry experts and consultants. Findings Our findings highlight the role of formal institutional agents in creating and implementing the rules of the institutional environment. However, we found that the regulatory framework alone has insufficient credibility to establish legitimacy for PPE manufacturers from the perspective of their consumers. This is in part because of weak regulatory oversight, manifested as the absence of enforcement through post-certification inspections, which is possibly due to mimetic isomorphism. Originality/value Our study contributes to the field of organizational legitimacy by analyzing and offering insights into the role of formal institutional agents in a regulated industry. In the empirical field, it helps organizations to understand how institutions impact customers’ perception of legitimacy in the market, paradoxically, by showing that sometimes the impact is negligible.