COVID-19’s Effect on Citizens’ Legitimacy Perceptions of Business Regulation

Stricter business regulation regarding human rights and environmental misbehavior is a promising approach for a transition to a more just and sustainable economy. A major crisis, such as the COVID-19 pandemic, can strongly affect how individuals form their legitimacy beliefs about this kind of regulation. However, the current literature proposes two opposing effects of crises on the legitimacy beliefs about business regulation. The system justification theory suggests that the pandemic will lead to a decline in the legitimacy perceptions because individuals are highly risk averse and status-quo supporting, when they feel threatened. Conversely, the moral identification theory implies a positive effect of COVID-19 on regulatory legitimacy beliefs because a global problem, such as the COVID-19 pandemic, increases the identification with global humanity and thereby the motivation to help people in distant countries for which stricter business regulation would be most helpful. We conducted four studies to test the effects of the COVID-19 pandemic on citizens’ legitimacy perceptions of stricter business regulation. We differentiate between propriety and validity beliefs based on multilevel legitimacy theory to understand the full spectrum of legitimacy beliefs. Consistent with the system justification theory, we find that the propriety beliefs declined during the pandemic. However, the pandemic had a positive effect on validity beliefs. The bias blind spot effect explains the divergence of the validity beliefs from propriety beliefs. Our findings contribute to a better understanding of the change of legitimacy beliefs, which consist of propriety and validity beliefs, during a crisis. We contribute to the theory of legitimacy as perception, system justification, and citizens’ support for a more sustainable future.