Cross-Sector Partnerships: City Regeneration and Social Justice

In recent years, firms have greatly increased the amount of resources allocated to activities classified as Corporate Social Responsibility (CSR). While an increase in CSR expenditure may be consistent with firm value maximization if it is a response to changes in stakeholders’ preferences, we argue that a firm’s insiders (managers and large blockholders) may seek to over- invest in CSR for their private benefit to the extent that doing so improves their reputations as good global citizens and has a “warm-glow” effect. We test this hypothesis by investigating the relation between firms’ CSR ratings and their ownership and capital structures. Employing a unique data set that categorizes the largest 3000 U.S. corporations as either socially responsible (SR) or socially irresponsible (SI), we find that on average, insiders’ ownership and leverage are negatively related to the firm’s social rating, while institutional ownership is uncorrelated with it. Assuming that higher CSR ratings is associated with higher CSR expenditure level, these results support our hypothesis that insiders induce firms to over-invest in CSR when they bear little of the cost of doing so.     

Government Intervention,Perceived Benefit,and Bribery of Firms in Transitional China

This article examines whether (1) government intervention causes bribery (or corruption) as rent-seeking theory suggested; (2) a firm’s perceived benefit partially mediates the relationship between government intervention and its bribing behavior, as rational choice/behavior theory suggested; and (3) other firms’ bribing behavior moderates the relationship between government intervention and a firm’s perceived benefit. Our study shows that government intervention causes bribery/corruption indeed, but it exerts its effect on bribery/corruption through the firm’s perceived benefit. In other words, a firm’s perceived benefit fully mediates the relationship between government intervention and its bribing behavior. We also find that other firms’ bribery positively moderates the relationship between government intervention and a given firm’s bribery. This study partly proves that firms are rational actors. Potential benefit encourages them to practice bribery. Besides, this research also supports the rent-seeking view of bribery/corruption, which argues that government intervention is a source of bribery/corruption. However, we have also identified that only those government interventions that will create “rent” can cause bribery/corruption.     

Entrepreneurial orientation and the performance of service business

The purpose of this study is to investigate the impact of entrepreneurial orientation (EO) on the performance of service businesses. For this purpose, we analyzed the data from the owners of Japanese food restaurants. The results of this study suggest: (1) the owner’s personal attributes have a strong influence on the performance of small- and medium-sized service businesses and (2) most EO dimensions have a positive impact on the service firm’s performance. These findings emphasize the importance of developing EO among the owners of small- and medium-sized service businesses for their success.     

Environmental and Economic Dimensions of Sustainability and Price Effects on Consumer Responses

The lack of attention to sustainability, as a concept with multiple dimensions, has presented a developmental gap in green marketing literature, sustainability, and marketing literature for decades. Based on the established premise of customer–corporate (C–C) identification, in which consumers respond favorably to companies with corporate social responsibility initiatives that they identify with, we propose that consumers would respond similarly to companies with sustainability initiatives. We postulate that consumers care about protecting and preserving favorable economic environments (an economic dimension of sustainability) as much as they care about natural environments. Thus, we investigate how two sustainability dimensions (i.e., environmental and economic) and price can influence consumer responses. Using an experimental method, we demonstrate that consumers favor sustainability in both dimensions by giving positive evaluations of the company and purchase intent. In addition, consumers respond more negatively to poor company sustainability than to high company sustainability. In comparison, consumers respond more negatively to the company’s poor commitment to caring for the environment than to the company’s poor commitment to economic sustainability. We also find that consumers do not respond favorably to low prices when they have information about the firm’s poor environmental sustainability. Finally, we find support for an interaction effect between consumer support for sustainability and corporate sustainability; that is, consumers evaluate a company more favorably if the company shares the consumers’ social causes. Overall, we conclude, from our empirical study, support for the idea that consumers do respond to multiple dimensions of sustainability.     

A Multidimensional Approach to the Influence of Environmental Marketing and Orientation on the Firm’s Organizational Performance

Since it implies a reduction in the quality and the quantity of the natural resources, environmental degradation is a present day problem that requires immediate solutions. This situation is driving firms to undertake an environmental transformation process with the purpose of reducing the negative externalities that come from their economic activities. Within this context, environmental marketing is an emerging business philosophy by which organizations can address sustainability issues. Moreover, environmental marketing and orientation are seen as valuable strategies to improve a firm’s competitiveness. However, the literature that has analyzed the link between environmental strategies and firms’ results has been inconclusive and contradictory. In this study, we propose and test a model that analyses how the implementation of ecological issues within a firm’s marketing strategy and orientation influences organizational results. Data were obtained through a survey sent to Spanish manufacturing firms. The results show that environmental marketing positively affects firms’ operational and commercial performance and this improvement will influence their economic results. Moreover, environmental marketing is revealed as an excellent strategy to obtain competitive advantages in costs and in product differentiation. Thus, this study agrees with the researchers who affirm that environmental strategies positively affect firm’s competitiveness while reducing environmental impact.     

The Effect of Ownership Structure on Corporate Social Responsibility: Empirical Evidence from Korea

Relatively little research has examined the effects of ownership on the firms’ corporate social responsibility (CSR). In addition, most of it has been conducted in the Western context such as the U.S. and Europe. Using a sample of 118 large Korean firms, we hypothesize that different types of shareholders will have distinct motivations toward the firm’s CSR engagement. We break down ownership into different groups of shareholders: institutional, managerial, and foreign ownerships. Results indicate a significant, positive relationship between CSR ratings and ownership by institutions and foreign investors. In contrast, shareholding by top managers is negatively associated with firm’s CSR rating while outside director ownership is not significant. We conclude that different owners have differential impacts on the firm’s CSR engagement.     

Porter's Model of Generic Competitive Strategies

A firm’s competitive behavior is an important topic for practitioners, theorists, and policy makers. Among the explanations of firms’ behavior is Michael Porter’s model. We have presented this model along with some alternative approaches: Structure-Conduct-Performance, the New Industrial Organization and Game Theory, the Resource-Based Perspective, and Market Process Economics. These approaches are discussed in terms of their relations, similarities, and differences relative to Porter’s model. In our comparative discussion, we support the use of Porter’s model to evaluate firms’ competitive behavior. Our reasons for this support are this model’s popularity, well-defined structure, feasibility, clarity, simplicity, generality, and its complementarity to two other main approaches. We find the Porter model to be a convenient approach to the firm’s competitive advantage and strategy. This article draws on the thesis that Orges Ormanidhi wrote for his Masters of Philosophy from Staffordshire University.     

The embedded sales force: Connecting buying and selling organizations

Business-to-business firms are increasingly focusing on building long-term partnering relationships with key customers. Salespeople are often responsible for managing these relationships. To be effective as relationship managers, salespeople need to be embedded in both their firm’s and customers’ organizations. They need to have extensive knowledge of their customers’ business and also know and be able to leverage their firm’s resources to develop offerings tailored to their customers’ needs. Their companies and sales managers need to use different approaches to manage and support salespeople in this new role. In this paper, we examine some issues affecting the interfaces between elements of the embedded sales force and suggest some directions for future research and methods for examining these issues.     

Living in Agreement with a Contract: The Management of Moral and Viable Firm–Stakeholder Relationships

In a contractual firm–stakeholder relationship the participants are expected to act according to the agreement and for mutual benefit. By acting against the agreement at the expense of the other participant, however, may result in higher individual profits within a short period of time. Building on the unlocked iterated prisoner’s dilemma (PD) setting, Scanlon’s [Scanlon, T.␣M.: 1998, What We Owe to Each Other (Belknap Press of Harvard University Press, Cambridge, Mass)] version of contractualism, and the social dilemma literature, this article considers what types of behaviors should be followed by both parties in an established firm–stakeholder relationship in order to reach an outcome that is defensible both in terms of morality and viability. It is argued that a normative foundation, which advises firms and stakeholders to ground their behavior on principles that could not reasonably be rejected by others, forms a basis for moral and viable behavior that can be expressed in the form of a strategic rule that excludes defection and utilizes the option to exit in response to the other participant’s defection. Then, a set of testable propositions is developed that describe how a firm and its stakeholders can further promote moral and viable relationships.Kalle Pajunen received his Ph.D. in strategic management. His current research interests include research methodologies, turnaround processes, stakeholder theory, strategic leadership, and business ethics. His recent articles appear (or are forthcoming) for instance in Advances in Strategic Management, Human Relations, Journal of Management Studies, and Leadership.     

The Impact of Corporate Social Performance on a Firm’s Multinationality

Using panel data of 4,244 company years, we examine whether and how corporate social performance (CSP) affects a firm’s capacity to achieve profitable sales in foreign markets. Based on our extension of instrumental stakeholder theory into the international arena, we hypothesized a U-shaped relationship between CSP and multinationality. Results supported our contention that multinational enterprises (MNEs) need to be substantially committed to social performance objectives if they are to recoup the cost of their CSP investments, and improve their capacity to compete in foreign markets. MNEs engaged in intermediate levels of CSP achieve lower levels of multinationality than firms operating at either anchor of the social performance continuum. In addition, this study demonstrates that CSP moderates a well-established relationship in international business literature – the relationship between R&D investment and a firm’s multinationality. Implications for research and practice are discussed.     

Modeling the Relationship Among Perceived Corporate Citizenship,Firms’ Attractiveness,and Career Success Expectation

Drawing on propositions from the signaling theory and expectancy theory, this study hypothesizes that the perceived corporate citizenship of job seekers positively affects a firm’s attractiveness and career success expectation. This study’s proposed research hypotheses are empirically tested using a survey of graduating MBA students seeking a job. The empirical findings show that a firm’s corporate citizenship provides a competitive advantage in attracting job seekers and fostering optimistic career success expectation. Such findings substantially complement the growing literature arguing that corporate citizenship brings firms competitive advantages without solid evidence from the perspective of recruitment and human resources. Finally, managerial implications and limitations of this study are also discussed.     

The impact of a firm’s internal control mechanisms on the choice of innovation mode

A firm’s internal control mechanisms may have a significant influence on the choice of innovation mode. Therefore, based on the research on the internal control mechanisms of companies, we developed a model to explore the relationship between a firm’s internal control mechanisms and the choice of innovation mode. Using a sample of 585 Chinese firms, this study tests the proposed model. Results show that strategic control has a positive relationship with radical innovation, but a negative relationship with incremental innovation, while financial control has a negative relationship with radical innovation, but a positive relationship with incremental innovation. Translated from Nankai Guanli Pinglun 南开맜理评论 (Nankai Business Review), 2006(2): 64–68     

Understanding Consumer’s Responses to Enterprise’s Ethical Behaviors: An Investigation in China

The response of consumers to a firm’s ethical behavior and the underlying factors influencing/forming each consumer’s response outcome is analyzed in this article based on information obtained through interviews. The results indicate that, in the Chinese context, the responding outcome can be boiled down to five types, namely, resistance, questioning, indifference, praise, and support. Additionally, consumers’ responses were mainly influenced by the specific consumer’s ethical consciousness, ethical cognitive effort, perception of ethical justice, motivation judgment, institutional rationality, and corporate social responsibility–corporate ability (CSR–CA) belief. Based on these results, a generalized framework of consumer’s ethical responses is developed which provides a number of insightful suggestions upon how to motivate a consumer’s support of a firm’s ethical behavior and to transfer this kind of support into truly positive purchasing behavior.     

Stakeholder Salience Revisited: Refining,Redefining, and Refueling an Underdeveloped Conceptual Tool

This article revisits and further develops Mitchell et al.’s (Acad Manag Rev 22(4):853–886, 1997) theory of stakeholder identification and salience. Stakeholder salience holds considerable unrealized potential for understanding how organizations may best manage multiple stakeholder relationships. While the salience framework has been cited numerous times, attempts to develop it further have been relatively limited. We begin by reviewing the key contributions of other researchers. We then identify and seek to resolve three residual weaknesses in Mitchell et al.’s (1997) framework, thereby strengthening its foundations for further development. We argue, first, that urgency is not relevant for identifying stakeholders; second, that it is primarily the moral legitimacy of the stakeholder’s claim that applies to stakeholder salience; and last, that the salience of stakeholders will vary as the degrees of the attributes vary. These insights inform revised definitions of stakeholder salience and legitimacy, and necessitate a new theoretical underpinning for the role of legitimacy. Finally, we present an extensive agenda for future research with the objective of refueling research in stakeholder salience.     

Private Equity and the Public Good

The dominance of agency theory can reduce our collective scope to analyse private equity in all its diversity and depth. We contribute to theorisation of private equity by developing a contrasting perspective that draws on a rich tradition of virtue ethics. In doing so, we juxtapose ‘private equity’ with ‘public good’ to develop points of rhetorical and analytical contrast. We develop a typology differentiating various forms of private equity, and focus on the ‘take private’ form. These takeovers are where private equity funds are used to buy all a firm’s publicly listed shares. Take private deals reduce reporting requirements and lessen the amount of public scrutiny a firm comes under. They allow greater control of a firm’s assets and resources but also have effects in terms of the wider social fabric. The ‘public good’ and virtue ethics offer an alternative basis for theorisation of these deals. This provides a needed contrast to accounts of private equity based on agency theory.     

Social Sustainability in Selecting Emerging Economy Suppliers

Despite the growing public awareness of social sustainability issues, little is known about what drives firms to emphasize social criteria in their supplier management practices and what the precise benefits of such efforts are. This is especially true for relationships with international suppliers from the world’s emerging economies in Asia, Latin America, and Eastern Europe. Building on stakeholder theory, we address the issue by examining how pressures from customers, the government, and employees as primary constituencies of the firm determine the extent to which firms consider social aspects in the selection of emerging economy suppliers. Further, we analyze how such socially sustainable supplier selection relates to the capabilities of the firm’s suppliers, its market reputation, and the learning in its supply management organization. We test the developed research framework empirically using data from 244 U.S. and German corporations. Our findings, consistent with our hypothesized model, suggest that middle-level supply managers as internal stakeholders play a major driving role for firms’ socially sustainable supplier selection, and that strong positive links exist between that selection and the investigated outcomes.     

Andersen and the Market for Lemons in Audit Reports

Previous accounting ethics research berates auditors for ethical lapses that contribute to the failure of Andersen (e.g., Duska, R.: 2005, Journal of Business Ethics 57, 17–29; Staubus, G.: 2005, Journal of Business Ethics 57, 5–15; however, some of the blame must also fall on regulatory and professional bodies that exist to mitigate auditors’ ethical lapses. In this paper, we consider the ethical and economic context that existed and facilitated Andersen’s failure. Our analysis is grounded in Akerlof’s (1970, Quarterly Journal of Economics August, 488–500) Theory of the Market for Lemons and we characterize the market for audit reports as a market for lemons. Consistent with Akerlof’s model, we consider the appropriateness of the countervailing mechanisms that existed at the time of Andersen’s demise that appeared to have effectively failed in counteracting Andersen’s ethical shortcomings. Finally, we assess the appropriateness of the remedies proposed by the Sarbanes–Oxley Act of 2002 (SOA) to ensure that similar ethical lapses will not occur in the future. Our analysis indicates that the SOA regulatory reforms should counteract some of the necessary conditions of the Lemons Model, and thereby mitigate the likelihood of audit failures. However, we contend that the effectiveness of the SOA critically depends upon the focus and attention of the␣Public Companies Accounting Oversight Board (PCAOB) towards assessing the ethical climates of public accounting firms. Assessments by the PCAOB of public accounting firm’s ethical climate are needed to sufficiently ensure that public accounting firms effectively promote and maintain audit quality in situations where unconscious bias or economic incentives may erode the public accounting firm’s independence.     

The Value of Corporate Philanthropy During Times of Crisis: The Sensegiving Effect of Employee Involvement

Recent research suggests that philanthropy’s value to the firm is largely mediated by contextual factors such as managers’ assumed motives for charity. Our article extends this contingency perspective using a “sensegiving” lens, by which external actors’ interpretations of organizational actions may be influenced by the way in which the organization communicates about those actions. We consider how sensegiving features in philanthropy-related press releases affect whether investors value those donation decisions. For the empirical investigation in this study, we analyze abnormal returns to announcements by U.S. Fortune 500 firms documenting their donations to Hurricane Katrina disaster relief in 2005. We expect that in general, donation decisions would be controversial given the uncertainty surrounding the hurricane’s economic effects at the time. However, we also propose that announcements emphasizing employee involvement in the donation send investors positive signals about the firm’s ability to bounce back from the disaster’s adverse effects. We find empirical support for the proposed hypotheses, and discuss the implications for theory and practice.     

Signaling Sustainability Leadership: Empirical Evidence of the Value of DJSI Membership

We explore the relationship between corporate sustainability, reputation, and firm value by asking whether signaling sustainability leadership through membership on a recognized sustainability index is value generating. Increasingly, stakeholders are demanding that firms demonstrate their commitment to sustainability. One signal that companies can send to stakeholders to indicate that they are sustainability leaders is membership on a recognized “best in class” sustainability index. This article explores both the short-term and the intermediary impact on North American firms of being included or removed from the Dow Jones Sustainability World Index (DJSI). Our results provide evidence that being added to the DJSI results in a sustained increase in a firm’s share price, suggesting that the benefits of being included on the DJSI outweigh the costs associated with applying. This article also notes a temporary decrease in the value of firms for the first 10 days after their removal from the DJSI; however, this effect is eliminated within the next ten trading days.