Our article tidbits this week consider the effectiveness on CSR of mandatory regulation versus self-monitoring.
Promoting CSR through business strategy
This study examines the relation between a firm’s business strategy and its corporate social responsibility (CSR) performance. Using a comprehensive measure of business strategy based on the Miles and Snow (Organisational strategy, structure, and process, McGraw-Hill, New York, 1978, Organisational strategy, structure, and process, Stanford University Press, Stanford 2003) theoretical framework, the authors find that firms following an innovation-oriented strategy (prospectors) are associated with better CSR performance than those following an efficiency-oriented strategy (defenders).
Specifically, compared with defenders, prospectors engage in more socially responsible activities, fewer socially irresponsible activities, and perform better in both stakeholder- and third-party-related CSR areas. Taken together, the results suggest that business strategy is an important determinant of CSR performance. Prospectors take advantage of CSR, as their innovation-oriented strategy allows them not only to benefit more from CSR, but also to have more tolerance for the uncertainty, risk, and long time-horizon associated with CSR engagement.
Yuan Yuan, Louise Yi Lu, Gaoliang Tian and Yangxin Yu. 2020. Business Strategy and Corporate Social Responsibility.
Journal of Business Ethics, 162(2), 359–377.
Influence of mandatory non-financial disclosure on CSR across 24 countries
The article examines the effects of non-financial disclosure (NFD) on corporate social responsibility (CSR). The authors conceptualise trade-offs between two ideal types (government regulation and business self-regulation) in relation to CSR. Whereas self-regulation is associated with greater flexibility for businesses to develop best practices, it can also lead to complacency if firms feel no external pressure to engage with CSR.
In contrast, government regulation is associated with greater stringency around minimum standards, but can also result in rigidity owing to a ‘one-size-fits-all’ approach. Given these potential trade-offs, the authors ask how mandatory non-financial disclosure has been shaping CSR practices and examine its potential effectiveness as a regulatory instrument.
The analysis of 24 OECD countries using the Asset4 database shows that firms in countries that require non-financial disclosure adopt significantly more CSR activities. However, the authors also find that NFD regulation does not lead to lower levels of corporate irresponsibility. Furthermore, the analysis demonstrates that, over time, the variation in CSR activities declines as firms adopt increasingly similar practices.
The study thereby contributes to understanding the impact of government regulation on CSR at firm level. The authors also discuss the limits of mandatory NFD in addressing regulatory trade-offs between stringency and flexibility in the field of corporate social responsibility.
Gregory Jackson, Julia Bartosch, Emma Avetisyan, Daniel Kinderman & Jette Steen Knudsen. 2020. Mandatory Non-financial Disclosure and Its Influence on CSR: An International Comparison.
Journal of Business Ethics,162(2), 323–342.
Inclusive business and social innovation at the base of the pyramid
Inclusive businesses that combine profit making with social impact are claimed to hold the potential for poverty alleviation while also creating new entrepreneurial and innovation opportunities. Current research, however, offers little insight on the processes through which for-profit business organisations introduce social innovations that can profitably create social impact.
To understand how social innovations emerge and become sustained in business organisations, the authors studied a telecom firm in Kenya that successfully extended financial services across the country through a number of mobile banking innovations. The qualitative analysis revealed the strong role of being embedded in local networks and structures for initiating and implementing social innovations.
Strong embeddedness enhanced the pragmatic and ethical imperative for internalising social issues, but also provided access to diverse resources for implementing and legitimising social innovations. However, hybridisation processes that emphasised social issues introduced organisational tensions by increasing goal diversity and requiring adapting organisational processes and structures. The case shows how developing a mission-driven identity enabled the sustenance of social innovations by providing a meta-narrative that bridged goal diversities and rationalised organisational change.
Addisu A. Lashitew, Lydia Bals and Rob van Tulder. 2020. Inclusive Business at the Base of the Pyramid: The Role of Embeddedness for Enabling Social Innovations.
Journal of Business Ethics, 162(2), 421–448.
Sustainability-related identities and the institutional environment in NZ SMEs
While it is well known that SME owner–managers’ sustainability values and attitudes impact their company’s sustainability activities, they often face profit-driven institutional orders. In a qualitative study, the authors investigate which identities are critical for their engagement in sustainability and how these identities interrelate with their institutional environment.
The authors applied a qualitative design with narratives from 29 owner–managers of hospitality businesses who belong to a New Zealand-based sustainability network. The study revealed no single overarching sustainability identity; instead, six identities could be identified as sustainability-related and be linked to different institutional orders. By analysing the interplay between the identities and the institutional environment, the authors also found mechanisms on how SME owner–managers impact on their business’ sustainability.
The authors revealed that an adequate institutional environment can foster the development of sustainability-related identities, which in turn can lead to cultural evolution towards more sustainability. By integrating identity theory with organisational institutionalism, the authors contribute to theoretical development and to further sustainability research at individual and institutional level.
Eva Kiefhaber, Kathryn Pavlovich & Katharina Spraul. 2020. Sustainability-Related Identities and the Institutional Environment: The Case of New Zealand Owner–Managers of Small- and Medium-Sized Hospitality Businesses.
Journal of Business Ethics, 163(1), 37–51.
Managing tensions in corporate sustainability through a practical wisdom lens
Previous research has underlined the significance of practical wisdom pertaining to corporate sustainability (CS). Recent studies, however, have identified managing opposing but interlocked tensions related to environmental, social, and economic aspects as one of the most crucial future challenges in CS.
Therefore, the authors apply the established link between wisdom and sustainability to the pressing topic of managing tensions in CS. The authors commence with a literature overview of tensions in sustainability management, which manifests the basic work assumption concerning the need for practical wisdom in CS.
The authors then discuss the threefold, mutual interconnectedness between practical wisdom and tension management in CS, which the authors illustrate in a conceptual model. Thereafter, the authors develop a set of propositions on how a practical wisdom approach influences CS in practice and how it differs from a business-case approach.
In recognition of the conceptual character of the paper, the authors conclude by outlining potential practical applications and theoretical implications of the model and of the propositions. Limitations and avenues for further research are discussed.
Laura F. Sasse-Werhahn, Claudius Bachmann & André Habisch. 2020. Managing Tensions in Corporate Sustainability Through a Practical Wisdom Lens.
Journal of Business Ethics, 163(1), 53–66.