Session 10

Stakeholders and Crisis Performance

Track M

Date: Tuesday, October 9, 2012

 

Time: 15:45 – 17:00

Paper

Room: Meeting Room 2.2


Session Chair:

  • Mary-Hunter McDonnell, University of Pennsylvania

Title: A Dynamic Political Stakeholder Theory Model of Firms’ Response Strategies towards Marginalized Stakeholders

Authors

  • Rashedur Chowdhury, University College Dublin

Abstract: The traditional approach to stakeholder management research has focused on firms’ engagement with powerful stakeholders. We integrate research from social movement theory, dynamic capability perspectives on managing political environments and stakeholder theory to develop a political stakeholder theory model. We show that (1) firms’ responses to marginalized stakeholders using political strategies are essential for gaining competitive advantage and avoiding reputation loss; (2) economic gain from implementing political strategies does not need to occur at the expense of ethics. By reconfiguring organization capabilities firms can adopt ethically and economically viable engagement with marginalized stakeholders that create value for both groups.

Title: Stakeholder Capital and Performance in Tough Times

Authors

  • Sinziana Dorobantu, New York University
  • Witold Henisz, University of Pennsylvania
  • Lite Nartey, University of South Carolina

Abstract: We argue that stakeholder capital, which we define as the level of mutual recognition, understanding and trust established by the firm with its stakeholders, mitigates the adverse financial impact of negative stakeholder events by preserving a firm’s social license to operate during times when the firm’s actions and operations are being challenged by opponents. Using a media-based measure of stakeholder capital that considers a broad range of engagements, we show that firms with higher levels of stakeholder capital are more likely to get the benefit of the doubt when they become the target of criticism and are more likely to see some of their stakeholders rise to defend their activities, thus increasing the likelihood that the companies will maintain their social license when this is being challenged. In this way, investments in stakeholder capital can, like insurance, generate benefits or payoffs after adverse events.

Title: Taxing a Tarnished Halo: Reputable Firms are Punished More Harshly for a Social Transgression

Authors

  • Mary-Hunter McDonnell, University of Pennsylvania
  • Brayden King, Northwestern University

Abstract: Prior research in strategic management suggests that a firm’s high reputation can be a critical asset during a crisis. The “halo effect” suggests that stakeholders are more likely to give a firm the “benefit of the doubt” in ambiguous situations, buffering the firm from reputational damage and performance declines. While firms benefit from a high reputation when they are involved in ambiguous crisis situations, we suggest in this paper that high reputations become a liability for firms that commit unambiguous acts of normative deviance. Using a unique database of over 500 employment discrimination cases brought in US courts, we show that the most reputable firms are actually punished more severely when found guilty of a normative transgression. Ultimately, our findings underscore an unrecognized source of punitive liability faced by companies that do not heed the normative expectations on which their reputation hinges.

Title: The Performance Effects of Coupling Strategic Change with CSR During the 2008 Market Crash

Authors

  • Jordi Surroca, University of Groningen
  • Josep Antoni Tribó, Carlos III University of Madrid
  • Sandra Waddock, Boston College

Abstract: This study examines the influence of corporate social responsibility (CSR) activities on firms’ propensity for strategic change and the financial performance effect of such change in turbulent environments. We propose that CSR positively affects strategic change and also contributes to implement effectively such change giving raise to improvements in financial performance. Our findings for an international sample of 725 firms from 23 countries suggest that in turbulent periods such that of the year 2008 social responsible firms have implemented radical strategic changes and these changes combined with the proactive orientation towards stakeholders contributed to enhance financial performance. Results also indicate that in firms that have not changed significantly their strategies in turbulent periods, CSR can reduce the negative financial impact of following such adaptive strategies.

All Sessions in Track M...

Sun: 08:00 – 09:15
Session 126: Entrepreneurship & Stakeholders - The Future Research Agenda
Sun: 11:15 – 12:30
Session 276: Performance Measurement Tools: A Review of Progress
Mon: 08:00 – 09:15
Session 106: Why do Firms do Bad Things and What Do We Know about It?
Mon: 09:30 – 10:45
Session 15: Human Factors in Stakeholder Strategy
Mon: 13:30 – 14:45
Session 12: Effective Stakeholder Management
Session 138: Value Creation & Appropriation: Take the money and run
Mon: 16:30 – 17:45
Session 113: Large Shareholders are Doing it for Themselves
Tue: 08:00 – 09:15
Session 11: Stakeholders and Corporate Social Performance
Tue: 11:00 – 12:15
Session 117: Heterogeneous Owner Types and their Influence
Tue: 14:15 – 15:30
Session 182: Challenges for Stakeholder Management
Tue: 15:45 – 17:00
Session 10: Stakeholders and Crisis Performance
Tue: 17:30 – 18:45
Session 13: The Problem of Performance in the Theory of the Firm:


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