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)

This article examines the implications of the escalation in institutional inves power and heterogeneity for two dominant theories of corporate governanceagency theory and stakeholder theory. From this analysis, a new view of the agency relationship between institutional investors and their portfolio firms emerges, which recognizes the institutions’ market power, complex role as financial intermediaries, and possible involvement in simultaneous and opposing agency contracts. We also conclude that stakeholder theorists should reconsider these newly empowered shareholders’moral standing in relation to their portfolio (...) firms, and they should reexamine the identities and goals of these modern investors. To that end, we demonstrate that a novel, intragroup application of Mitchell, Agle, and Wood’s stakeholder framework to heterogeneous institutional investors illuminates their varying levels of stakeholder salience. (shrink)

This study examines corporate social performance (CSP) as a multi-dimensional concept and relates each dimension to a variety of explanatory variables. Regression analysis is used to test the proposition that the determinants of CSP will vary with the dimension of CSP under investigation. The results of this exploratory analysis indicate they relate in unique patterns to the different measures of social performance. Implications for future research are discussed.

The three leading normative theories of business ethics are the stockholder theory, the stakeholder theory, and the social contracttheory. Currently, the stockholder theory is somewhat out of favor with many members of the business ethics community. Thestakeholder theory, in contrast, is widely accepted, and the social contract theory appears to be gaining increasing adherents. In thisarticle, I undertake a critical review of the supporting arguments for each of the theories, and argue that the stockholder theory is neitheras outdated nor as (...) flawed as it is sometimes made to seem and that there are significant problems with the grounding of both thestakeholder and social contract theory. I conclude by suggesting that a truly adequate normative theory of business ethics must ultimately be grounded in individual consent. (shrink)

Most studies of corporate social responsiveness (CSR) focus on the relationship between CSR and profit. Here, we use three perspectives (institutional theory, economic theory and agency theory) to explain CSR. Industry norms, market share and indicators of management reputation predict variance in CSR. The combined perspectives improve understanding of both CSR and the CSR-profit relationship in two ways. First, they suggest that CSR levels and their relationship with profit will vary by industry. Second, they suggest that stock market measures and (...) accounting measures will respond differently to CSR measures. Stock market measures lead, while accounting measures lag, CSR. (shrink)

In recent years the resource-based view of the firm has made significant headway in explaining differences in interfirm performance. However, this perspective has not considered the social and ethical dimensions of organizational resources. This paper seeks to provide such an integration. Using Kuhn's three stage model of adaptive behavior, the resource worthiness of stakeholder management, business ethics, and issues management are explored. The paper concludes by drawing on prospect theory to understand the reasons for this conceptual lacuna.

Building on existing studies suggesting that corporate social performance (CSP) is important in the job choice process, the authors investigate job seekers’perceptions of importance of CSP and explore effects of CSP dimensions on organizational attractiveness. Job seekers consider CSP important to assessment of firms and rate five specific CSP dimensions (environment, community relations, employee relations, diversity, and product issues) as more important than six other CSP dimensions. Using signaling theory and social identity theory, the authors hypothesize differences in effects of (...) CSP data on ratings of employer attractiveness and find that environment, community relations, and diversity dimensions have the largest affect on attractiveness ratings. (shrink)

The results of a survey of business professionals verified a relationship between perceptions of corporate citizenship and organizational commitment. More important, the results demonstrated that the relationship between corporate citizenship and organizational commitment was stronger among employees who believe highly in the importance of the social responsibility of businesses. The results also indicated that the ethical measure of corporate citizenship was a stronger predictor of organization commitment than the economic, legal, and discretionary measures. Last, the results revealed that the discretionary (...) measure was more strongly associated with organizational commitment among female employees. (shrink)

Theoretical and practical trends of corporate citizenship indicate a deepening partnership between business and community. Following these developments, the article develops a model for the participation of businesses in decision-making processes as part of policy making and social-economic planning in the community. The article focuses on three levels: It examines the benefits and risks of such participation; identifies the typical dimensions of the participation processes; and finally, provides guidelines on how to develop a participation strategy based on the unique conditions (...) of each business and community. (shrink)

Abstract:Analysis of ethical conduct of business organizations has hitherto placed primary emphasis on the conduct of that corporation’s managers because ethical conduct, like all conduct, must manifest itself through individual behavior. This paper argues that in the real world corporate actions are influenced, to a considerable extent, by external market-based conditions. Therefore, a more comprehensive explanation of ethical business conduct must incorporate both corporate, i.e., internal considerations, and competitive, industry structure-based, i.e., external considerations. A framework is presented that provides a (...) systematic analysis of the interactive effect between different types of external market-based competitive conditions, institutional opportunities to engage in ethical behavior, and the likelihood that corporations would do so. The analytical framework leads to recommendations as to the types of actions that might be more effective in improving business ethical conduct under varying sets of market-based competitive conditions. (shrink)

Previous research in the social responsibility/social performance area has failed to systematically address the institutional determinants of social responsibility and its various manifestations in terms of social performance. This paper examines the relationship between the configuration of institutional structures at various levels and the necessary and sufficient conditions for the concept of social responsibility to manifest in the practice of stakeholder management. In particular we hypothesize that smaller, closely held firms in profitable niches are in the optimum position to practice (...) stakeholder management, assuming the management of these firms is predisposed to do so. (shrink)

The corporation's social role is usually presented as a cultural phenomenon in which the corporation learns socially acceptable behaviors through voluntary social responsibility, government regulations/public policies, and/or acceptance of ethics principles. This article presents an alternative view of corporationcommunity relations as a natural phenomenon based on complexity-chaos theory and a biological-physical conception of corporate values. Corporation and community are depicted as interacting nonlinear adaptive systems having unpredictable futures, the corporate social role is depicted as largely indeterminate, and competing values are (...) depicted as key factors driving change in corporationcommunity linkages. Normative duties of corporate and community leaders are described. (shrink)

This paper reviews the development of socially responsible investment (SRI) over recent years and highlights the prospects for an increasingly strong connection with the practice of corporate social responsibility. The paper argues that not only has SRI grown significantly, it has also matured. In particular, it has become an investment philosophy adopted by a growing proportion of large investment institutions. This shift in SRI from margin to mainstream and the position in which institutional investors find themselves is leading to a (...) new form of SRI shareholder pressure. Although this bears some resemblance to lobbying campaigns which might take advantage of shareholder rights, we seek to distinguish it as an important phenomenon in its own right — one to which corporate executives are likely to be paying increasing attention in the years to come. We further argue that this approach potentially meets some of the earlier ethical criticisms of certain forms of SRI but, ironically, probably owes its existence to those pioneering approaches. We conclude with some suggestions for further research to inform discussion of the issues highlighted in the paper. (shrink)

The Community Reinvestment Act (CRA) requires U.S. banks to make loans available in low- and middle-income sectors of their communities. Vaguely worded and unevenly enforced, CRA has created a major dilemma for banks because their CRA ratings are open to public scrutiny and used by regulators in determining whether to permit a bank to expand its products, services, or geo- graphic presence. Ironically, foreign banks doing business in the United States have been able to avoid the impact of CRA because (...) of legal privileges that are now disappearing. As Depression era-banking laws are set aside so that American banks can regain their international competitiveness, foreign banks in the United States will be forced to comply with CRA to take full advantage of the new opportunities available in the American banking arena. Based on current evidence, it appears that CRA may be a major stumbling block in the path of future foreign bank expansion in the United States. (shrink)

To survive and be successful in today's setting of globalisation and complexity, companies are obliged to think in wider strategic terms, developing active and enterprising strategies that include social, political and ecological elements, besides the economic ones. The analysis of the relationship between companies and society is especially interesting when these companies operate in international markets. Countries demand that large corporations contribute to local, regional and national development in such a way that their resources are exchanged for a significant increase (...) in their citizens' quality of life. Faced with that fact, the aim of this work is to establish what actions the subsidiaries will take in order to offer a response to the needs of their stakeholders in the host countries. Secondly, we attempt to identify the factors explaining the different levels of social response of the subsidiaries established in a particular country by different parent companies. The empirical study was carried out on a sample of Spanish subsidiaries in the two manufacturing industries with most foreign investment (the chemical and automobile industries) and the results obtained both confirmed the validity of the tool used to measure social response and permitted us to determine which factors influence the institutionalisation of social responsiveness. (shrink)

In this article, the authors investigate the applicability and usefulness of three alternative perspectives on corporate issues management: issue life cycle theory, legitimacy theory, and stakeholder theory. Each perspective makes certain as- sumptions about the nature of issues management activities and certain general predictions about corporate social responsiveness. The authors test the relative applicability of the three theories through a case study of the issues management activities of four large forestry companies in Finland and Canada. The authors conclude that all (...) three perspectives have value but differ in the level of analysis and time frame to which they apply. (shrink)

This article focuses on the association between the beliefs of small business owners and managers and their support for the community. Qualitative and quantitative data are utilized in an exploratory examination of two rationales for socially responsible behavior and of two kinds of support. Analyses show that the belief in strengthening the community as an important strategy for business success is positively associated with the provision of nonrisky and risky support. Risky support may threaten short-term business success. However, the belief (...) that a good public image is important for business success is negatively or not significantly associated with either risky or nonrisky support for the community. Findings uphold the position that there are significant variations in enlightened self-interest rationales that are differentially associated with business social performance among small business operators and demonstrate the usefulness of disaggregating social performance into risky and nonrisky variations. (shrink)

Various corporate social activities were regressed on self-report measures of stakeholder-orientations from 220 CEOs from large Fortune 500 industrial and service firms. Overall, the relationship between who CEOs say is important and corporate activities toward those stakeholders is much weaker than anticipated. Of the expected relationships, only corporate philanthropy was positively related to CEO community orientation. The few other significant findings were less straightforward. Return on equity (ROE) of the company was related to the CEO's customer orientation rather than the (...) CEO's stockholder orientation, and liberal HRM programs were positively associated with a CEO's stockholder orientation rather than employee orientation. (shrink)