Toward Dynamic Corporate Stakeholder Responsibility

Today, sustainable relations with a broad range of key stakeholders are not only important from a normative business ethics perspective, but also from an entrepreneurial viewpoint to allow and support the long-term survival of a firm. We will argue that the traditional conception of a firm’s corporate social responsibility does not reflect this view and that a comprehensive and dynamic conception of a firm’s responsibilities is necessary to map the reality of business practice and to manage the challenges implied by sustainability. We think that distributive justice, that is the way in which firms involve their stakeholders in their wealth creation and dissemination processes, provides a comprehensive understanding of corporate responsibilities. Concerning procedural justice, we will discuss how firms involve stakeholders in their strategic processes according to their contribution to wealth creation. In the course of the article, we will propose a framework along with three design principles that can be used for shaping dynamic and comprehensive corporate responsibilities, and which thereby allow a sustainable procedure for changing business and non-business environments.     

Stakeholder Management, Reciprocity and Stakeholder Responsibility

Stakeholder theory advocates that firms bear responsibility for the implications of their actions. However, while a firm affects or can affect stakeholders, stakeholders can also affect the corporation. Previous stakeholder theorising has neglected the reciprocal nature of responsibility. The question can be asked whether??in a spirit of reciprocity, loyalty and fairness??stakeholders should treat the corporation in a fair and responsible way. This study based on different definitions of stakeholders argues that various stakeholder attributes differ for different categories of stakeholders. This analysis presumes that the attribute of stakeholder reciprocity can probably be restricted to real stakeholders, labelled stakeowners: genuine stakeholders with a legitimate stake, the loyal partners who strive for mutual benefits. Stakeowners own and deserve a stake in the firm. Stakeholder reciprocity could be an innovative criterion in the corporate governance debate as to who should be accorded representation on the board. Corporate social responsibility should imply corporate stakeholder responsibility.     

The interplay of corporate social responsibility and corporate political activity in emerging markets: The role of strategic flexibility in non‐market strategies

Corporate social responsibility (CSR) and corporate political activities are complementary, and the coordinated management of corporate social responsibility and corporate political activities may lead to better firm performance. However, corporate social responsibility and corporate political activities should be aligned carefully to utilize this complementarity. Strategic flexibility, which is the ability of a firm to adapt to changes in the external environment and make necessary organizational modifications quickly, can help firms to align their corporate social responsibility and corporate political activities. This paper empirically investigates the political dimension and the interactive dimension which describes interactions between corporate social responsibility and corporate political activities together with strategic flexibility and their effects on firm performance through a study of 142 firms in Turkey using moderated multiple regression methods. The results show that, while the political dimension had an inverted U‐shaped effect on firm performance, indicating that only a moderate level of corporate political activities may improve financial performance, the interactive dimension had positive but limited implications for performance. Finally, it was found strategic flexibility plays a positive moderating role on the relationships between the interactive dimension and firm performance. It is concluded that complementarity between corporate social responsibility and corporate political activities which may result in better performance is contingent on strategic flexibility.     

The Impact of Top Mana(g)ement Team Process on Corporate Social Responsibility and Firm Performance

This article aims to explore how top management team (TMT) process affects strategic corporate social responsibility (CSR), and in turn, how strategic CSR influences firm performance. In addition, this article examines whether CSR mediates the relationship between TMT process and firm performance. The sample consists of 203 hotels from the tourism and hospitality industry in the southeast China. TMT processes assessed are communication and cohesion. Results indicate that (1) corporate social responsibility is positively related to firm performance, (2) top management team process (communication and cohesion) is positively related to corporate social responsibility, and (3) corporate social responsibility fully mediates the relationship between top management team process and firm performance. Results highlight upper echelons mechanisms that underpin the TMT process–firm performance relationship. This study contributes to understanding how TMT process affects firm performance both directly and indirectly, through strategic CSR.     

Stakeholder Management Theory, Firm Strategy, and Ambidexterity

Stakeholder theory scholars have recently addressed two crucial calls: the first is for the integration of strategy and ethics, of stakeholder theory and strategic management, and the second call is for the development of a dynamic approach to stakeholder management. I have attempted to answer these calls by developing a theoretical framework that links together stakeholder management, stakeholder commitment to cooperate with the firm, key decision makers?? ethical commitment, and firm strategy. Starting from the basic assumption that managers cannot meet all stakeholders?? demands immediately and in a tailored manner, I contend, first, that an ambidextrous approach to stakeholder management is conducive to stakeholders?? commitment to cooperate for the sustainable well-being of the firm and, second, that firm strategy and key decision makers?? ethical commitment moderate the relationship between an ambidextrous stakeholder management and stakeholder commitment to cooperate. Furthermore, drawing on this theoretical framework, I attempt to address the call for the integration of strategy and ethics by proposing a three-level conceptual model that distinguishes the objectives, the field, and the levers of integration. Finally, I outline a set of propositions that, taken together, represent a first attempt to develop a dynamic approach to stakeholder management.     

Employee Participation in Cause-Related Marketing Strategies: A Study of Management Perceptions from British Consumer Service Industries

The purpose of cause-related marketing (CRM) is to publicise and capitalise on a firm??s corporate social performance (CSP) by enhancing its legitimacy in the eyes of its stakeholders. This study focuses on the firm??s internal stakeholders ?C i.e. its employees ?C and the extent of their involvement in the selection of social campaigns. Whilst the difficulties of managing a firm that has lost or damaged its legitimacy in the eyes of its employees are well known, little is understood about the extent to which managers and their social partners listen to and involve their employees in the legitimation process. Through telephone interviews with non-profit organisations and senior managers of service sector firms, the extent of employee involvement in CRM campaigns and the perceived benefits of doing so are investigated.?Amongst other things, we find that (i) the extent of employee participation varies significantly across firms; (ii) larger CRM campaigns tend to be managed centrally with relatively less employee participation than smaller ones and (iii) financial services firms are more likely to make CRM decisions centrally, with relatively less employee participation than retail services firms.     

Selective Engagement in Corporate Social Responsibility: A Stakeholder Perspective

This paper attempts to understand selective engagement in corporate social responsibility (CSR). CSR involves various issues that can meet demands from multiple stakeholders. A firm can focus on certain CSR issues to satisfy a particular stakeholder while ignoring the demands from other stakeholders, or it can take a more balanced approach to CSR by addressing a wider range of social issues. In this paper, I investigate how stakeholder pressures from three types of primary stakeholders (customer, supplier, and employee) shape selective engagement in CSR. The empirical results based on a representative sample of more than 1,000 small and medium-sized enterprises (SMEs) in the early 2000s suggest that firms prioritize their stakeholders based on instrumental considerations. Those stakeholders who have greater power over the focal firm will exert a larger impact on a firm’s CSR engagement. Constrained by limited managerial resources, firms accord attention to a limited range of issues most relevant to salient stakeholders. Specifically, MNCs as major customers pressure the focal firm to assume more responsibility for product quality, as well as on a wider range of social issues; SOEs as both major customers and major suppliers pressure the focal firm to assume more responsibility for employee welfare; employees with higher education pressure the focal firm to assume more responsibility for employee welfare, and for a wider range of social issues. This study contributes to stakeholder theory and research on the CSR of SMEs, and has important implications for CSR practitioners.     

Towards ��An Intellectual Capital-Based View of the Firm��: Origins and Nature

Economic and social activities are undergoing radical changes, which can be labelled as ??knowledge economy and/or society??. In this sense, intellectual capital (IC), or knowledge assets, as the fourth factor of production, is replacing the other ones ?C job, land and capital. This article tries to offer the origins and nature of the firm??s IC that can be labelled as ??An Intellectual Capital-Based View of the Firm Competition??. This framework tries to highlight the strategic role of different intangible assets like talented and committed workers, cultural values, or long-term relationships among the firm and its stakeholders ?C customers, allies, suppliers and society in general ?C in gaining and sustaining competitive advantages, being the management of IC a key issue in the management agenda.     

Corporate Political Strategy: An Examination of the Relation between Political Expenditures, Environmental Performance, and Environmental Disclosure

Two fundamental business ethics issues that repeatedly surface in the academic literature relate to business’s role in the development of public policy [Suarez, S. L.: 2000, Does Business Learn? (The University of Michigan Press, Ann Arbor, MI); Roberts, R. W. and D. D. Bobek: 2004, Accounting, Organizations and Society 29(5–6), 565–590] and its role in responsibly managing the natural environment [Newton, L.: 2005, Business Ethics and the Natural Environment (Blackwell Publishing, Oxford)]. When studied together, researchers often examine if, and how, corporations influence environmental policy decisions. Drawing from literatures on?corporate political activity, corporate social and environmental performance, and corporate environmental disclosure, we develop and empirically examine two research questions concerning the relations between corporate political expenditures, environmental performance, and environmental disclosure. The questions are: (1) Do corporations that are poorer environmental performers spend more on political activities than their better-performing counterparts? (2) Is there an association between corporations’ spending on political activities and the extent of their financial report environmental disclosures? We investigated these questions through analyses of data we gathered on a sample consisting of 119 U.S. environmentally sensitive firms for the 2001–2002 election cycle. After controlling for firm size and specific industry effects, our tests reveal a significant, inverse relationship between firm environmental performance and political spending. This is consistent with the notion that U.S. firms with relatively poorer environmental performance records engage more intensely in corporate political activities as part of their overall strategic management of their relationship with the state. In addition, a significant and positive association between the amount of political spending and the extent of environmental disclosure suggests that environmental disclosure and political spending are both proactive, complementary tactics to strategically manage public policy pressure. If corporations’ strategies are intentionally designed to unreasonably limit their environmental responsibilities or to misrepresent firm environmental performance, then we argue that these activities reflect a significant lapse in ethical conduct.     

Stakeholder theory: A process-ontological perspective

Advocates of stakeholder theory have long known that grasping its key insights requires a specific worldview that is, unfortunately, still not prevalent within the community of strategic management scholars. We argue that this worldview encompasses a process ontology that is radically different from the substance-ontological outlook typical of the mainstream approaches to strategic management. The unquestioned commitment of strategic management scholarship to a substance ontology leads to the viewing of corporations as macro-entities comprising aggregations of discrete autonomous actors each relying on individual choice and instrumental rationality. In contrast, within a process-ontological worldview, corporations and their stakeholders are seen to be sustained and attenuated through social practices and relationships involving interlocking chains of coping actions taken in everyday interactions. We show that adopting a process-ontological worldview presents a much-needed step that may help strategic management scholars reach a better understanding of how stakeholder theory deals with three problems of today's capitalism, those value creation and trade, ethics of capitalism, and managerial mindsets. On this basis, we discuss how to process ontology may lead stakeholder theory to further refine its understanding of business strategy, corporate social responsibility, and the common ground between the firm and stakeholders.     

Board Attributes,Corporate Social Responsibility Strategy,and Corporate Environmental and Social Performance

In this paper, we draw on insights from theories in the management and corporate governance literature to develop a theoretical model that makes explicit the links between a firm’s corporate social responsibility (CSR) related board attributes, its board CSR strategy, and its environmental and social performance. We then test the model using structural equation modeling approach. We find that the greater the CSR orientation of the board (as measured by the board’s independence, gender diversity, and financial expertise on audit committee), the more proactive and comprehensive the firm’s CSR strategy, and the higher its environmental and social performance. Moreover, we find this link to be endogenous and self-reinforcing, with superior CSR performers tending to further strengthen their board CSR orientation. This result while positive is also suggestive of the widening of the gap between the leads and laggards in CSR. Therefore, the question arises as to how ‘leaders’ are using their superior CSR competencies seen by many scholars as a source of corporate (at times unfair) competitive advantage. Stakeholders of corporations therefore need to be cognizant of this aspect of CSR when evaluating a firm’s CSR activities. Policy makers also need to be cognizant of these concerns when designing regulation in this field.     

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.     

Multiple stakeholders and middle managers: the role of the hotel financial controller

This article explores the key characteristics of the specific stakeholders for one type of middle manager, the hotel financial controller. Eleven semi-structured interviews among financial personnel showed that although some owners require on-going profits and have high expectations of middle managers, others may take a more long-term view and be less demanding. Head offices provide systems and services for the unit, but a lack of efficiency and strategic planning affects the ability of managers to do their job. The middle manager must take a proactive intrapreneurial approach in communicating and implementing corporate strategic decisions within the unit and in managing the multiple stakeholders, but in return requires more guidance, resources and support from senior management.     

Corporate Social Strategy in Multinational Enterprises: Antecedents and Value Creation

In this article, we examine the relationship of the multinational firm’s market environment, stakeholders, resources, and values to the development of strategic social planning and strategic social positioning. Using a sample of multinational enterprises in Mexico, we examine the relationship of these different ways of conducting social strategy to the creation of value by the firm. The market conditions of munificence and dynamism, and the resource for continuous innovation are found to be related to strategic social positioning. The social responsibility orientation of the firm is related to strategic social planning. Positioning is related to value creation for the multinational firm, but planning is not. We discuss the implications of these findings for research and practice. Bryan W. Husted is a professor of management at the Instituto Tecnológico y de Estudios Superiores de Monterrey (Mexico) and Alumni Association Chair of Business Ethics at the Instituto de Empresa (Spain). His research focuses on corporate social and environmental management. His work has appeared in such publications as the Journal of Management Studies, Organization Science, and the Journal of Business Ethics. David B. Allen is a professor of strategy at the Instituto de Empresa (Spain). He received an MBA from New York University and his M.F.A. and Ph.D. from the University of Iowa. His research focuses on non-market strategy. His work has appeared in such publications as the Journal of International Business Studies and the Journal of Business Ethics. He has consulted extensively for European and American multinational firms.     

Corporate Environmental Disclosure: Contrasting Management's Perceptions with Reality

This paper's purpose is to assess how management's perceptions regarding certain aspects of environmental reporting relate to the firm's actual reporting strategy. Toward that end, we propose a model where a firm's environmental disclosure is conditional upon executive assessments of corporate concerns. The study relies on a survey that was sent to environmental management executives from European and North American multinational firms enquiring about the determinants of corporate environmental disclosure. Responses from these executives were then contrasted with their firms' actual environmental reporting practices, which was measured using a comprehensive multi-criteria grid. Results show that there is a relationship between environmental managers' attitudes toward various stakeholder groups and how those managers respond to the stakeholders via the decision to disclose and the actual disclosures made. Our model provides a perspective as to how a firm responds to the numerous stakeholders to whom it must be accountable. This accountability in turn relates to how the company communicates its actions to society in order to achieve or maintain its social legitimacy.     

Do Suppliers Applaud Corporate Social Performance?

The influence of corporate social performance (CSP) on stakeholders is one of the focal issues in corporate social responsibility (CSR) research. Using data of listed companies in China, this paper examines whether CSR behavior in the form of charitable donations garners a positive reaction from suppliers. Results derived from both level and change model regressions show that superior CSP makes it easier for a firm to obtain trade credit from suppliers, although the effect is significant only in non-state-owned enterprises (non-SOEs). The results are robust to various measures of CSP and endogeneity tests. The results support the strategic philanthropy view and apply stakeholder theory in supply chain, that strategic CSR can help firms to attract suppliers and consolidate cooperative relationships with them, which in turn benefits the firms in terms of more trade credit financing from suppliers. This paper also shows that state-owned enterprises and non-SOEs have different CSR intentions and use CSR to achieve strategic goals in different ways. The conclusions drawn from this study provide practical guidance on CSR strategy, suggesting that CSR activities can help a firm in transition economies to enhance its corporate image, establish and consolidate the good relationship with suppliers, and obtain economic benefits or achieve long-term business objectives.     

Internalization of Environmental Practices and Institutional Complexity: Can Stakeholders Pressures Encourage Greenwashing?

This paper analyzes the determinants underlying the internalization of proactive environmental management proposed by certifiable environmental management systems (EMSs) such as those set out in ISO 14001 and the European Management and Auditing Scheme (EMAS). Using a study based on 232 usable questionnaires from EMAS-registered organizations, we explored the influence of institutional pressures from different stakeholders and the role of corporate strategy in the “substantial” versus “symbolic” integration of environmental practices. The results highlighted that although institutional pressures generally strengthen the internalization of proactive environmental practices, the influence of stakeholders can either support the integration of these practices or encourage their superficial adoption. For example, while pressure from suppliers and shareholders contribute to corporate greening, pressure from customers and industrial associations tend to encourage greenwashing (i.e., the superficial and misleading adoption of environmental practices). Product quality-oriented strategies also positively influence EMS internalization. The paper sheds light on the institutional complexity underlying the substantial versus symbolic implementation of environmental practices, and questions the dominant isomorphic view of EMS adoption. The paper also bridges the gap between complementary approaches on corporate greening, notably neo-institutional and stakeholder theories.     

The Reasons Behind Non-Ethical Behaviour in Business and Entrepreneurship

Despite the recent increase in interest in corporate social responsibility and the propagation of corporate governance in both business and academic literature, from observations of actual practice, the author has seen at all company levels, in everyday operations, instances of non-ethical behaviour vis-à-vis the whole gamut of stakeholders. This state of affairs is linked with: pressure from stakeholders, short-term tactics, hegemony of financial considerations, ‘juridisation’ of business, the tyranny of communications and the media and the difficulties in translating strategy into practical implementation. The paper scrutinises the motivation and the psychology of entrepreneurs and business people, and their behaviour is compared to other professional groups and confronted with the decline in ethics in society as described by some important observers. The conclusion drawn is that the recent positive evolutions do not provide sufficient ethical guidelines for the day-to-day activities of middle managers and entrepreneurs in the present competitive environment. Managers will always be confronted by difficult choices with ethical dilemmas. There will always be a tension between theory and pragmatism, but progress can be made with the effective implementation of the ethical discourse in companies. To achieve this, ethical management should not be confined to the large strategic issues but also applied to the small practical matters of everyday business life. Ethics in business and entrepreneurship requires more than corporate governance and corporate social responsibility (CSR).     

Criteria for Evaluating the Legitimacy of Corporate Social Responsibility

The goal of this paper is to provide a general discussion about the legitimacy of corporate social responsibility. Given that social responsibility projects entail costs, it is not always obvious under what precise conditions managers will have a responsibility to engage in activities primarily designed to promote societal goals.In this paper we discuss four distinct criteria for evaluating the legitimacy of corporate projects for institutionalizing social responsibility:(1) local knowledge(2) level of responsibility(3) shared consensus, and(4) relationship to financial performance.We conclude our discussion by noting that in those cases where the firm possesses knowledge about a specific problem and its solution, is directly responsible for causing harm, where a shared consensus among all relevant stakeholders exists, and financial performance will be enhanced, social responsibility projects are ideal. Obviously, no program will meet all of the criteria. In fact, our model specifically suggests that there is often a trade-off between the first three criteria and the last. For example, in those situations where the corporation directly imposes harm on third parties, and where a high degree of consensus exists among all stakeholders, there is little need to link the social responsibility program to financial performance. By contrast, as the corporation seeks proactive solutions to problems which are only incidental to the corporation, and where little consensus exists, the predicted relationship to financial performance becomes more crucial. By formally examining the trade-offs among these four criteria we more fully understand the complex relationship between social responsibility and financial impacts.