Stakeholder–firm power difference,stakeholders' CSR orientation,and SMEs' environmental performance in China

Although stakeholder power theory has been at the forefront of environmental studies, extant research has focused on stakeholders' power while firms' countering power has not been systematically examined. Furthermore, different stakeholders may prioritize social goals differently. In this paper, we propose that stakeholder–firm power difference determines firms' environmental performance and stakeholders' CSR orientation (i.e., the degree to which a stakeholder holds firms' engagement in CSR as important) moderates this relationship. Utilizing a sample of 144 Chinese small- and medium-sized enterprises (SMEs), we found that governments-, competitors-, and the media-firm power difference indeed significantly affect Chinese SMEs' environmental performance. Besides, governments' and the media's CSR orientation moderate the relationship between stakeholder–firm power difference and firms' environmental performance. Research and practical implications are discussed.     

Where does ESG pay? The role of national culture in moderating the relationship between ESG performance and financial performance

This study investigates the moderating role of a country’s culture as an external contingency factor in the relationship between a firm’s environmental, social, and governance (ESG) performance and financial performance. Using ESG performance data of 4978 firms from 48 countries for 17 years, we argue that the financial return from engaging in ESG varies depending on the countries’ cultural aspects because stakeholder evaluations and appreciations for a firm’s ESG performance differ across nations. We find that a country that espouses a culture of high individualism or masculinity tends to appreciate and reflect on this more explicitly, strengthening the relationship between a firm’s ESG performance and financial performance. Contrastingly, in a country with a culture of high power distance or uncertainty avoidance, firms’ ESG efforts are less likely to be associated with financial performance. Our findings have important implications for multinational enterprises facing various cultural environments when dealing with heterogeneous stakeholder demands across countries.     

Capabilities, Proactive CSR and Financial Performance in SMEs: Empirical Evidence from an Australian Manufacturing Industry Sector

Proactive corporate social responsibility (CSR) involves business strategies and practices adopted voluntarily by firms that go beyond regulatory requirements in order to manage their social responsibilities, and thereby contribute broadly and positively to society. Proactive CSR has been less researched in small and medium enterprises (SMEs) compared to large firms; and, whether SMEs are ideally placed to gain competitive advantage through such activity therefore remains a point of debate. This study examines empirically the association between three specified capabilities (shared vision, stakeholder management and strategic proactivity), proactive CSR and financial performance in SMEs. Using quantitative data collected from a sample of 171 SMEs in the machinery and equipment sector of the Australian manufacturing industry, we find that all specified capabilities are positively associated with adoption of proactive CSR by SMEs, and that proactive CSR is, in turn, associated with an improvement in firm financial performance. Evidence of a fully mediating role for proactive CSR on the association between capabilities and financial performance presented in this study aligns with RBV theory that suggests adoption of value-creating strategies that make the most effective use of a firm’s capabilities is essential to financial success. The study contributes to the CSR literature by demonstrating a case for SMEs being able to maximise financial returns whilst proactively making progress towards CSR.     

The Heterogeneous Impact of Corporate Social Responsibility Activities That Target Different Stakeholders

We aggregate different dimensions of corporate social responsibility (CSR) activities following the stakeholder framework proposed in Clarkson (Acad Manag Rev 20(1), 92–117, 1995) and present consistent evidence that CSR strengths targeting different stakeholders have their unique impact on firm risk and financial performance. Institutional CSR activities that target secondary stakeholders are negatively associated with firm risk, measured by total risk and systematic risk. Technical CSR that target primary stakeholders are positively associated with firm financial performance, measured by Tobin’s Q, ROA, and cash flow returns. Our results, based on a sample of S&P 500 component firms over the period of 1995–2009, are consistent with the risk management view of “altruistic” CSR activities and with the stakeholder salience theory. We also show that the impact of CSR activities on risk varies with the ethical climate, as proved in our subsample analyses on pre- and post-Sarbanes–Oxley periods. Our empirical analyses mitigate possible omitted variables and endogeneity concerns that are often overlooked in previous research. Our findings are robust to alternative CSR measures, to alternative risk and performance measures, and to alternative estimation methods.     

Competitive Dynamics among Service SMEs

In an effort to further our understanding of competitive dynamics, the three constructs of firm specialization, environmental munificence, and rivalry intensity are examined in relation to financial performance in service-intensive Small and Medium-Sized Enterprises (SMEs). Using a sample of physician organizations, direct and interaction relationships are empirically examined using multivariate regression analyses. Findings confirm a three-way interaction that exists among these factors in relationship to overall performance; this supports a more complex, configurations approach to competitive dynamics research, particularly among service-intensive SMEs.     

Internationalization and firm performance of SMEs: The moderating effects of CEO attributes

This paper examines the impact of CEO attributes on the internationalization–performance relationships of SMEs. Based on the upper echelons and information processing theories, we argue that CEOs play an important role in the internationalization of SMEs. Furthermore, some of the attributes of CEOs who have a greater information processing capability have positive moderating effects on the internationalization–performance relationship. Using panel data of 187 Taiwanese SMEs that expanded abroad, we find that age, educational level, international experience, and duality of the CEO have moderating effects on the relationship between internationalization and firm performance.     

Corporate environmentalism pursuit by foreign firms competing in China

This study examines the relationships among environmental orientation, environmental strategy, firm performance, and regulatory stakeholder influence. Survey data collected from foreign invested enterprises (FIEs) in China show that while internal environmental orientation positively influences environmental corporate (but not marketing) strategies, external environmental orientation positively influences both. These two types of environmental strategy are, in turn, found to positively affect firm performance. Regulatory stakeholder influence is found to exert a direct effect on external environmental orientation. Moreover, it is found to positively moderate the relationship between environmental orientation and environmental strategy. These findings provide FIE executives with useful insights into enhancing firm performance through the pursuit of corporate environmentalism.     

Competitor orientation in successful SMEs: an exploration of the impact on innovation

The impact of market orientation on organisational performance has been the subject of many studies illustrating variance with firm size. Although small- to medium-sized enterprises (SMEs) are inherently customer-oriented, research has identified that they have significantly lower levels of competitor orientation than large firms and that competitor orientation is significantly related to organisational performance. In addition, studies have illustrated that SME success is linked to innovative problem solving, new product development and resource optimisation. SMEs are inherently innovative in how they adopt creative approaches to overcome constraints associated with their size. Given that SMEs often neglect to focus on competitors, this study explores the relationship between competitor orientation and organisational performance through an innovation lens. This study uses a qualitative research approach to investigate seven successful SMEs as case studies. The findings indicate that SMEs seeking optimal organisational performance should pay close attention to direct and indirect competitors in order to identify opportunities and build sustainable competitive businesses.     

Analyst coverage,corporate social responsibility,and firm risk

This article examines the empirical association between analyst coverage and corporate social responsibility (CSR) by investigating their simultaneous and causal effects, and its joint effects of CSR engagement and analyst coverage on firm risk. We find a positive association between the level and change of CSR engagement and the level and change of analyst coverage after considering simultaneity and causality. Based on the first‐difference approach, we further find that the change in analyst following from the previous year affects the change in CSR in the current period, whereas the change in CSR from the previous period does not influence the change in analyst following in the current period. Furthermore, we find that the change in CSR engagement as well as the interaction effect of changes in CSR and analyst coverage reduces the change of firm risk. When we examine the CSR strengths and concerns separately, analyst following does not significantly influence firms’ CSR strength but CSR concern activities decreases significantly as firms have more analyst followings. We further find the mediating role of financial analysts between CSR concerns (but not CSR strengths) and firm risk. We maintain that analysts provide indirect but additional social pressure to the firms to eventually reduce their irresponsible activities. Taken together, we interpret these results to support the stakeholder theory‐based conflict‐resolution explanation that considers CSR engagement as a vehicle to reduce conflicts of interest between managers and noninvesting stakeholders but not the overinvestment hypothesis that views CSR as a waste of valuable resources at the cost of shareholders.     

Proactive CSR: An Empirical Analysis of the Role of its Economic, Social and Environmental Dimensions on the Association between Capabilities and Performance

Proactive corporate social responsibility (CSR) involves business practices adopted voluntarily by firms that go beyond regulatory requirements in order to actively support sustainable economic, social and environmental development, and thereby contribute broadly and positively to society. This empirical study examines the role of the economic, social and environmental dimensions of proactive CSR on the association between three specific capabilities—shared vision, stakeholder management and strategic proactivity—and financial performance in small and medium enterprises (SMEs). Using quantitative data collected from a sample of 171 Australian SMEs in the machinery and equipment manufacturing sector and employing structural equation modelling, we find that the adoption of practices in each CSR dimension by SMEs is influenced slightly differently by each capability, and affects financial performance differentially. The study also demonstrates the importance of the interaction between the three dimensions of proactive CSR in positively moderating the deployment of each individual CSR dimension to generate financial performance. Paying primary attention to the economic dimension of proactive CSR and selectively focusing on social and environmental elements of proactive CSR that drive and support the economic dimension are of key importance to sustainable long-term financial success for SMEs.     

Market Orientation and Performance Measurement System Adoption Impact on Performance in SMEs

Previous research has shown a connection between market orientation (MO) and firm performance, as well as between performance measurement systems (PMS) adoption, but their mutual interactions are as yet little understood in small and medium‐sized enterprises (SMEs). Using empirical data collected by a survey from 123 Finnish SMEs, we analyze the relationship between MO, PMS adoption, and performance. According to the results, MO has positive relationships with PMS adoption and nonfinancial performance. However, the impact of MO on financial performance is mediated by PMS adoption. PMS adoption is thus an important factor in explaining variance in firm performance. Finally, empirical analysis shows that the larger SME firms adopt PMS more extensively.     

Environmental strategy and exports in medium,small and micro-enterprises

Growing corporate internationalization and the emergence of environmental concerns are two of the main trends in the business world. This paper analyzes whether strategies for environmental protection can help small and medium enterprises (SMEs) as they internationalize their activities through exports. Personal interviews were conducted with 123 general managers of exporting SMEs from the Spanish food industry. The results show a relationship between advanced environmental strategies and export intensity for the sampled firms. However, the size of firm plays a role in this relationship, as the relationship between advanced environmental strategies and exports is stronger with an increase in the size of the SMEs. Authors discuss implications of these results for practitioners and future research.     

Social Performance and Firm Risk: Impact of the Financial Crisis

This paper examines the impact of the recent financial crisis (2008–2009) on the relation between a firm’s risk and social performance (SP) using a sample of non-financial U.S. firms covering the period 1991–2012. We find that the relation between SP and risk is significantly different in the crisis period (post-crisis period) compared to the pre-crisis period. SP reduces volatility during the financial crisis. The risk reduction potential of SP is mainly due to the strengths component of SP. Since the relation of risk is stronger with SP strengths than SP concerns, this implies an asymmetric relation between these SP components and a firm’s risk. Specifically, strengths act as a risk reduction tool during an adverse economic environment.     

Marketing capabilities, stakeholders’ satisfaction, and performance

This study shows that the relationship between marketing capabilities and firm financial performance can be better understood when it is drawn using stakeholder satisfaction as an additional variable, in the context of the service industry. Results from 152 Spanish service organizations indicate that superior marketing capabilities lead to higher levels of stakeholder satisfaction, which consequently improves financial firm performance. Results complement previous research which found a strong relationship between marketing capabilities and performance when the latter includes financial and nonfinancial indicators. Marketing capabilities improve not only customer satisfaction but also employee fulfillment which, in turn, may increase financial indicators.     

Losses from Failure of Stakeholder Sensitive Processes: Financial Consequences for Large US Companies from Breakdowns in Product,Environmental, and Accounting Standards

This article makes first use of a set of databases that are authoritative, independent, and consistent to examine an old research question: do firms hurt their financial performance by damaging stakeholder interests? The databases are US government on-line listings of fines for environmental breaches, unsafe workplaces, fraudulent accounting standards, and product recalls. These measures are assumed to proxy for signals to stakeholders of the environmental, social, and governance (ESG) risks in transacting with the firm and appear to have fewer biases than conventional measures of stakeholder standards. Using a sample of all non-financial S&;P 500 firms during the most recent 1998–2003 full cycle in the market, after controlling for firm-specific differences, sales margins of firms fell by 0.8% if they announced a product recall and by 0.4% if cited by OSHA for an unsafe workplace; and shareholder return was significantly reduced by an EPA or SEC prosecution. This study links the risk of transaction uncertainty, information signaling theory, and the resource-based view of the firm to company financial performance. Results support the normative assumption that a firm’s sales margin will be damaged by unethical treatment of stakeholders as evidenced by ESG breaches, presumably because risk-averse customers and suppliers are alert to signals of counterparty risk.     

Internet resources and capabilities: Japanese SME risk-taking,industry and performance

This study investigates how Internet-related resources and capabilities are influencing performance in Japanese small- and medium-sized enterprises (SMEs). We use a structural equation modelling approach to test these relationships between Internet readiness, Internet capability, risk-taking perceptions and performance within Japanese SMEs (350 SMEs). Unlike other counterpart countries, such as South Korea, Japanese SMEs have been relatively slow in implementing Internet technologies into business practice. However, the results indicate that if Japanese SMEs allocate appropriate resources and deploy Internet capabilities these firms will benefit with performance gains. Further, we find that both the perception of risk-taking and the industry in which the firm operates are key factors in either inhibiting or enhancing the firm’s ability to leverage Internet-related capabilities for firm performance.     

Proactiveness,legitimation via ISO certification and the growth of SMEs in China

According to the literature on entrepreneurial orientation (EO), proactive firms are more likely to achieve first-mover advantage and higher performance. The neoinstitutionalism, however, suggests that enterprises with more legitimacy will acquire more growth opportunities. Usually, the first mover might face more legitimacy obstacles. To date, there has been little research on how proactive firms cope with legitimacy constraints and achieve firm growth. Integrating the legitimacy perspective and the EO literature, this research examines the roles of ISO certification as a strategy for seeking legitimacy of small and medium-sized enterprises (SMEs) in emerging economies, and the relationship between proactiveness and firm performance. In particular, it hypothesizes that ISO certification has a mediating effect on the relationship between proactiveness and firm growth. We test the hypothesis using a sample of 632 firms collected from a nationwide survey on SMEs conducted by the Chinese SME Association. The results reveal that ISO certification partially mediates the relationship between proactiveness and firm growth, suggesting that proactive firms tend to use legitimation via ISO certification to enhance firm growth. Our paper contributes to the literature by shedding light on the important relationship between seeking legitimacy, entrepreneurial orientation and firm growth in SMEs in an emerging economy.     

Strategic agility of SMEs in emerging economies: Antecedents,consequences and boundary conditions

This study investigates the effects of firm-level capabilities, and their relationships with strategic agility and the international performance of small and medium-sized enterprises (SMEs). Using time-lagged data from 233 internationalizing SMEs from Ghana, we test the direct relationships between SMEs’ capabilities and strategic agility. Additionally, we examine the indirect relationships between technological and networking capabilities and superior performance in international markets through the mediating mechanism of strategic agility. We also investigate the moderating effects of environmental dynamism and internationalization knowledge on the relationship between strategic agility and international performance. Our findings provide a nuanced view of the relationship between the firm-level capabilities, strategic agility and SMEs’ international performance.     

Paradox strategic cognition and ECSR in China: a three-tripod perspective

Literature rooted in institutional theory and stakeholder theory offers conflicting views on the relationship between environmental corporate social responsibility (ECSR) and financial performance. However, both failed to explain why firms interpret this relationship variously which is subjective to a firm’s strategic cognition. How firms interpret this relationship affects the ECSR decision and implementation. Drawing on the paradox theory, four hypotheses were proposed and examined using data from 170 manufacturing firms in China. This study found paradox strategic cognition positively affects ECSR. Legal enforcement inefficiency, competitive intensity and industrial power weaken the effect of paradox strategic cognition on ECSR.     

Competitor identification,perceived environmental uncertainty,and firm performance

To create a competitive advantage and generate superior performance, firms must first identify rivals. However, there is little understanding of how perceived environmental uncertainty affects competitor identification, why some firms are better at identifying domestic versus foreign rivals, or how competitor identification is related to firm performance. In this paper we theorize that perceived environmental uncertainty is an important antecedent of competitor identification; it influences how many competitors a firm identifies. Our theory also suggests that different firm characteristics influence domestic/foreign competitor identification and that there is an inverted‐U shaped relationship between under/overidentification of competitors and firm performance. Based on a large sample of Taiwanese firms, we find support for each of these ideas. Our study helps reinforce the importance of competitor identification for firm success. Copyright © 2015 ASAC. Published by John Wiley & Sons, Ltd.