A Speech-Act Model for Talking to Management. Building a Framework for Evaluating Communication within the SRI Engagement Process

Socially Responsible Investment (SRI) has grown considerably over the past three decades. One form of SRI, engagement-SRI, is today by far the most practiced form of SRI (in assets managed) and has the potential to mainstream SRI even further. However, lack of formalized engagement procedures and evaluation tools leave the engagement practice too opaque for such a mainstreaming. This article can be considered as a first step in the development of a standard for the engagement practice. By developing an engagement heuristic, this article offers a more transparent engagement dialog. Drawing on Stevenson’s and Austin’s speech-act theories, this article develops a classification of management’s responses to the signaling of allegations and controversies on two dimensions: a factual dimension concerning (dis)agreements on factual claims and an attitudinal dimension concerning (dis)agreements on responsibilities, values, and norms. On the basis of the distinctions this article develops, the authors provide for a synoptic table and offer a next-step heuristic for the engagement process that started with signaling a concern to management. The article uses an engagement logic that, while keeping the exit option for the investor open, allows management to address signaled concerns without having to let down or to opt out at the first setback in the dialog process between investor and investee corporation. Wim Vandekerckhove is Assistant Professor of Practical Ethics at Ghent University, Center for Ethics & Value Inquiry. Jos Leys is Sustainable Development Officer with Dexia. Dirk Van Braeckel is Head of Research with Vigeo Group S.A.     

CSR,Transparency and the Role of Intermediate Organisations

Transparency is a crucial condition to implement a CSR policy based on the reputation mechanism. The central question of this contribution is how a transparency policy ought to be organised in order to enhance the CSR behaviour of companies. Governments endorsing CSR as a new means of governance have different strategies to foster CSR transparency. In this paper we discuss the advantages and disadvantages of two conventional policy strategies: the facilitation policy and the command and control strategy. Using three criteria (efficiency, freedom and virtue) we conclude that both strategies are defective. Most attention is paid to the facilitation strategy since governments nowadays mainly use this. In evaluating this strategy we analyse the Dutch case. As an alternative we introduce a third government policy: the development of a self-regulating sub-system. By construing an analogy with the historical development of corporate financial disclosure, we point out that the vital step in the creation of a self-regulating subsys- tem is the creation of strong informational intermediate organisations.     

The effect of internal and external technology sourcing on firm performance throughout the technology life cycle

In studies about the impact of technology sourcing on firm performance, the impact of the technology life cycle has thus far received scant attention. This paper investigates this topic from the knowledge-based perspective. Data was gathered from 22 PLD (Programmable Logic Device) manufacturers in the integrated circuit industry between 1986 and 2005, and used to test two hypotheses based on panel analysis: (1) that strategic alliance networks, as a mode of external technology sourcing, have a positive effect on a firm's innovative and market performance early in the technology life cycle, and (2) that internal development as a mode of internal technology sourcing has a positive effect on a firm's innovative and market performance later in the technology life cycle. Although both hypotheses are supported as far as market performance is concerned, neither is supported when it comes to innovative performance.     

Multiple facets of budgeting: an exploratory analysis

This paper investigates four potential reasons for budgeting in organizations (operational planning, performance evaluation, communication of goals, and strategy formation), their antecedents (e.g., organizational strategy and structure), and several budgeting characteristics (e.g., target difficulty and budget emphasis) that potentially influence these reasons-to-budget's performance. While the idea of multiple uses of budgets in organizations is not new, the rationale for this study is that prior research has tended to look at the same (one) reason for budgeting (primarily performance evaluation), or at only one reason in isolation. Based on survey data from 57 managers responsible for preparing the budget for their organizational unit, our analyses suggest that while the four reasons-to-budget exhibit overlap, they are also substantively unique in their own use. Moreover, we demonstrate that the reasons-to-budget arise in different circumstances and that each reason-to-budget's performance is associated with different budgeting characteristics. We also demonstrate a link between the performance of the individual reasons-to-budget and overall budget satisfaction and organizational unit performance.     

Does education promote social capital? Evidence from IV analysis and nonparametric-bound analysis

This study uses the British National Child Development Study to examine the effect of educational attainment on social capital at the individual level. Social trust and membership of voluntary groups are considered as two basic indicators of social capital. We employ the IV analysis and nonparametric bound analysis to tackle the problem of education endogeneity. Both the approaches reveal that the OLS estimator of the educational effect suffers from an upward bias in the study of group membership. We do not observe any significant bias in the educational effect on social trust. Our empirical findings indicate that education has a positive influence in promoting social trust and membership of voluntary groups.     

The influence of scope, depth, and orientation of external technology sources on the innovative performance of Chinese firms

It is commonly accepted nowadays that external knowledge sources are important for firms' innovative performance. However, it is still not clear, what dimensions of firms' external knowledge search strategy are crucial in determining their innovation success and whether these search strategies are contingent on different innovation modes. In this study, we analyse how the innovative performance is affected by the scope, depth, and orientation of firms' external search strategies. We apply this analysis to firms using STI (science, technology and innovation) and DUI (doing, using and interacting) innovation modes. Based on a survey among firms in China, we find that greater scope and depth of openness for both innovation modes improves innovative performance indicating that open innovation is also relevant beyond science and technology based innovation. Furthermore, we find that decreasing returns in external search strategies, suggested by Laursen and Salter (2006), are not always present and are contingent on the innovation modes. Next, we find that the type of external partners (we label it “orientation of openness”) is crucial in explaining innovative performance and that firms using DUI or STI innovation modes have different sets of relevant innovation partners. This shows that the orientation of openness is an important dimension—in addition to the scope and depth of openness. As respondents are located in China, this study provides evidence that open innovation is also relevant in developing countries.     

How do dimensions of proximity relate to the outcomes of collaboration? A survey of knowledge-intensive networks in the Dutch water sector

There is a growing body of literature on the importance of proximity for innovation and other knowledge-related outcomes. We examine the impact of geographical, social, organisational, and cognitive proximity for a heterogeneous population, including people from academia, knowledge institutes, industry, and government. We analyse data on 1020 ego–alter relationships, derived from a survey among water professionals in the Netherlands. The use of survey data allows for more refined indicators of proximity and more diverse collaboration outcomes than those common in the literature. Social and cognitive proximity have a positive effect for all outcomes examined. Geographical and organisational proximity have a negative effect on hard (tangible) outcomes yet a weak positive (if any) effect on soft (intangible) outcomes. We do not find evidence for the suggestions in the conceptual literature that proximity follows an inverted U-curve where most outcomes are achieved in relations with some but not too much proximity.     

Regional clusters of innovative activity in Europe: are social capital and geographical proximity key determinants?

Finding proper policy instruments to promote productivity growth features prominently in the Europe 2020 strategy and is central in many national as well as European policy debates. In view of the increased mobility of high-skilled workers in Europe, ongoing globalization and increased interregional and international co-operation, location patterns of innovative activity may be subject to drastic changes. A proper understanding of location patterns of innovative outputs can enhance the effectiveness and efficiency of national and European placed-based innovation policies. Building on the literature on the knowledge production function, the aim of this article is to explain the observed differences in the production of innovative outputs across European regions. Our main research question is whether geographical proximity and social capital are important vehicles of knowledge transmission in Europe. Several other variables are used to control for structural differences across European regions. We find support for the hypothesis that both social capital and geographical proximity are important factors in explaining the observed differences in the production of innovative output across European regions.     

“Surfeiting,the appetite may sicken”: entrepreneurship and happiness

Do the presence and nature of entrepreneurship impact on national happiness, and are nations with happy citizens better for entrepreneurs to start new businesses? To provide tentative answers we survey the literature on entrepreneurship and subjective well-being and use various data sources to uncover the first evidence of the relationship between entrepreneurship and happiness at the country level. We find that opportunity-motivated entrepreneurship may contribute to a nation’s happiness but only to a certain point, at which the effects of happiness begin to decline. Moreover, our results suggest that a nation’s happiness affects early-stage opportunity-driven entrepreneurial activity.     

IS THE CAPITAL STRUCTURE LOGIC OF CORPORATE FINANCE APPLICABLE TO INSURERS? REVIEW AND ANALYSIS

Since the financial crisis of 2008, next to banks, insurers have received increasing attention from researchers and regulators because of their crucial role in the financial system. A key point for a stable insurer is its capital structure, i.e. the choice between equity, debt and provisions in financing its operations. Based on earlier work a quickly developing literature has directly applied capital structure theories (in particular trade-off and pecking order) from corporate finance to insurers’ financing choices. Corporate finance concepts used herein however, are developed for industrial firms. In this paper we provide an overview of the literature on the capital structure of insurers, but contribute by systematically clarifying how to account for the specificities of insurers when transferring the trade-off and pecking-order logic from an industrial to an insurer context. This way, we add several new insights on an insurer's choice between equity, financial debt and provisions. In particular, we are able to explain why, as compared to industrial firms, insurers use less financial debt, and why insurers focus so strongly on self-financing. Finally, we identify multiple avenues for future research.