Although personal attributes have gained recognition as an important area of effective corporate governance, scholarship has largely overlooked the value and implications of individual virtue in governance practice. We explore how authenticity—a personal and morally significant virtue—affects the primary monitoring and strategy functions of the board of directors as well as core processes concerning director selection, cultivation, and enactment by the board. While the predominant focus in corporate governance research has been on structural factors that influence firm financial outcomes, this (...) paper shifts attention to the role of authenticity and its relationship to individual board member qualities and collective board activities. We explore how authenticity has the potential to influence board dynamics and decision making and to enhance transparency and accountability. (shrink)

How does corporate social performance (CSP) affect financial performance as the firm expands internationally? To address this question, I integrate arguments from the International Business (IB) literature and the literature on CSP to propose that the costs and benefits associated with CSP are unevenly distributed across the range of internationalization. Specifically, I argue that the costs of CSP outweigh the benefits at low levels of internationalization, while the benefits outweigh the costs at high levels of internationalization, leading to a moderated, (...) U-shaped relationship. In addition, I disentangle CSP’s effects further by distinguishing between “do-good” CSP and “do-no-harm” CSP, which have been theorized to evoke different stakeholder perceptions and attributions and can thus be expected to harbor different performance effects across the range of internationalization. Analysis of a panel of 1,056 U.S.-based international firms over the period 1995-2012 lends support to these arguments. (shrink)

As companies increasingly communicate CSR initiatives through social media, viral message propagation has become a crucial prerequisite for CSR success. Evidence from two experimental studies, one based on a national representative online sample, shows that social media peers’ endorsement of a CSR message in terms of number of shares, likes and positive replies contributes to an individual’s intention to share it on the social network and thereby participate in message propagation, and that this process can be explained by normative influences (...) exerted by the social media community through the activation of injunctive and descriptive norms, as well as social identity motives. Findings further confirmed that the norm-activating effects of social media endorsement are moderated by the empowering qualities of the CSR message, the sharing source of the message by affecting CSR credibility, and the recipient’s interdependent self-construal. Corporate communication managers are advised to achieve a high degree of initial social media endorsement of their CSR message, for recipients of the message to perceive social pressure motivating message sharing with their social media peers. (shrink)

This article uncovers an important yet overlooked antecedent of brand ethicality that lies beyond the predominant focus on environmental and social actions in the literature: perceived brand authenticity. Perceived authenticity and brand ethicality strongly drive consumer decision making, but the link between the two has not been closely scrutinized. This article examines how two types of authenticity cues differently influence consumers’ perceptions of brand ethicality. Across five studies and four different product categories, the findings show that indexical authenticity cues lead (...) to greater perceived brand ethicality than iconic authenticity cues. The underlying mechanism is that indexical authenticity cues prompt people to perceive that a product is made with more effort; this increases their perception that it is crafted with love, which then enhances their perception of brand ethicality. The findings also indicate that lower perceived brand ethicality when using iconic authentic cues can be offset by the notion that developing the product involved intense effort. (shrink)

Customers are increasingly talking positively about brands that are socially responsible and authentic. However, little empirical research has related corporate social responsibility (CSR) to brand authenticity and brand authenticity to customers’ positive word-of-mouth. Moreover, although highly attractive alternative brands are increasingly appearing in the marketplace, there is a lack of research examining the role of alternative attractiveness in the relationship between CSR and brand authenticity. We address these shortcomings in the literature drawing on data from 1,101 customers of insurance services (...) brands and analyze them using structural equation modeling. The findings show that CSR is positively related to customers’ positive word-of-mouth, both directly and indirectly, through brand authenticity. Moreover, alternative attractiveness positively moderates the effect of CSR on brand authenticity. This implies that CSR can act as a differentiation mechanism to further enhance the focal brand’s authenticity, when an alternative brand is perceived as highly attractive. (shrink)

This paper examines whether firms strategically legitimize large labor dismissals by performing ex-ante downward earnings management. We further assess whether the effect is larger under stakeholder pressure and whether these practices influence the external perception of firms’ behavior. As laying off employees without an economic reason is perceived as a breach of the social contract, stakeholders pressure firms to provide economic justification for LLDs. We argue that firms strategically legitimize LLDs by artificially worsening their financial performance through downward earnings management. (...) From a sample of European listed firms for the period 1998–2014, using a propensity score matching model to control for differences in observable characteristics between LLD and non-LLD firms, we find that firms manage their earnings downward in the year prior to LLDs. These results are more pronounced in the presence of high stakeholder pressure. As such, firms with stronger trade unions, higher visibility, stricter employment protection legislation, and more stakeholder-oriented legal environments have stronger incentives to manage earnings downward before LLDs. Finally, we document that downward earnings management prior to LLDs is effective at legitimizing LLDs, offsetting the negative external perceptions of firms in the aftermath of LLDs. This study contributes to the business ethics literature by identifying unintended consequences of stakeholder pressure around LLDs. It also brings important empirical insights into how ethically questionable decisions are strategically legitimized through further unethical practices. (shrink)