Normative Legitimacy Normative legitimacy is based on an organization following the institutionalized laws and regulations that have been put in place. These are not necessarily based on government regulations, but can also be based on entities such as trade associations. Therefore the institutions that create these rules do not have to have legal power (like trade associations). However, organizations follow these rules because they are valued by society, and society views organizations that follow the rules as legitimate. The organization decides whether to adhere to the rules through a cost-benefit analysis, seeing whether the lost opportunity and costs imposed by following these rules are outweighed by the benefit of being seen as legitimate or whether they are less than the cost of a potential legal fine. By following the rules the organization obtains society's approval and support, as it acts in congruence with society's values. Since laws and regulations are considered legitimate, compliance with them creates legitimacy for the organization. The rules are followed by most organizations as this reduces uncertainty for them, as they know that other organizations are also following them and therefore know what actions to expect from them. It makes organizations appear rational, since they follow rules that people believe to be rational, since they reflect society's values ​​and opinions. Therefore they settle for a stable and predictable environment in exchange for the possibility of gaining a competitive advantage that could result from failure to follow the rules. Rules are also followed because of the legal and social repercussions that occur when organizations do not follow them, such as potential boycotts of the organization and fines imposed by g...... middle of paper ......Ezra W Zuckerman. “The Categorical Imperative: Securities Analysts and Illegitimate Discounting.” American Journal of Sociology, see 104 (1999), pp. 1398-1438. Freeland, Robert F. “Regulatory Legitimacy.” University of Wisconsin-Madison. Conference.Hargadon, A. and Douglas, Y. 2001. “When Innovations Meet Institutions: Edison and the Design of Electric Light.” Administrative Science Quarterly 46: 476-501. James G. March. “Follow the rules [and logic of appropriateness]”. Chapter 2 in A Primer on Decision Making. New York: Free Press, pp. 57-76 and 100-102, 1994. Joan Acker. “Hierarchies, Jobs, Organisms: A Theory of Gender Organizations.” Gender and Society, see 4 (1990), pp. 139-158. John Meyer and Brian Rowan, “Institutionalized Organizations: Formal Structure as Myth and Ceremony,” American Journal of Sociology, v. 83 (1977), pp. 340-363.