Although scholars have long known that entrepreneurship involves the interaction of countless individuals beyond the entrepreneur, traditional performance metrics are limited to capturing the economic value that is created for shareholders. Multiple scholars have suggested that it should be possible to develop a more complete assessment that is able to simultaneously capture both the economic and non-economic consequences of entrepreneurship that exist for the broader network of firm stakeholders. The purpose of this paper is to provide a more nuanced understanding (...) of entrepreneurial performance by operationalizing the concept of stakeholder capabilities. Building on concepts from stakeholder theory and the human development and capability approach in welfare economics, we argue that the pursuit of entrepreneurial opportunities can either create or destroy value for multiple stakeholders, and that this value is best conceived in terms of increases and decreases in individual capabilities. Approaching entrepreneurial performance from a stakeholder capabilities lens has implications for how we view entrepreneurs’ impact on society, what we mean by the creation and destruction of “value,” and how we define failure and success in entrepreneurship. (shrink)

This article examines why firms engage in Corporate Social Responsibility (CSR). Specifically, it investigates the relationship between a firm's motivation to engage in CSR and the depth of its commitment. I propose that the enduring debate over CSR and financial performance is misaligned, and that scholars should instead focus on the underlying components of CSR engagement. This research sheds light on the motivational antecedents of a firm's engagement in CSR and their effect on CSR commitment. Despite calls for scientific investigation (...) of this linkage, it has received scant attention in the literature. Pursuing this area of research requires the construction of measures of CSR motivation and CSR commitment, as prior work generally lacks objective analysis. I present measures and a research methodology that test hypotheses about how CSR motivation relates to different levels of CSR commitment. The results of this research both validate and challenge current theory. This refined understanding of CSR engagement may enhance firm transparency and accountability to stakeholders. It may reduce the uncertainty in both internal and external assessments of firm CSR and the potential for social and financial impact. (shrink)

Cyber attackers targeting large corporations achieved a high perimeter penetration success rate during 2013, resulting in many corporations incurring financial losses. Corporate information technology leaders have a fiduciary responsibility to implement information security domain processes that effectually address the challenges for preventing and deterring information security breaches. Grounded in corporate governance theory, the purpose of this correlational study was to examine the relationship between strategic alignment, resource management, risk management, value delivery, performance measurement implementations, and information security governance (ISG) effectiveness (...) in United States-based corporations. Surveys were used to collect data from 95 strategic and tactical leaders of the 500 largest for-profit United States headquartered corporations. The results of the multiple linear regression indicated the model was able to significantly predict ISG effectiveness, F(5, 89) = 3.08, p = 0.01, R² = 0.15. Strategic alignment was the only statistically significant (t = 2.401, p <= 0.018) predictor. The implications for positive social change include the potential to constructively understand the correlates of ISG effectiveness, thus increasing the propensity for consumer trust and reducing consumers' costs. (shrink)

ABSTRACT:How does the state influence stakeholder legitimacy? And how does this process affect an industry’s ethical challenges? Stakeholder theory adopts a forward-looking perspective and seeks to understand how managers can address stakeholders’ claims to improve the firm’s ability to create value. Yet, existing work does not adequately address the role of the state in defining the stakeholder universe nor the implications this may have for subsequent ethical challenges managers face. This article develops a political stakeholder theory (political ST) by weaving (...) together the political economy, stakeholder theory, and legitimacy literatures. Political ST shows how state policies influence stakeholder legitimacy and, in turn, affect an industry’s ethical challenges. This article integrates the concept of agonism to address the perennial tension between markets and states and its implications for firms and their managers. Political ST is then applied to the case of microfinance, followed by a discussion of the contributions of this approach. (shrink)

In the egoism philosophical framework, it is contended that when organizations focus on their long-term interests, they, without knowing it, advance the interests of society as a whole, which is perceived as ethical. In this research, this premise is challenged using data collected from the social media outlets of 29 randomly selected companies from the 2013 Fortune 500 list. Through qualitative comparative analysis, the exact opposite was found. In fact, the organizations that focused on striving for their long-term success are (...) perceived as unethical. It was also found that socially responsible organizations are perceived as ethical whereas those that misrepresent their positions and attempt to influence the decisions of others are perceived as unethical. Implications for managers are discussed, and future directions are suggested. (shrink)

This work underscores the importance of answering the question: who are organizational stakeholders? It argues that stakeholder theory is a normative management theory, and there is a need to differentiate between stakeholder and non-stakeholder firms. It further argues that the overall organizational stakeholder orientation indicates how narrowly or broadly organizations define their stakeholders. Therefore, this work attempts to provide a stakeholder salience scheme for stakeholder organizations, i.e., organizations with accommodative and proactive stakeholder orientations. In the process, this work reviews key (...) scholarly contributions and points out some potential weaknesses in these contributions with an aim to develop a new stakeholder typology. This work contributes to the existing literature by: introducing a contingent variable, i.e., organizational strategy, in a stakeholder typology scheme; reaffirming the normative aspect of stakeholder theory by placing normative considerations at the center of stakeholder salience typology; and improving the descriptive validity of stakeholder theory by adding a new stakeholder variable, i.e., organization, in the presented stakeholder salience typology scheme. (shrink)

The question of stakeholder salience has recently resurfaced in the suggestion that the ethical foundations of corporate cultures result in stakeholder cultures that largely explain how firms allocate resources among stakeholders. The present article seeks to complement this novel approach to understanding stakeholder management by adding insights from the multilevel influences that create the corporate culture in the first place, and ultimately affect managers in their stakeholder decisions. This article draws on cultural theory to examine how the individuals who compose (...) firms present group and grid solidarity that results in cultural biases in the corporate culture. These cultural biases—individualism, hierarchy, fatalism, and egalitarianism—are then paired with the stakeholder cultures they enable, and inferences are extracted concerning the salience managers are likely to accord to various classes of stakeholders as a result. Future research and managerial implications stemming from this new view on stakeholder management conclude this article. (shrink)

This paper investigates the impact of activism on a large, powerful corporation in Tasmania. Gunns Ltd was a large woodchip processor in Tasmania that fought a long-running battle with environmental activists regarding Gunns’ logging and processing activities. The study focuses on events in 2004–2005, when Gunns applied to build a pulp mill in rural northern Tasmania and began a legal case against activists. The research question is whether there is clear statistical evidence that these events were important, as is widely (...) believed, in the ultimate failure of Gunns in, just 6 years after being the largest and one of the most financially successful Tasmanian companies. We use a mixed methods approach that combines a detailed narrative informed by theory, to examine issues of corporate social responsibility and ethical behaviour, with an econometric time series analysis of the impact of activism on the market value of Gunns. Our analysis supports the contention that the events in 2004–2005 played a significant part in the decline of the long-run market value of Gunns over the subsequent period, through to its failure in 2011. We discuss the underlying causes for Gunns’ failure in terms of agency, stakeholder, legitimacy and leadership theories. Research frequently assesses effects such as those in the Gunns’ case through solely qualitative means. This paper integrates a quantitative analysis into a detailed qualitative narrative and theoretical interpretation of events, to provide additional precision to its findings. It contributes to research in CSR and the impact of activism. (shrink)

Despite its central position in the history of European and Christian thought on the protection of human dignity, the virtue of mercy is currently a problematic and under-developed concept in business ethics, compared to related ideas of care, compassion or philanthropy. The aim of this article is to argue for its revival as a core principle of ethical business practice. The article is conceptual in method. An overview is provided of the scope of contemporary business ethics research on related topics (...) and clarifies some of the similarities and differences between mercy and popular terms, such as compassion and prosocial behaviour. The question is then explored as to why mercy has so little traction in business ethics. Some of the history of the idea of mercy in European and Anglophone philosophy is discussed, from Anselm and Aquinas to the present day, showing how discourse on mercy came to be split into a wider concept of the prevention and alleviation of suffering (_misericordia_) and a narrower one of clemency or leniency. Aquinas’s wide concept of the virtue of _misericordia_ is developed as the basis for a principle of mercy, which is applicable directly to corporations. The practical implications of this for standards of corporate behaviour towards employees and other stakeholders are then considered through the introduction of a ‘vulnerability grid’. The grid offers a critical contrast to other analysis tools, such as stakeholder power-interest matrices. Cases drawn from empirical studies are used to illustrate application of the grid and to challenge some common assumptions of stakeholder theory. (shrink)

This paper investigates the corporate social responsibility (CSR) structures of U.S. listed firms. We find evidence of a general tendency towards CSR specialization with almost three-quarters (73.91%) of these firms focusing on a single CSR dimension. The degree of specialization varies across industries and the single CSR dimension focused on also varies for industries with similar degrees of specialization. We find that firms with higher exposures to CSR concerns, international activities, larger size, and higher financial slack tend to diversify across (...) multiple CSR dimensions. More importantly, we find evidence that diversified CSR structures positively affect a firm’s value relative to a control group before and during the 2008 financial crisis. Our findings have important implications for corporate and portfolio managers, investors, and policy makers. (shrink)

Business Ethics: A European Review, EarlyView.

Since its inception in 2006, the United Nations-backed Principles for Responsible Investment have grown to over 1300 signatories representing over $45 trillion. This growth is not slowing down. In this paper, we argue that there is a set of attributes which make the PRI salient as a stakeholder and its claim to sign the six PRI important to institutional investors. We use Mitchell et al.’s theoretical framework of stakeholder salience, as extended by Gifford. We use as evidence confidential data from (...) the annual survey of signatories carried out by the PRI in a 5-year period between 2007 and 2011. The findings highlight pragmatic and organizational legitimacy, normative and utilitarian power, and management values as the attributes that contribute most to the salience of the PRI as a stakeholder. (shrink)

This paper advances stakeholder salience theory from the viewpoint of small businesses. It is argued that the stakeholder salience process for small businesses is influenced by their local embeddedness, captured by the idea of social proximity, and characterised by multiple relationships that the owner-manager and stakeholders share beyond the business context. It is further stated that the ethics of care is a valuable ethical lens through which to understand social proximity in small businesses. The contribution of the study conceptualises how (...) the perceived social proximity between local stakeholders and small business owner-managers influences managerial considerations of the legitimacy, power and urgency of stakeholders and their claims. Specifically, the paradoxical nature of close relationships in the salience process is acknowledged and discussed. (shrink)

The aim of this study is to analyse how secondary stakeholders influence managerial decision-making on Corporate Social Responsibility disclosure. Based on stakeholder salience theory, we empirically investigate whether differences in environmental disclosure among companies are systematically related to differences in the level of power, urgency and legitimacy of the environmental non-governmental organisations with which these companies are confronted. Using proprietary archival data for an international sample of 199 large companies, our results suggest that differences in environmental disclosures between companies are (...) mainly associated with differences between their environmental stakeholders’ legitimacy. The effects of power and urgency are of an indirect nature, as they are mediated by legitimacy. This study improves our understanding of CSR disclosure by demonstrating that, next to the well-documented effect of company characteristics, stakeholder characteristics are also important. Besides, it provides scarce empirical evidence that not only primary stakeholders, but also secondary stakeholders are influential with regards to management decision-making. And more specifically, it offers insight into why some stakeholder groups are better able to influence disclosure decisions than other. The results also have important practical implications for managers of both environmental NGOs and large companies. For managers of environmental NGOs the results provide evidence of the most successful tactics for having their environmental information demands satisfied by companies. For company management the results provide insights into the most important stakeholder characteristics, on the basis of which they may develop strategies for proactively disclosing environmental information. (shrink)

The aim of this research is to investigate the web of business-stakeholder relationships emerging from first integrated reports. Drawn from the stakeholder salience theory, the analysis focuses on some factors that may cause specific stakeholders to be crucial for some organizations and their ability to create value over time. More precisely, findings highlight the importance of industry membership, while entities’ nationality seems not to be a differentiating element. This study contributes to the corporate disclosure literature by analyzing an emerging reporting (...) tool, the integrated report, and demonstrating that the link between some business characteristics and stakeholder salience seems fundamental for the representation of the impact of corporate social and environmental responsibilities on the economic performance. From a practical point of view, the impact of industry membership on corporate disclosures encourages the drafting of differentiated reporting standards across sectors, in order to improve comparability, materiality, and reliability of information. (shrink)