Olga Hawn

Mind the Gap: The Interplay Between External and Internal Actions in the Case of Corporate Social Responsibility

Research summary: We explore the effect of the interplay between a firms external and internal actions on market value in the context of corporate social responsibility (CSR). Specifically, drawing from the neo‐institutional theory, we distinguish between external and internal CSR actions and argue that they jointly contribute to the accumulation of intangible firm resources and are therefore associated with better market value. Importantly, though, we find that, on average, firms undertake more internal than external CSR actions, and we theorize that a wider gap between external and internal actions is negatively associated with market value. We confirm our hypotheses empirically, using the market‐value equation and a sample comprising 1,492 firms in 33 countries from 2002 to 2008. Finally, we discuss implications for future research and practice. Managerial summary: Companies often accumulate intangible assets by taking internally and externally oriented CSR actions. Contrary to popular beliefs, the data show that they undertake more internal than external ones: firms do more and communicate less. How does a potential gap (i.e., a misalignment) between internal and external CSR actions affect a firms market value? We find that although together (the sum of) internal and external actions are positively associated with market value, a wider gap has negative implications. In other words, firms do not realize the full benefits of their internal actions when such actions are not externally communicated to key stakeholders, and to the investment community in particular. This negative association with market value is particularly salient in CSR‐intensive and the natural resources and extractives industries. Copyright

The Market for Corporate Social Responsibility (CSR): How Industry Structure Determines CSR

The effect of competition on firm performance and activities is at the core of strategy research; however, the question of how competition affects CSR remains largely understudied. This is partly due to endogeneity issues inherent in the question, and partly due to problems with existing data and methods. We overcome these limitations by triangulating traditional and non-traditional research methods in a specific empirical setting: addressing endogeneity issues not only with fixed effects and instrumental variables but also by calibrating market structure and strategic CSR in a simulation. Results of the more static regression analysis show that competition and CSR of competitors increase CSR at the firm level, while the more dynamic simulation analysis demonstrates that competition in fact decreases CSR at the industry level.

Social License to Acquire Abroad

I examine the strategic impact of corporate social responsibility (CSR) on international expansion. When going abroad, firms often face liabilities of foreignness, newness, and origin. I argue that information about their CSR activities can help circumvent these liabilities and affect the outcome of international expansion. A quantitative analysis of 4,130 cross-border M&A announcements by firms from Brazil, Russia, India, China, and South Africa (1990-2011) shows that positive (negative) news about CSR is associated with greater (lower) likelihood of and faster (slower) M&A deal completion. Thus, social license to acquire, or social approval of the acquiring firm by the relevant stakeholders, plays an important role in gaining access abroad. The study bridges instrumental stakeholder theory, corporate social responsibility, international business, and strategic management research.

How Do Financial Markets Value Corporate Social Responsibility? Investor Perceptions of Additions and Deletions by the Dow Jones Sustainability Index

Research has long studied how corporate social responsibility (CSR) activities affect financial market evaluations of firm value, but we know little about how investors use new information about changes in CSR to update their assessments of firm value. This paper argues that firm performance moderates the degree to which investors respond to new information about CSR activity. Using a large-scale financial event study of additions and deletions by the Dow Jones Sustainability Index (DJSI), we show that firms with strong financial performance gain fewer benefits for being recognized as CSR leaders, while bearing fewer penalties for losing recognition as CSR leaders. Intriguingly, analyst expectations of future performance have stronger moderating impact than historical accounting performance.

National Culture and Corporate Sustainability

How and when does national culture influence corporate social performance (CSP)? We use culture as an important new lens through which to examine CSP –one that has not been explored holistically to...

Redefining the Strategy Field in the Age of Sustainability

I examine how strategy is defined in the literature and find that most conceptualizations predominantly focus on financial metrics as measures of performance and mainly provide guidance on the strategic management of a corporation’s economic context. I also explore the work on externalities and corporate social responsibility to understand how environmental and social issues have been integrated in the literature. I find that environmental and social performance is examined either in isolation or by assuming a strong form of independence from financial performance. Therefore, I identify a clear gap in our understanding of the fundamental strategic problem in the age of sustainability and social responsibility. I highlight the urgent need for rigorous research around the phenomenon itself, and its theoretical implications for strategy as a field. Importantly, I suggest and discuss an extended definition (i.e., a reconceptualization) of strategy, and I refer to empirical evidence of the emergence of the “sustainable organization”—a distinct type of the modern corporation that effectively and profitably integrates environmental and social issues into its strategy. I also briefly suggest avenues for future research.We examine how the strategy field is defined in the literature and find that most conceptualizations focus on financial metrics as measures of performance and only provide guidance on the strategic management of a corporation’s economic context. We then review the externalities and corporate social responsibility literatures and find that environmental and social performance is examined either in isolation or by assuming a strong form of independence from financial performance. Therefore, we identify a clear gap within the strategy field with regards to our understanding of the fundamental strategic problem in the age of sustainability. Importantly, we suggest and discuss an extended definition (i.e., a reconceptualization) of the strategy field, thus expanding its boundaries. We conclude by discussing implications for future research and practice.

A Model of Organizational Symbolism: Understanding the Different Shades of Green

Despite growing institutional pressures for greater transparency, accountability and sustainability in socio-environmental terms, a number of organizations respond to stakeholder demands and expectations in a symbolic way. We develop a richer conceptual understanding of how, when, and why organizations pursue this strategy. Specifically, we characterize the behavioral antecedents and the resulting heterogeneity in organizational symbolism. We use the context of “greenwashing” - an often monolithically perceived, yet fundamentally strategic and complex organizational phenomenon. Drawing on the concepts of conformity and compliance, symbolic and substantive actions, our model considers this heterogeneity (i.e., the “different shades of green”) based on the materiality of the issue and organizational costs and benefits of resource mobilization (or acquisition) to respond to the issue. More specifically, we suggest a model whereby firms decide whether and in what way to decouple their response to a specific issue based on its materiality, and a calculus of the costs and benefits associated with the use of organizational resources and capabilities versus the costs of inaction. We extend the basic model by considering the moderating role of institutional pressures and organizational characteristics. We offer several propositions for future research to unpack organizational symbolism, its various degrees and antecedents.