Entry of new organizations, including multinational enterprises from emerging markets, raises the ethical question of will they benefit society. The concept of legitimacy answers this question because it is the overall assessment of the appropriateness of organizational ends and means. Moreover, gaining legitimacy enables EMNEs to succeed in new host countries. Past work examined collective level indicators of the legitimacy of MNEs, but recent research recognizes the importance of individuals’ perceptions as the micro-foundation of legitimacy. This study first uses new (...) pragmatism, deontology, and utilitarianism to demonstrate that legitimacy is fundamentally an ethical concept—a perspective that has been overlooked in management research. Second, this study uses a seven-step procedure to develop and validate a measure of individuals’ perceptions of the legitimacy of Chinese EMNEs operating in The Netherlands, a developed country. Six dimensions of legitimacy were identified. The study also finds support for this legitimacy judgment process linking the dimensions: validating knowledge → propriety judgments → generalized judgment. This work provides additional micro-foundations to research on legitimacy and contributes to the ongoing process of construct validation. Future research could use the validated measure in other settings and use specific ethical theories in depth to refine the concept of legitimacy. (shrink)

The traditional understanding of corporate social responsibility (CSR) has largely been focused on its downstream performance implications, particularly its associations with firms’ customer market metrics such as customer loyalty, customer satisfaction and customer co-creation as well as financial ones such as firm value, return on assets etc. However, given the close relationship between CSR and marketing that literature has identified, it is surprising that the relationship between a focal upstream construct, i.e. the marketing function’s power within a firm and the (...) firm’s propensity toward CSR has not been addressed in the literature. Examining the link between marketing’s power (MP) in a firm’s top management team (TMT) and firm CSR levels, we investigate how this fundamental TMT configuration, i.e. the distribution of marketing power in the TMT, motivates the firm’s social endeavors. Further, we formulate this relationship in a contingency-based model that incorporates the moderating effects of firm size, firm age, service intensity, and resource slack across 1569 firms operating in 63 industries. In addition to their effect on CSR, this study shows how MP in TMT may influence corporate social irresponsibility (CSI) as well as CSR capability after controlling for industry type. The inclusion on these additional dimensions of CSR (CSI and CSR capability) complements our analyses of the effect that MP has on CSR. The research contributes to a deeper understanding of CSR’s fundamental corporate determinants as well as identifies the essential role of the marketing function in firms’ CSR strategy. In this process, it yields useful implications for multiple streams of theory as well as for business practices. (shrink)

Prosocial compensation is a corporate social responsibility practice that involves donating money to a charitable cause on behalf of customers as a means to compensate them for their loss after a service failure. In order to determine the effectiveness of PC, we carried out three experiments while also comparing its effectiveness within private and public settings. Experiment 1 focused on the signaling effects of communicating the promise to offer PC to potential customers in the event of service failure. Results show (...) that, in both private and public settings, PC has positive effects on corporate image, credibility, and word-of-mouth intent. More significantly, PC improved one’s CSR image, whereas more tangible compensation, such as a gift voucher, did not. Experiments 2A and 2B focused on the effects of offering PC after a service failure on perceptions of justice. Results show that PC contributes to perceived distributive justice, procedural justice, and post-recovery satisfaction in both private and public settings. Our study showed that PC could be a relevant new CSR practice for organizations wanting to enhance theirs CSR image while contributing to fulfilling their ethical and philanthropic CSR responsibilities. We discuss the implications of our findings and offer several avenues for follow-up research on this initial study on PC. (shrink)

The objective of this research is to examine whether and how enterprises adjust their corporate social responsibility (CSR) activities in response to top executives’ local tournament incentives. The findings provide evidence to support the claim that local compensation gaps encourage top executives to reduce their CSR performance; furthermore, they indicate that this reduction is accomplished mainly through the CSR categories of diversity, community, the environment and product. The enforceability of noncompete agreements (NCAs) is examined, and the negative relationship between local (...) compensation gaps and CSR is documented to be weaker in states that feature stronger enforcement of NCAs, which constrains labour mobility and imposes turnover costs. The findings of this research are robust to concerns regarding endogeneity and reverse causality. (shrink)