Activism for Corporate Responsibility: Conceptualizing Private Regulation Opportunity Structures

In this article, we examine how private regulatory initiatives (PRIs) – which define standards for corporate responsibility (CR) issues and sometimes monitor their application by firms – create opportunities and constraints for activist groups aiming to push firms towards more stringent CR activities. Drawing on social movement theory, we conceptualize how private regulation opportunity structures affect such CR‐based activist groups' targets and tactics at both the firm and field levels. At the field level, we argue that both radical and reformative activist groups direct most of their time and resources towards PRIs with comparatively more stringent standards. At the firm level, while radical activist groups are likely to target firms participating in more stringent PRIs, reformative activist groups target firms participating in less stringent PRIs, or those that do not participate in PRIs at all. When facing unfavourable opportunity structures, CR‐based activist groups tend either to advocate the creation of new PRIs or to shift their activities to pressure other focal points. This article contributes to moving beyond extant literature's emphasis of PRIs as settlements of contentious firm–activist interactions towards also viewing them as starting points for activist groups aiming to push firms towards a more substantive CR engagement.     

Does Reputation Contribute to Reducing Organizational Errors? A Learning Approach

In this study I examine the effect of a firm's reputation for product quality on its effort in learning to reduce its product defect rate. Theoretical ideas on the motivation of learning associated with social aspiration levels and the self-serving bias combined with social categorization suggest that poor quality reputation firms are more likely than their counterparts with a good reputation to attend to potential product defects and consequently reduce their defect rate. However, a stream of research on the motivation of learning stemming from historical aspiration levels and slack search leads to a different argument: a reputation for good quality is more likely to provide firms with a motivation to avoid product defects. I build upon these two competing arguments and hypothesize that stronger motives for learning exist in situations where firms have either a weak or strong reputation for product quality. My study of product recalls in the US automotive industry highlights an inverted U-shaped relationship, indicating the liability of an intermediate reputation in reducing product defects.     

Applying the marketing concept to cultural organisations: an empirical study of the relationship between market orientation and performance

A recent trend in nonprofit organisations is an emphasis on business management and concepts. This paper examines the application of the marketing concept to nonprofit arts organisations through an analysis of the relationship between market orientation and organisational performance. Data were collected from arts organisations in two large Canadian cities, and a structural equations model was developed to test the impact of marketing activities and culture on three performance variables (customer satisfaction, peer reputation and resource attraction). The analysis shows that the model fits the data well and that six hypotheses pertaining to the relationship between market orientation and organisational performance were supported. The study concludes that those organisations that implemented more market‐driven activities into their marketing plans were more likely to develop a market‐oriented internal culture. A market‐oriented culture not only predicted a growth in resources and higher levels of customer satisfaction, but also a growth in reputation among peers. Copyright © 2002 Henry Stewart Publications     

Influences on Sustainable Innovation Adoption: Evidence from Leadership in Energy and Environmental Design

The adoption of innovations associated with environmental sustainability has been a topic of growing interest among scholars. The research presented in this paper draws on Abrahamson's theoretical framework of fads and fashions to argue that dimensions of uncertainty and degree of external versus internal influence provide significant insights into firms' decisions to adopt sustainable building innovations. We develop three hypotheses, reflecting three views of adoption influence: fad, fashion, and efficient‐choice. We find that adoption of Leadership in Energy and Environmental Design (LEED) green building certification in the United States was more likely among firms similarly oriented toward end‐consumers and among firms strategically positioned as environmental leaders. These results provide support for the fad and efficient‐choice views of adoption, respectively. Contrary to expectations suggested by the fashion perspective, adoption was not more likely among firms located in states whose political leaders are more committed to environmental protection. Our findings offer important implications for practitioners and policy makers seeking to encourage sustainable building design. Copyright © 2011 John Wiley & Sons, Ltd and ERP Environment.     

Defensive Practice Adoption in the Face of Organizational Stigma: Impression Management and the Diffusion of Stock Option Expensing

Although most diffusion research focuses on firms adopting new practices to maintain their legitimacy, this paper examines a setting in which firms adopted a controversial practice to defend themselves against challenges relating to corporate deviance. We argue that understanding defensive adoption requires attending to both the dynamics of organizational stigma and impression management, and test our theoretical claims by analysing the diffusion of an accounting practice, stock option expensing (SOPEX), following the Enron scandal. We first provide evidence that the media and shareholder activists transformed the practice into a defensive device by theorizing it as a solution to problems relating to corporate fraud and corporate governance. Using event history analysis, we then show that corporations that became targets of stigma‐inducing threats were more likely to adopt SOPEX and that the media were a key force channelling these threats.     

How Do Environmental Violation Events Harm Corporate Reputation?

This study, based on attribution theory, provides empirical evidence for how environmental violation events (EVEs) damage corporate reputation, using media reputation as a proxy. Hypotheses are developed to address the influences of violating firms’ past environmental behaviors and ownership on the reputational effect of EVEs. The results show that firms with a history of unfavorable behaviors (precedent environmental violation) are deemed by the media to be more culpable for adverse environmental events and consequently suffer more damage to their reputation, while for firms with a favorable environmental record (environmental awards and honors gained) the reputational harm of an EVE is alleviated to some extent. EVEs cause more reputational damage to foreign‐owned enterprises than to domestic‐owned firms. These findings reveal that certain company behaviors could exert an indirect effect on a firm's reputation by influencing public perception of later relevant behaviors, and imply a discriminatory treatment in a host country for foreign‐owned enterprises. Copyright © 2014 John Wiley & Sons, Ltd and ERP Environment     

Sustainability reporting quality and post‐audit financial reporting quality: Empirical evidence from the UK

This study examines whether firms that appear to exhibit high sustainability reporting quality are less likely to engage in earnings management activities, thereby delivering financial information that is more transparent and reliable than that delivered by firms that do not produce high‐quality sustainability reports. I also investigate whether the association between sustainability reporting quality and post‐audit financial reporting quality is conditional on audit effort. Analysis of data drawn from FTSE 350 companies covering 2007 to 2018 indicates that firms that produce high‐quality sustainability reports are significantly and negatively associated with earnings management metrics. More importantly, this association is moderated by audit effort, measured by audit fees, suggesting that sustainability reporting quality reflects factors considered by auditors in their audit risk assessment practices. These results remain robust after several sensitivity analyses. I conclude that firms that devote more resources to producing high‐quality sustainability reports are likely to demonstrate an overall commitment to quality that alleviates auditors' concerns about the opportunistic use of sustainability reporting and reduces business risk, thereby reducing the effort auditors expend to verify financial reports.     

Crossing the Threshold from Founder Management to Professional Management: A Governance Perspective

ABSTRACT We argue that the challenges faced by threshold firms are deeply rooted in governance characteristics (i.e. the incentives, authority and legitimacy) which imbue them with characteristic capabilities, disabilities and path dependencies. Whereas Zahra and Filatotchev (2004 ) reason the principal problem facing threshold firms relates to organizational learning and knowledge management, we posit resource acquisition and utilization to be equally important. Moreover, we argue governance theory is more able than a knowledge‐based perspective to explain the root causes of the learning and resource issues faced by threshold firms as well as the complex set of processes involved in their effective management.     

Camouflaged Indicators of Earnings Management†

Abstract

We argue that, in response to increased scrutiny and greater attention to accruals versus sales, firms become more likely to engage in accrual conversion (AC) cash management aimed at aligning cash and accruals with earnings and sales (e.g. by factoring of receivables). In doing so, they reduce the statistical power of standard indicators of accrual-based earnings management – in effect, camouflaging their earnings management activity. This proposition is of interest because many influential papers on earnings management have utilized accrual-based indicators to reach their conclusions. Our results indicate that firms indeed became more likely to engage in AC cash management after the passage of the Sarbanes-Oxley Act (SOX), and that this tendency was particularly pronounced among firms with strong incentives (or enhanced ability) to perform and hide earnings management. In particular, our findings suggest that the post-SOX decrease in standard measurements of accrual-based earnings management, identified in prior research, is partially attributable to firms’ increased engagement in AC cash management activity.     

Impact of Green Innovation on Labor Productivity and its Determinants: an Analysis of the Korean Manufacturing Industry

Due to worsening environmental conditions around the globe, firms have been investing a great deal of money in green technologies as a way of coping with the environmental crisis. This paper uses a unique data set based on the Korea Innovation Survey to examine the impact of green innovation on labor productivity, and the determinants of environmental activities in 2010. The empirical results show that green innovation intended for both firm and customer benefits has a positive effect on labor productivity. This finding means that firms need to implement firm‐oriented green innovation as well as customer‐oriented green innovation in order to increase their performance. Our findings also show that there are significant differences in aggregate green innovations depending on different firm sizes and industries. Specifically, large firms implement environmental activities more than small ones, and pollution‐intensive industries tend to invest more in activities related to environmental technology. Copyright © 2013 John Wiley & Sons, Ltd and ERP Environment.     

Do Board's Corporate Social Responsibility Strategy and Orientation Influence Environmental Sustainability Disclosure? UK Evidence

The environmental implications of corporate economic activities have led to growing demands for firms and their boards to adopt sustainable strategies and to disseminate more useful information about their activities and impacts on environment. This paper investigates the impact of board's corporate social responsibility (CSR) strategy and orientation on the quantity and quality of environmental sustainability disclosure in UK listed firms. We find that effective board CSR strategy and CSR‐oriented directors have a positive and significant impact on the quality of environmental sustainability disclosure, but not on the quantity. Our findings also suggest that the existence of a CSR committee and issuance of a stand‐alone CSR report are positively and significantly related to environmental sustainability disclosure. When we distinguish between firms with high and low environmental risk, we find that the board CSR/sustainability practices that affect the quantity (quality) of environmental sustainability disclosure appear to be driven more by highly (lowly) environmentally sensitive firms. These results suggest that the board CSR/sustainability practices play an important role in ensuring a firm's legitimacy and accountability towards stakeholders. Our findings shed new light on this under‐researched area and could be of interest to companies, policy‐makers and other stakeholders. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment     

Types and influential factors of consumers' non‐purchasing ecological behaviors

This article presents an examination of non‐purchasing ecological behaviors and their influential factors. The results indicate that consumers who engage in recycling, pro‐environmental post‐purchasing behavior and pro‐environmental activities are highly educated people. Among them, those who are mostly involved in recycling and the non‐energetic, rather traditional, activities are mostly influenced by their positive attitudes towards recycling, as well as by their social responsibility. Those who adopt more energetic, more active, behaviors are mostly influenced by their beliefs that they hold power over politicians and politics. It was also found that those who are engaged in one type of non‐purchasing pro‐environmental behavior are more likely to engage in another type as well. Copyright © 2006 John Wiley & Sons, Ltd and ERP Environment.     

Executive succession as an antecedent to corporate restructuring

One of the most visible adjustments in company strategies in recent years was the dramatic increase in the level of corporate restructuring activity that took place during the 1980s. Strategic decisions that result in the realignment of firms with their environments are likely to be influenced by the composition of the top management team. This study found that firms experiencing non-routine executive succession events within the management team subsequently underwent more restructuring activity than did firms without non-routine executive turnover. These findings suggest that unexpected executive turnovers can significantly alter managerial perspectives within top teams and may thus provide an important mechanism by which firms adapt to their competitive environments. © 1995 by John Wiley & Sons, Inc.     

Top Management Team Advice Seeking and Exploratory Innovation: The Moderating Role of TMT Heterogeneity

Research on strategic decision making has considered advice‐seeking behaviour as an important top management team attribute that influences organizational outcomes. Yet, our understanding about how top management teams utilize advice to modify current strategies and pursue exploratory innovation is still unclear. To uncover the importance of advice seeking, we delineate between external and internal advice seeking and investigate their impact on exploratory innovation. We also argue that top management team heterogeneity moderates the impact of advice seeking on exploratory innovation. Findings indicated that both external and internal advice seeking are important determinants of a firm's exploratory innovation. In addition, we observed that top management team heterogeneity facilitates firms to act upon internal advice by combining different perspectives and developing new products and services. Interestingly, heterogeneous top management teams appeared to be less effective to leverage external advice and pursue exploratory innovation.     

Sustainability‐oriented capabilities for eco‐innovation: Meeting the regulatory,technology, and market demands

Despite consensus in the literature that regulation, technology push, and market pull drive eco‐innovation (EI), evidence remains limited on the diverse firm capabilities needed to boost EI. Building on the natural‐resource‐based view of the firm and the EI literature, this paper posits that firms need to renew and realign their capabilities, and ultimately develop distinctive sustainability‐oriented capabilities, in order to meet the rapidly changing regulatory, technology, and market demands. Results of the analysis, based on a survey of U.K. firms, reveal that EIs are more likely to arise when firms (a) build capabilities on voluntary self‐regulation (i.e., executive driven environmental management system and corporate social responsibility) because such organizational capabilities allow them to address increasing regulatory pressures; (b) invest in environmental research and development (i.e., eco‐R&D)—instead of generic research and development—because it provides them with the relevant and specific technological capabilities to tackle technology shifts towards sustainability; and (c) develop capabilities in green market sensing as such capabilities allow them to address green consumption needs.     

Looking Attractive until You Sell: Earnings Management,Lockup Expiration,and Venture Capitalists

Earnings management occurs when managerial discretion allows managers to influence reported earnings and thus mislead some investors about the underlying economic performance and quality of the firm. This study considers how potential investors may guard against earnings management by observing negative stock price reaction at the lockup expiration period of initial public offering (IPO) firms as a negative signal. Findings from a sample of 160 newly public firms show that earnings management behaviour is stronger in IPO firms backed by venture capitalists (VCs). Moreover, VC reputation negatively moderates this relationship such that IPO firms backed by reputable VCs are less likely to manage earnings, suggesting that reputable VCs serve an auditing function following an IPO. Overall, we provide insights into signalling theory by examining negative signals arising from the behaviour of multiple agents in an IPO firm.     

Power in the Firm and Managerial Career Concerns

More powerful managers make more important decisions. Therefore, firm performance is more informative about the abilities of such managers, who, realizing that they are more visible, are more eager to improve performance. If this reputation effect exists, how should firms allocate power? I analyze the optimal allocation of power and derive implications for several issues that often arise in management practice: the choice of departmentation criteria, the importance given to seniority, and the width of job definitions. Finally, I show that the model is consistent with the empirical evidence on managerial succession.     

Reputation and Corporate Social Responsibility Aberrations,Trends, and Hypocrisy: Reactions to Firm Choices in the Stock Option Backdating Scandal

Drawing on strategic corporate social responsibility (CSR) and reputation theory, this paper examines the market reaction to firm disclosures of involvement in the US stock option backdating scandal. We examine how a firm's prior signals regarding ethical behaviour and values, as demonstrated through CSR initiatives, may both ameliorate and exacerbate market reactions. CSR initiatives may buffer a firm against general wrong‐doing but expose it to greater scrutiny and sanction for related wrong‐doing. Our results show that firms with enhanced overall reputations for CSR are partially buffered from scandal revelations. However, we find that when firms possess an enhanced reputation for CSR associated with corporate governance, violations pertaining specifically to governance are viewed as hypocritical and more harshly sanctioned. We also find lower and negative market reactions for firms that delay but self‐disclose their involvement in the scandal. The study extends the emergent, related literatures on strategic CSR and reputation management, and documents dynamics in the relationship between corporate social and financial performance.     

Corporate motivations for environmental sustainable development: exploring the role of consumers in stakeholder engagement

This paper examines the extent to which the end‐consumer appears to influence corporate behaviour towards reporting specific environmental management activities, through examination of environmental disclosures by the UK FTSE 100 companies. The paper also explores whether proximity to the end‐consumer is associated with particular motivations for environmental management – whether cost‐reducing or reputational benefits, hypothesizing that close‐to‐consumer companies (C2C) will have a greater focus on reputational benefits than their counterparts. The results established that C2C companies were significantly more active in particular environmental measures (climate change and management processes) than their counterparts. They were also more likely to undertake environmental activities for which there was no explicit cost‐reduction benefit, suggesting that reputation with consumers/society may be a particular business motivator for them. These findings are important to policy makers, government and investors in terms of identifying which companies are leading particular aspects of the corporate environmental agenda and understanding the driving forces for it. Copyright © 2009 John Wiley & Sons, Ltd and ERP Environment.     

The effect of NYSE listing on a firm’s media visibility

The most frequently cited reason by corporate managers for switching their firm’s trading location from Nasdaq to the NYSE is to improve visibility. This study examines whether these perceptions about listing are real or illusory and whether firm size affects media visibility. Based on a large sample of firms that listed on the NYSE compared with a matched sample of firms remaining on Nasdaq, the results show that NYSE listing does not lead to gains in media visibility during the period immediately after listing. Over a longer period, small- and medium-sized firms experience significant gains in media visibility compared with large firms. Additional tests show that increased media coverage is attributable much more to the rapid earnings growth before listing than to listing. Therefore, managers erroneously attribute the visibility gains to NYSE listing.