Oral exam Flashcards
1
Q
What does the “descriptive” nature of stakeholder theory refer to?
A
It describes what the corporation is. It describes the corporation as a constellation of co-operative and competitive interests possessing intrinsic value.
2
Q
What does “instrumental” stakeholder theory refer to?
A
It examines a framework for examining the connections between the practice of stakeholder management and the achievement of various corporate performance goals. The notion is that firms practicing stakeholder theory will be succesfsul
3
Q
What is meant with the most important aspect of stakeholder theory, the normative aspect?
A
(a) Stakeholders are persons or groups with legitimate interests in procedural and/or substantive aspects of corporate activity. Stakeholders are identified by their interests in the corporation, whether the corporation has
any corresponding functional interest in them.
(b) The interests of all stakeholders are of intrinsic value. That is, each group of stakeholders merits consideration
for its own sake and not merely because of its ability to further the interests of some other group, such as the share owners.
4
Q
Why is stakeholder theory managerial in the broad sense of the term?
A
It is not a framework that can be applied to every organization. It is more of an approach on how to properly manage stakeholders. Stakeholder management requires, as its key
attribute, simultaneous attention to the legitimate interests of all appropriate stakeholders, both in the establishment of organizational structures and general policies and in case-by-case decision making.
5
Q
What is depicted by the “contrasting models of the corporation: input-output” model?
A
Input flow into the firm: Investors, Suppliers and Employees
Output flow from the firm: Customers
6
Q
What is depicted by the “contrasting models of the corporation: the stakeholder model”?
A
both input and output flows from: Governments, investors, political groups, customers, communities, employees, trade associations, suppliers.
7
Q
What is the neo-classical theory on the firm?
A
It attempts to explain the economic principles governing production, investment, and pricing decisions of established firms in competitive markets.
8
Q
What is explained by the behavioral theory of the firm?
A
behavioral theory of the firm attempts to explain the process of decision making in the modern firm in terms of goals, expectations, and choice-making procedures.
9
Q
How does stakeholder theory differ from other theories in this sphere?
A
The stakeholder theory is intended both to
explain and to guide the structure and operation of the established
corporation.
10
Q
Stakeholder theory has been used to describe…?
A
a) the nature of the firm
b) the way managers think about managing
c) how board members think about the interest of corporate constituencies
d) how some corporations are actually managed
11
Q
What are stakeholders?
A
those groups without whose support the organization would cease to exist.
12
Q
Why is stakeholder theory practiced by firms?
A
There has been a paradigm shift from only focusing on shareholders interest to a more broad focus on more stakeholders. Regulatory pressure has also weakened the single-minded pursuing of shareholder value.
13
Q
Why was CSR created?
A
As a defense against capitalism in the 1950’s USA. Unregulated capitalism and the great depression eroded trust. Regulation empowered labor and ended small government.
14
Q
“Initial” CSR efforts were primarily aimed at…?
A
Keeping the government out of regulating firms. Firms themselves were best positioned to regulate the economy.
15
Q
CSR can be defined as what?
A
Voluntary corporate practices aimed at furthering social goods, beyond the interest of the firm and that which is required by law.
16
Q
What is corporate irresponsibility?
A
- Coercive pressured from outside stakeholders to be socially responsible
- Multinationals operating in contexts characterized by an absence of regulation
- A growing list of corporate scandals
- Mistrust in business
17
Q
What are the pathologies of contemporary capitalism?
A
- Inequality
- Exclusion
- Failure to attend to local needs
18
Q
How “voluntary” is CSR? make claims.
A
- A necessary part of corporate strategy is to appear legitimate and reduce negative externalities.
- An opportunity to create social and financial value
- A distinct mode of governance to address shortcomings of traditional regulation
19
Q
What does agency theory suggest?
A
Agency theory believes that owners of the firm are the most important stakeholders. Owners give their money and have so called ‘residual’ claims. It does not believe in social responsibility above and beyond following the law.
20
Q
Criticism on agency theory entails what?
A
Shareholder focus ignores legitimate claims of other stakeholders, hurting important agents in keeping the business alive.
21
Q
What is the main criticism on stakeholder theory?
A
CSR enables managers to ‘waste’ other people’s money on pet projects without accountability.
22
Q
What are some criticisms on CSR?
A
Business are owned by shareholders. Money spent on CSR initiatives is theft of the rightful property of the owner. CSR can impose inappropriate standars eliminating value creation resulting in business failure and job losses. Once exposed and positioned in the public minds, exposure can lead to the public scrutinizing every little mistake.
23
Q
How and what are the three dimensions of stakeholder theory?
A
- Descriptive: allows us to identify different stakeholders, examine their influence and how they are affected by the firm’s actions
- Analytical/instrumental: allows us to think about how stakeholder and the firm affect/are affected by CSR
- Normative: allows us to make value statement about the claims of stakeholders and the responsibility of the firm towards them.
24
Q
What is sociological institutionalism?
A
regulative, normative, and cultural-
cognitive elements that, together with associated activities and resources, provide stability and meaning to social life.
25
Why do agents respond to sociological institutionalism?
Central in this is isomorphism. that is, similarities across organizations in terms of both form and practice. The mechanism underlying this convergence is held to be social legitimacy—that is, actors adopt certain structures and practices not because they best serve their rational self-interest, but because they are seen as “appropriate”.
26
What is historical institutionalism?
Institutions here are seen as “humanly devised constraints that structure human interaction” (North, 1990, 3). These
come in both formal and informal shape. Unlike its sociological sibling with emphasis on similarities, historical institutionalism tends to focus on differences in practices across institutional contexts.
27
What is rational choice institutionalism?
rational choice institutionalists differ in that they conceive of institutions as social structures for solving market failures by lowering transaction costs (Hall and Taylor, 1996; Williamson, 1975, 1985). This arguably results in a functionalist tendency: institutions exist because they lower transaction costs. (eliminate trust and risk. Actions by individuals are controlled and thus become more predictable.)
28
What are some examples of formal institutions?
- Environmental regulations
- Labor standards
- Consumer or product safety
29
What are some informal institutions?
values, norms, culture
30
What are some informal institutions?
- Voluntary regulatory frameworks (united nations global compact)
- Ethics
- Cultural norms and institutional logics
- Industry norms
31
What are the 4 levels of institution?
- Industry
- Country
- International
- Multilevel
32
What is global governance?
global governance, seen as the process of defining and implementing global rules and providing global public goods, is a poly centric and multilateral process to which governments, international institutions, civil society groups, and business firms contribute knowledge and resources.
33
What is globalisation?
a process of intensification of cross-border social interactions due to declining costs of connecting distant locations through communication and the transfer of capital, goods, and people. This process leads to growing transnational interdependence of economic and social actors, an increase in both opportunities and risks, and to intensified competition
34
How did globalization happen?
1970: Industrial decline, rising unemployment. Heavily regulated and rigid economies. State regulated monopolies.
1980: Liberation of markets and finance. Deregulation. World trade agreements. Collapse of communism. Eastern Europe, China, South and East Asia and South America join the market
2000s: digitalization. Rise of mobile communication.
1970s > social-cultural improvements
35
What are issues of reduced effectiveness caused by globalization?
1. Exploitation
2. High investment cost when setting up international company
3. Different laws in different countries. Can be confusing
4. Weak regulation
5. Immigration
36
What is Explicit CSR?
“corporate policies that assume and articulate responsibility for some societal interests. They normally consist of
voluntary programs and strategies”
37
What is implicit CSR?
“corporations’ role within the wider formal and informal institutions for society’s interests and concerns. Implicit CSR normally consists of values, norms, and rules that result in (mandatory and customary) requirements for corporations to address stakeholder
issues”
38
When is CSR a substitute?
CSR emerges in the absence of regulatory institutions,
whereby private governance fulfills functions of traditional governance:
• With less regulation, there are greater expectations by stakeholders
that firms are responsible for providing social goods
• But companies may also have greater discretion to provide CSR
• More “soft” or “symbolic” CSR?
• Expectations ≠ power
Comparative institutional analysis of CSR
39
When is CSR a complement?
CSR emerges in the presence of regulatory institutions, whereby CSR reflects stakeholder power on the firm level
• Stakeholders may be empowered to demand CSR practices for other
stakeholders(e.g., employees in other countries Nordic countries)
• More substantive CSR?
40
What are advantages of the complement-substitute view?
```
• Can account for home and host country institutions and their interactions
• Allows for seemingly
contradictory influences of
institutions (substitute and
complement, e.g. labor rights)
```
41
What is financialization?
“Reorientation from the logic of production to the logic of finance.”
Corporations are increasingly
perceived more as portfolios of
diverse investments
less as integrated technical and
social units
42
What are some trends that have given rise to CSR?
- Growth of the MNC: changing relationship between business and society
- Less regulation in the West: free market policies imposed and adopted by developing countries
- Bigger scandals, reputation threads
- Less transparency
43
Brainscape used its trap card!
Your opponent has to study the history tables of model 3 until the next standby phase.
44
What was the initial response to corporate scandals in the past?
Deny all knowledge and responsibility of claims.
45
Eventually, businesses created codes of conduct. What are those?
A written statements of principle or policy intended to serve as the expression of a commitment to particular enterprise conduct.
46
How did organizational behavior change after the creation of the code of conduct?
Code of conduct was voluntary applied in strategic alignments. Efforts to look good in the eyes of the stakeholder. Vision that a good image is necessary to compete.
47
Why were codes of conduct not enough?
Codes of conduct lead to corporate accountability movements. Codes were not enough. Scandals and activists raised awareness and created the fundaments for reporting.
48
What are the reasons to report?
- Legal compliance
- Stakeholder expectation
- Reputation
- Intra-firm determinants
49
What is an example of legal requirement to report?
EU directive 2014/95/EU: firms with 500 or more employees have to disclose information about social and environmental issues. No longer voluntary for large firms. The type of reporting is relatively flexible.
50
What are external firm pressures to report?
Industry norms
• Cultural context
• Sometimes: access to capital from certain investors
• Responding to the expectations of their
stakeholders and by doing so, they are also contributing to the welfare of society (Morsing & Schultz, 2006)
• They feel obligated to because of institutional
pressures and expectations (Campbell, 2007)
• Hooghiemstra (2000) and Vanhamme and
Grobben (2009), argued that CSR disclosures are used mainly to protect the reputation and the identity of a firm
51
What are the reasons internal to the firm to report?
• Signal to employees, talent
• Reducing costs (when efficiencies are
found)
• Manage risks
52
Does reporting necessarily mean better performance?
No, it is evident that firms who pollute more also disclose more environmental information.
53
What are the types of reporters in organizations?
* Improvisers: Sustainability is not integrated in everyday operations
* Performers: Sustainability management is focused on ultimate sustainability performance not just reporting
• Reporters: companies that have formalized their reporting and sustainability management yet they
have not integrated sustainability into overall strategy & management
54
What are some advantages and disadvantages to reporting?
+Advantages:
- Count what counts: it makes companies aware of their own impacts.
- When you report it is quantified where you stand right now. So it helps you improve (benchmark)
- Dataset: can analyze over time
- Disadvantages:
- Incomplete (Leaving things out -> window dressing)
- Incomparable (over 300 types of reports so not easy to compare to each other. Also different industries)
- Assumes causality: do policies have an impact?
- Measuring the apparent, missing the system
55
What are the most accepted forms of reporting?
- GRI
- Integrated reporting
- Bcorp
56
What is GRI?
- Most widely used sustainability report.
- Founded in 1997 by Ceres and UNEP.
- Has alignment with other sustainability standards such as OECD guidelines for MNC'S, ISO 26000 and the UN compact.
- Covers a wide range of topics in the categories: Economic, Environmental and Social.
57
What is important in creating a quality GRI report?
* Materiality: reflect the organization’s significant economic, environmental, and social impacts that would substantively influence the assessments and decisions of stakeholders
* Stakeholder inclusiveness: identify all relevant stakeholders
* Sustainability context: performance reporting in the broader context of sustainability. E.g., compare with national and global levels
* Completeness: sufficient coverage.
• Balance: both good news and
bad news
* Comparability: enable comparison across time and organizations
* Accuracy: detailed for stakeholders to assess performance
* Timeliness: reporting on a regular basis and information in time
* Clarity: understandable and accessible to stakeholders
* Reliability: available for further examination and quality checks
• Control: the power to govern
organizational policies
```
• Significant influence: the
power to participate in the
financial and operating policy
decisions of the entity but not
the power to control those
policies
```
58
The most important and relevant issues are the material issues. What are they and why are they relevant?
Materiality is the threshold or cut-off point at which information becomes significantly important such that it should be reported. “the materiality principle allows auditors to make a professional judgement about whether the omission or misstatement of the information in question would significantly influence the economic decisions of a reasonable investor”
59
What are some criticisms to GRI?
The authors argue that organizations that report using GRI only report on what they choose to report. KFC racism incidents not integrated in GRI
* Loses sight of big picture (globalization, focusing to much on the business while missing the impact on the overall world)
* Reductionist because 3 dimensions treated equally (why use economic indicators in reporting on sustainability? Also quite logical because it is a business)
* Loses complexity by using individual rather than integrated indicators (specific measures)
* Promotes using indicators instead of “instilling business with values to change their mentality so they can subscribe to the assumptions of sustainable development”
* Ignores the interaction and participation of constituents (not accounting for all stakeholders)
60
What is integrated reporting?
the primary purpose of an integrated report is to explain to providers of financial capital how an organization creates value over time”
61
What does integrated reporting consist of?
```
Must consist of a summary report describing how a company's strategy, governance, business model, performance, and prospects lead to the creation of value in the short, medium, and long terms.
• Reports consider six different forms of capital fundamental to the success of companies:
• Financial capital
• Manufactured capital
• Natural capital
• Intellectual capital
• Human capital
• Social and relationship capital
```
62
What are the benefits of integrated reporting?
• A main advantage is integrated thinking, its
value as a tool for assessing the sustainability of
a company over the long term (Roth, 2014)
• Able to foster a long‐term vision (Tweedie,
2014)
• More information about the value created by
the company and on the way in which it is
distributed among stakeholders. (Haller and
van Staden, 2014)
• Preparation of the report can be a useful way to
increase financial performance and improve
relations with stakeholders
• improve the spread of a sustainability culture
within the company
63
What are some criticisms to integrated reporting?
* Can be too closely tied to business aspects and too far from the values of sustainability
* Not able to cover the needs of all stakeholders (Flower, 2015)
* Difficult to actually implement because of difficulty in understanding the six categories of capital (financial, manufactured, intellectual, human, social, and relationship, and natural).
* the presence of a large quantity of information and a lack of specific information systems and internal controls could make assurance more complicated
* Risk that integrated reporting could be just a marketing tool
* Problems of standardization and homogenization of the content
64
What is BCorp?
• Community of businesses
• Verified by external party: BCorp
• Legal accountability – Legally required to consider
stakeholders; sometimes required to pursue the creation of public benefit
• Internal vetting process for company; impact management system
65
What are the benefits of BCorp?
Its similar to other forms of reporting when looking at transparency and accountability but there are differences. It actually is more of a certificate that can only be obtained by complying to certain impact levels. It is available to al firms and the fee is based on revenue.
Other benefits:
• Access best practices across industries (other certified companies); compare and improve
• Template for employee manual
• Identify waste and operational inefficiencies, e.g. energy and water usage
• Attracting and retaining employees, e.g expanding medical, military, paid maternity and paternity leave →also in some countries, to be expected
• Corporate governance guidelines provide a framework to advance a shared company culture
• Patagonia founder: “Benefit Corporation legislation creates legal frame to enable companies to stay mission-driven through succession, capital raises,
and even changes n ownership, by institutionalizing the values, culture, processes , and high standards put in place by founding entrepreneurs.”
66
Does organizational vision lead to implementation?
No. There seems to be a contrast of what firms aim to be written in codes of conducts, human rights and other policies, reports, etc. But there seems to be a gap in how much it translates into concrete corporate action.
67
Who are the internal actors involved in CSR activities?
- Top management: the CEO's -> determine the CSR strategy and have a delegating function.
- Dedicated CSR teams or specialists (ethic officers). Responsible to get things done: Often middle managers (CSI "issue sellers") -> selling issues into other units (internally and externally)
- Main business units: Regular workers (often with conflicting priorities). Are the drivers of developing products, services and business models: Align with the business case. Work with marketing to explain actions in a way that speaks to sustainability but very little change.
68
When do companies engage with CSR?
- When pressured to do so
- Values: religious, philanthropic, personal
- Strategic alignment / business case
69
What drives the so-called "issue sellers" ?
- Dissatisfaction with the status quo: They aim to change the daily habits and routines
- Self perception as a change agent: Clear conviction that a CSR unit is like an internal NGO.
70
What are the main activities where issue sellers are bounded to?
• Environmental Policy and government relations – Two-way flow of
information between the company and the government
• Sometimes influencing policy
• Partnerships, programs
• “Environmental communications” = Marketing what the company does in sustainability terms
• Overseeing labor issues
71
In what ways do issue sellers face issues with legitimacy?
- Internal: Issue sellers are suspected of being primarily driven by pursuing philanthropic instead of "real business". May struggle to pursue issue buyers with less lucrative business activities.
- External: Issue sellers considered to be motivated by profit, philanthropic activities not taken seriously. May struggle obtaining partnerships with skeptical others.
72
What is an organizational sub-culture?
Values, behaviors, patterns, artifacts
• Different interpretations, problem definitions
For example:
• Influenced by societal level logics; influence societal-level logics
73
What are institutions (from an organization perspective)?
Conventional, standardized patterns of behavior found within and across organizations and giving
meaning to social exchange and order.
These patterns of behavior include:
• organizational and industry standards
• routines
• norms
“Multi-faceted, durable, social structures, made up of symbolic elements,
social activities, and material resources.” (Scott, 2001)
74
How do differences in subcultures come about?
Conflicting logics amplify subcultural characteristics between groups, shaping behavior and practices. Infusing behavior from logics with subcultural values, beliefs and
assumptions.
75
What are tempered aspirations?
-Inward looking aspiration:
Be modest about what kind of change you can achieve. small but tangible pictures of change rather than large visions. Modestly rejecting current practices.
-Outward-looking aspirations:
Focus on patience when introducing change, the slow-process with introducing concepts in order to create a little awareness. Focus on non-confrontation.
76
What are the three engagements strategies that issue sellers can employ?
1. Accumulating internal influence
2. Establishing proximity (linking to the person and to the business case)
3. Adapt to world views
77
What is accumulating internal allies?
Its about creating a network of people who have the same aligning values as you do, knowing both the company and you. Both winning internal allies and achieve small wins.
78
What is establishing proximity?
Establishing proximity relates to reach people individually. You need to relate sustainability to the individual in order to create a level of urgency. Discuss what the relevant issues to the issue buyers are in terms of sustainability. Concretely point out the business relevance. Create both emotional- and functional proximity.
79
What is adopting the world views?
Its about identifying all the different ways CSR can be seen. Both the "green lover" and the one who realizes the importance in order to establish customer sentiment. You have to communicate in a way that your counterpart understand you. Its about identifying world views and speaking the same language.
80
What are some others strategies that help to sell issues (apart from main 3)?
- Having clear targets
- Executive support to gain both internal and external legitimacy
- Enlist nonprofits for external legitimacy, but actually do good with them
- Strategic alignment
81
What is a hybride organization?
Having an organization that balances profit motive, shareholder focus, and profit redistribution & mission motive, stakeholder management and social projects.
82
What is market-led CSR?
Narrow view of stakeholder interest and focusing on the business case.
83
What is holistic CSR?
Wider scope of stakeholders. Having a system approach to problem solving and decision making. Synergistic approach.
84
Are profit and purpose mutually exclusive?
A corporation doesn’t have to ‘greenwash’ or add on CSR to the side of its business; it could just do something valuable.
85
What are some examples of aligning profit and purpose?
* Improving efficiency across the supply chain
* Tight coupling of firm activities and social or environmental outcomes
* Treating everyone fairly in the process
* Reducing costs (e.g. shipping)
* Not yet perfect: (raw materials mining, recycling, labor; circularity)
86
What are the 3p's?
Its a framework for social innovators. Habits of thought and action that contribute to the status quo.
87
What is a problem statement?
Identify the gap between current reality and how you want it to be (changing the status quo) Imagining a goal state can presuppose a solution. Dive deep into the problem. Do not create a solution for something that is not a problem to begin with.
88
What is person in the 3p's?
Its about person pursuing change. Think about motivations like growth mindset, sense of purpose, etc.
-Sources of power:
• Control of resources
• Personal – internal, deriving from personality, experience, expertise
• Positional – from formal roles in organizations and society
• Relational – from connections with family, friends, colleagues
```
In organizations:
• Control of resources
• Personal – internal, deriving from brand awareness, experience, expertise
• Positional – from formal roles in
industries, supply chains and society
• Relational – from connections with
governments, suppliers, partners, etc.
```
89
What is pathway in the 3p's?
It refers to the pathway of change (activities). Its about the possible vehicles to bring about change. Think about maybe creating a daughter organization or making changes to an existing organization. Scaling is also important. Aim to scale the solution up to the problem.
90
What are challenges in finding a fit within the 3 p's?
- Problem pathway fit: Is the vehicle focused on the cause or symptoms of the problem?
- Problem person fit: The person experience of the problem is affecting their knowledge and internal motivation of the problem.
- Pathway person: Do individuals have the sources of power to benefit from the vehicles of change.
91
Brainscape used its trapcard!
Study the table on hybrid organizations until the end of your opponents 2nd standby phase.
92
What is cross sector collaboration?
“the linking or sharing of information, resources, activities, and capabilities by organizations in two or
more sectors to achieve jointly an outcome that could not be achieved by organizations in one sector
separately (Bryson, Crosby, and Stone, 2006, 44)
93
What does RSPO refer to?
Different methods for certification:
- Segregated and identity preserved: certified palm oil is kept separate from ordinary palm oil along the supply chain.
- Book and claim: just buy uncertified palm oil and later pay for a certificate from an RSPO-certified grower to offset this.
94
What are important antecedent conditions for collaboration effectiveness?
* Power and resource asymmetries
* Interdependence among members
* Negative prehistories
* Degrees of goal consensus and trust
* Need for network-level competencies
* Institutional environment – e.g. adjacent, competing social fields
* Attitudes, competencies, capacities
* Mandatory vs. voluntary collaborations – e.g. when CSCs are started to obtain public funds
95
What are four sources of value that may be brought into collaboration?
1. Resource complementary
2. Resource nature
3. Resource directionality and use
4. Linked interest
96
What values can be achieved with collaboration
1. Associational value
2 Transferred resource value
3. Interaction value
4. Synergistic value
97
What are the main 3 barriers/challenges for CSR?
1. the complexity of social problems
2. the openness of firms
3. political polarization
98
Explain the complexity of social problems!
Increasing pressure on firms to address social issues. means-end decoupling becoming more relevant in organizations. Companies engage in CSR because it seems like the right thing to do. forced into CSR by society, reflected in normative pressure, regulation. Growth in organizational complexity. CSR initiatives also not always effective. Features of global capitalism make designing effective CSR initiatives extremely difficult
Challenge starts with gathering information, which even precedes any
CSR actions. Outsourcing and global
production have made supervision of supply chains very difficult to manage.
99
What is meant with the openness of firms?
In order to reach its full potential, firms need to take societal voices into account. Being open to society can be done by serving looked down upon societal groups and avoiding blind spots in business activities. focus on:
-Inclusive innovation: “Extending the beneficiaries of innovation, and building on ideas of
innovation for the bottom of the pyramid (Prahalad, 2004). This focuses on pro-poor innovation
(primarily in the private sector) which, through new concepts, low cost labour and materials and
huge scales of production, can serve markets previously ignored by traditional innovation. It also
includes innovations by marginalized groups, introduced under conditions of resource
constraints.”
-Social innovation: “Shifting beyond technological to social innovation. This approach focuses
on organizational innovations and new social practices designed to improve human well-being
(for example, in business models, production practices and finance and public services
delivery).” (UNCTAD 2017)
facilitate social openness by:
• Creating receptive stakeholder structures that in turn
affect
• Innovation activities
• Hiring, promotion
• Customer service, etc.
• Advisory boards, CSR top management committees
• Shown to increase reflexivity, deliberative capacities
• Cross-sectoral partnerships
• Especially important to develop initiatives in non-traditional markets
100
What is meant with political polarization and why is it important for firms?
CSR has become a new battleground in a polarized world. CEO activism is when firms or CEO takes a public stance on a social issues. Firms were at times pioneers for social issues but it was done in silence (LGBT benefits). Social issues nowadays unrelated to core business.
CEO/CSR in highly polarized societies. Most issues are partisan= statements might not matter. Stances can create support from certain groups while alienating others. CSR come at full circle (Socially responsible firms seen as a threat to society by some)
