Performance measurement is a challenge – explore deeper with this week’s articles.
On the fallacy of sustainability balanced scorecards
In a recent review article published in this journal, Hansen and Schaltegger discuss the architecture of sustainability balanced scorecards (SBSC). They link the architecture of SBSCs to the maturity of the value system of a firm as well as to the proactiveness of a firm’s sustainability strategy.
The authors contend that this argument is flawed and that the architecture of SBSC does not matter since—irrespective of their architecture—SBSCs are ill-suited to achieve substantive corporate contributions to sustainability.
First, the authors assess the SBSC against three fundamental conditions for an effective management of corporate sustainability—the generation of positive outcomes at the societal level, the consideration of complexities and tensions, and the integration of heterogeneous and competing logics—to show that the SBSC is diametrically opposed to the complex and multi-facetted nature of corporate sustainability and ill-suited to achieve transformational change of for-profit organisations towards sustainability.
Second, the authors address the question whether architecture of the SBSC matters and find that it is a fallacy to believe that the architecture of SBSCs can address this fundamental misfit. Rather, the authors’ argument reveals that irrespective of its architecture the SBSC is not a suitable tool for achieving strategic change for sustainability beyond incrementalism because it is deeply rooted in the idea of aligning sustainability with established core business routines.
The authors propose that the emerging integrative view on corporate sustainability offers a more promising route for scholars and practitioners who are truly concerned with a deep transformation of private firms towards more sustainability.
Tobias Hahn and Frank Figge. 2018. Why Architecture Does Not Matter: On the Fallacy of Sustainability Balanced Scorecards.
Journal of Business Ethics, 150(4), 919–935.
Are sustainability balanced scorecards irrelevant or misunderstood?
In a recent systematic review of the Sustainability Balanced Scorecard (SBSC) literature in this journal, the authors developed a typology of architectures as a basis for the process of SBSC design, implementation, use, and evolution. This paper addresses a comment by Hahn and Figge (2016) designed to stimulate further research.
The authors argue that the existing literature demonstrates that the SBSC management tool can play an important role in corporate sustainability. The SBSC architectures—as representations of goals and priorities—form an integral and iterative part of the corporate sustainability strategy-making process and therefore cannot be isolated from it. However, the concept as such should not be overloaded (e.g. as a tool for radical change).
In this paper, the authors first reflect on the potentials and constraints of the SBSC in relation to (1) radical or transformational change and (2) measuring performance outcomes on the level of human–earth systems.
Second, the authors discuss the importance of SBSC architecture concerning (1) how it enables the integration of sustainability into business organisations; (2) how both strictly hierarchical cause-and-effect chains and less hierarchical designs can allow companies to seek inclusive profits; and (3) the contingency-based use of generic architectures (i.e. using the sustainability strategy and value system to determine a fitting architecture) in contrast to its use as a diagnostic tool (i.e. the architecture revealing the sustainability strategy and value system).
Read this Open Access article for free online.
Erik G. Hansen and Stefan Schaltegger. 2018. Sustainability Balanced Scorecards and their Architectures: Irrelevant or Misunderstood?
Journal of Business Ethics, 150(4), 937–952.
The misuse of information systems resources in the workplace
Mitigating response distortion in answers to sensitive questions is an important issue for business ethics researchers. Sensitive questions may be asked in surveys related to business ethics, and respondents may intend to avoid exposing sensitive aspects of their character by answering such questions dishonestly, resulting in response distortion.
Previous studies have provided evidence that a surveying procedure called the randomised response technique (RRT) is useful for mitigating such distortion. However, previous studies have mainly applied the RRT to individual dichotomous questions (e.g., yes/no questions) in face-to-face survey settings.
In this study, the authors focus on behavioural research examining the relationships between latent variables, which are unobserved variables measured by multiple items on Likert or bipolar scales. To demonstrate how the RRT can be applied to obtain valid answers from respondents answering a self-administered online questionnaire with Likert and bipolar scales, the authors build a behavioural model to study the effect of punishment severity on employees’ attitudes toward misuse of information systems resources in the workplace, which in turn influence misuse behaviour.
The survey findings meet expectations. The respondents are generally more willing to disclose sensitive data about their attitudes and actual behaviour related to misuse when the RRT is implemented. The RRT’s implications for causal modelling and the advantages and challenges of its use in online environments are also discussed.
Amanda M. Y. Chu, Mike K. P. So and Ray S. W. Chung. 2018. Applying the Randomized Response Technique in Business Ethics Research: The Misuse of Information Systems Resources in the Workplace.
Journal of Business Ethics, 151(1), 195–212.
Assertiveness bias in gender ethics research
Gender is one of the most researched and contentious topics in consumer ethics research. It is common for researchers of gender studies to presume that women are more ethical than men because of their reputation for having a selfless, sensitive nature. Nevertheless, the authors found evidence that women behaved less ethically than men in two field experiments testing a passive form of unethical behaviour.
Women benefited to a larger extent from a cashier miscalculating the bill in their favour than men. However, in three follow-up studies, the authors found that women did not necessarily intend to benefit at the expense of someone else. Women are less prone to speak up to a cashier than men are, even when the mistake is made in their disfavour. These results reveal that gender differences in assertiveness affect differences in unethical behaviour.
Saar Bossuyt and Patrick Van Kenhove. 2018. Assertiveness Bias in Gender Ethics Research: Why Women Deserve the Benefit of the Doubt.
Journal of Business Ethics, 150(3), 727–739.
Determinants and performance effects of social performance measurement systems
This study investigates the performance measurement systems adopted by companies to manage their social responsibility activities, a theme that remains under-researched despite the important role that these mechanisms may play in helping firms control and improve their social performance.
An integrative model is developed to examine how the three fundamental drivers of corporate social strategies, i.e., business motivations, perceived stakeholder pressures, and top management’s social commitment, influence the use of social performance indicators for internal decision-making and control and how such use impacts companies’ social and economic performance.
The results from a survey of 97 Italian companies suggest that economic motivations and top management’s commitment are associated with a more intensive use of social performance indicators for decision-making and control, whereas perceived pressures from stakeholders do not represent a significant determinant of such use. The use of social performance indicators, in turn, is found to directly influence a firm’s social performance and, indirectly, its bottom line.
Irene Eleonora Lisi. 2018. Determinants and Performance Effects of Social Performance Measurement Systems.
Journal of Business Ethics, 152(1), 225–251.
CSR disclosure items used as fairness heuristics in the investment decision
The growth in demand for corporate social responsibility (CSR) information raises the question of how various CSR disclosure items are used by investors, an important stakeholder group driven by instrumental, moral, and relational motives. Prior research examines the instrumental motive to maximise individual shareholder wealth and the moral motive to actualise personal stewardship interests.
The authors contribute to the literature by examining investors’ relational motive to realise positive stakeholder relationships within and between organisations and communities. The relational motive arises when investors look at a company’s treatment of other stakeholder groups as a heuristic to form a perception of how fairly they will also be treated by that company in the future, and thus invest in the company they perceive as fair.
Fair treatment in the future matters to the investor who purchases stock from the company or via the capital markets in exchange for becoming a shareholder and thus a residual claimant of the company. As such, the investor expects future cash flows from holding and/or reselling the stock and expects to be treated fairly by the company in the future.
The authors propose that investors, use as a fairness heuristic, CSR disclosure items—CSR investment level or CSR assurance—that represent the company’s commitment to its stakeholders, and that the resulting fairness perception affects the extent to which the CSR disclosure items influence their investment decision.
Using responses from 113 investors in an online experiment, the authors find that fairness perceptions are higher when CSR investment is above (versus below) the industry average, and that fairness perceptions partially mediate the impact of the CSR investment level on investment amount allocations. The authors do not find that the presence (versus absence) of CSR assurance is used by investors as a fairness heuristic.
The results are robust to controlling for preferences for financial performance and hence investors’ instrumental motive, and to controlling for individual environmental attitudes, and hence investors’ moral motive. Implications for future research and public policy are discussed.
Helen Brown-Liburd, Jeffrey Cohen and Valentina L. Zamora. 2018. CSR Disclosure Items Used as Fairness Heuristics in the Investment Decision.
Journal of Business Ethics, 152(1), 275–289.