Shawn L. Berman

Does Stakeholder Orientation Matter? The Relationship Between Stakeholder Management Models and Firm Financial Performance

Little empirical work has been done on the effect of stakeholder management on corporate performance. In this study, we contributed to stakeholder theory development by (1) deriving two distinct stakeholder management models from extant research, (2) testing the descriptive accuracy of these models, and (3) including important variables from the strategy literature in the tested models. The results provide support for a strategic stakeholder management model but no support for an intrinsic stakeholder commitment model. Implications of these findings for management practice and future research are discussed.

A Brand New Brand of Corporate Social Performance

We argue that corporate social performance (CSP) has become a legitimizing identity (brand) for researchers in the business and society field, but it has not developed into a viable theoretical or operational construct. Because measuring CSP is contingent on the operational setting (industry, issues, etc.), it is difficult to produce worthwhile comparisons across studies or generalizing beyond the boundaries of a specific study. The authors suggest that researchers remove the CSP label from their operational variables, and instead narrowly define their studies in operational terms. They provide aworking example of the proposed research direction by examining the theory underlying the popular CSP–financial performance (FP) debate. In the authors’ conceptualization, stakeholder action provides the underlying logic connecting CSP-FP, and we recast the research question to investigate the conditions under which stakeholders will take action to influence the focal organization and when those actions will influence the CSP-FP link.

Tacit Knowledge as a Source of Competitive Advantage in the National Basketball Association

In this study, we investigate a central tenet of the resource-based view of the firm舒that tacit knowledge often lies at the core of sustainable competitive advantage舒and attempt to articulate it wi...

Measurement of Corporate Social Action: Discovering Taxonomy in the Kinder Lydenburg Domini Ratings Data

The contribution of this work is a classification of corporate social action underlying the Social Ratings Data compiled by Kinder Lydenburg Domini Analytics, Inc. We compare extant typologies of corporate social action to the results of our exploratory factor analysis. Our findings indicate four distinct latent constructs that bear resemblance to concepts discussed in prior literature. Akey finding of our research is that positive and negative social action are both empirically and conceptually distinct constructs and should not be combined in future research. Additionally, we recommend that some prior research results be reconsidered to determine whether these newly derived measures might clarify some previous findings.

Boards of Directors and Shark Repellents:Assessing the Value of an Agency Theory Perspective

Because shark repellents decrease the vulnerability of firms (and their incumbent managers) to the market for corporate control, the decision to adopt these devices represents an excellent test of agency theory. In this empirical study, we examined the relationships between the adoption of shark repellents and several mechanisms that, according to agency theory, should align the interests of corporate board members and shareholders and/or make directors more effective monitors of management behaviour. Of the variables included, only board stock ownership (especially by employee directors) was linked to a reduced propensity to adopt shark repellents in the predicted manner. Two variables not immediately as- sociated with agency theory — the proportion of inside directors appointed by the incumbent chief executive officer (CEO) and a lower ratio of CEO compensation to the compensation of other top executives — were linked to higher rates of shark repellent adoption. Given that agency theory explains relatively little of the variance in shark repellent adoption, we advocate serious consideration of other theoretical formulations for corporate governance, including two approaches — stewardship theory and agent morality — that take the moral (‘other regarding’) obligations of directors seriously.

Strategy, stakeholders and managerial discretion

We begin by elaborating on the building blocks for understanding the dynamic interrelationships between stakeholder theory, managerial discretion and stakeholder orientation. We then provide a sketch of the dynamic between managerial discretion and stakeholder orientation and their likely interaction. We conclude by considering some future research directions motivated by this dynamic.

Ethics and Incentives: An Evaluation and Development of Stakeholder Theory in the Health Care Industry

This paper utilizes a qualitative case study of the health care industry and a recent legal case to demonstrate that stakeholder theorys focus on ethics, without recognition of the effects of incentives, severely limits the theorys ability to provide managerial direction and explain managerial behavior. While ethics provide a basis for stakeholder prioritization, incentives influence whether managerial action is consistent with that prioritization. Our health care examples highlight this and other limitations of stakeholder theory and demonstrate the explanatory and directive power added by the inclusion of the interactive effects of ethics and incentives in stakeholder ordering.

The Influence of Institutional Logics on Corporate Responsibility Toward Employees

Focusing on corporate responsibility (CR) toward employees, this article discusses how multilayered institutional logics affect the relationship between the firm and its employee stakeholders. It considers what constitutes CR toward employees and explores the institutional logics that can shape whether employers treat their employees as merely means to a strategic end or as ends in themselves. Specifically, the article examines market-, state-, professional-, and firm-based institutional logics that influence how employers treat their employees. The conclusion suggests that external institutional logics both enable and constrain firms to adopt a more instrumental relationship with their employees. However, some forms of organizational identity may generate firm-based institutional logics that enable firms to resist these pressures. Suggestions for future research focusing on the institutional and organizational drivers behind understanding CR toward employees are offered.

Stakeholder Orientation, Managerial Discretion and Nexus Rents

Building on prior research (Phillips et al. 2010), we make explicit the implied assumptions – both managerialist and determinist – in stakeholder research. We argue that three elements – managerial discretion, stakeholder orientation and nexus rent – interact in important and under-examined ways. A firm’s orientation toward its stakeholders determines how it will use the discretion accorded to it by external and internal circumstances. The interaction between these two factors affects a firm’s ability to create value in the short term and influences the level of discretion available to the firm in the long term. We argue that the interplay of discretion and orientation create a vicious (or virtuous) cycle, in which the firm either creates or destroys goodwill with stakeholders, thereby making it more or less likely that stakeholders will grant discretion in the future.

Stakeholder Theory: Seeing the Field Through the Forest

Does stakeholder theory constitute an established academic field? Our answer is both “yes” and “no.” In the more than quarter-century since Freeman’s seminal contribution in 1984, this domain has acquired some of the administrative, social, and disciplinary trappings of an established field. Stakeholder research has coalesced around a unique intellectual position: that corporations must be understood within the context of their stakeholder relationships and that this understanding must grow out of the interplay between normative and social scientific insights. Yet, much of this domain remains an unexplored territory. In this article, the authors assess the progress to date toward field status and outline future directions for stakeholder research.