Building on earlier work on the relationship between corporate social performance (CSP) and a firm’s financial performance, this integrative empirical study supports the theoretical argument that the higher a firm’s CSP the lower its financial risk. Specifically, the relationship between CSP and risk appears to be one of reciprocal causality, because prior CSP is negatively related to subsequent financial risk, and prior financial risk is negatively related to subsequent CSP. Additionally, CSP is more strongly correlated with measures of market risk (...) than measures of accounting risk. Of all CSP measures, reputation for social responsibility appears to be the most important one in terms of its risk implications. (shrink)

Business and society academics face an ongoing dilemma between the rigorous demands of good scholarship and the personal and pragmatic demands of constituencies and themselves. This dilemma is, above all, an ethical one, but it is partially solvable by paying closer attention to theory and methodology while acknowledging individual biases and desires and helping others in the field to do the same.

This study examines the extent to which corporate responsibility influences the demand for shares by institutions. The study follows Bushee (Account Rev 73(3):305–333, 1998 ) in categorising institutions as dedicated or transient. The demand for shares is organised according to three factors: a long-term factor, corporate responsibility; a short-term factor, market liquidity; and a time-independent factor, portfolio theory. The rank and importance of the factors for the different types of institutional investor are analysed. For one of two types of dedicated (...) institution, corporate responsibility is as important as portfolio theory in influencing the demand for shares. For all dedicated institutions, corporate responsibility influences the demand for shares more than market liquidity. For two of the three types of transient institution, market liquidity is the most important factor in share selection. For all transient institutions, the least important factor is corporate responsibility. Findings suggest that corporate responsibility positively and significantly influences the demand for shares by dedicated institutions. The discussion considers the extent to which these trends are constitutive of significant shifts in ethicality within the context of institutional investment. Looking at this from within a highly institutionalised Anglo market model, dedicated institutions’ commitment to broader and longer-term concerns could be interpreted as a small but significant step towards a more axiologically informed ethical business practice. Such a form of engagement calls for sensitive attention to a fuller range of features deemed to be relevant to investment decisions, as opposed to more narrow reliance on legislation, codes of practice and fiduciary principles. (shrink)

Two obvious trends in corporate governance include broadening board accountability beyond shareholders’ interests and paying outside directors with equity compensation (stock and stock options). By integrating common agency and instrumental stakeholder theories, we examine the effect of stock compensation on secondary stakeholders and a firm’s participation in social issues, two areas where interests are less aligned with shareholder value. Consistent with our predictions, we found that while stock compensation may be an effective way to align directors’ goals to those of (...) shareholders, it has adverse effects on important non-shareholder constituencies in the company’s operating environment. (shrink)

Scholars and practitioners alike indicate a movement in corporate philanthropy toward “strategic” giving, for example, giving that improves the firm's strategic position (ultimately the “bottom line”) while it benefits the recipient of the philanthropic act. Although the existence of this trend is widely accepted, it is represented in the literature most often by anecdotal evidence. This article presents the findings of a survey of corporate giving managers of U.S. firms that have had an established giving program of at least 5 (...) years, with annual giving totaling at least $200,000 each year. The data show that corporate giving managers believe their firms are becoming increasingly strategic in their philanthropic activities. The findings also indicate that institutional-, firm-, and individual-level influences combine to precipitate strategic philanthropy. These findings lend support to the belief that the nature of corporate philanthropy is evolving to fit a more competitive marketplace. (shrink)

This article focuses on the company-stakeholder relationship between a large pulp and paper company and a small monastery and nature retreat center. The literature on stakeholder management and organizational legitimacy provides a theoretical foundation. The analysis demonstrates how organizational power and legitimacy can influence stakeholder legitimacy. The authors illustrate the ways that a company can manage the legitimacy of stakeholders through the use of political language and symbolic activity. The results contribute to a better understanding of stakeholder identification, salience, and (...) the different contexts of legitimacy in the company-stakeholder relationship. Implications for stakeholder research and practice are also discussed. (shrink)