"Nothing But a Lot of Talk and CSR"
Public relations needs advise companies to commit to socially approved policies, but too often no substantive action follows. The Eye of the Beholder: When Symbolic Actions Fail in the Context of Corporate Social Responsibility, CROMA Working Paper 10/007, by Maurizio Zollo (Department of Management and Technology), Donal Crilly (London Business School) and Morten Hansen (INSEAD), brings bad news to these do-as-I-say-not-as-I-do people: stakeholders, the scholars assess, can discriminate companies decoupling CSR declarations and ongoing activities from companies integrating them. Moreover, the features of the stakeholders matter: organizations not receiving resources from the company and specialists monitoring a single CSR aspect are more likely to sort out the good apples from the bad ones.
The authors, within the RESPONSE research project, selected 11 companies in 5 industries, 6 of which decouplers and 5 integrators according to social performance data provided by three social rating agencies; then interviewed 112 senior executives of the companies and 138 stakeholders and consulted archive data in order to confirm the agencies' assessment and to understand what can affect stakeholders' judgement.
They find that overall stakeholders give a significantly worse evaluation of the social performance of decouplers than of integrators (1.4 less points on a scale 1-10), but that different stakeholders behave differently. While the evaluations of integrators are consistent along the spectrum of stakeholders, there is considerable variance in the evaluation of decouplers, suggesting that some stakeholders are blind to the decoupling that occurs. "An investigation of our stakeholder interviews", Zollo and his colleagues write, "suggested two broad distinctions between stakeholders: the nature of their relationship with the focal organization, and their capacity to 'see through' decoupling efforts".
The scholars find that stakeholders "with a great deal at stake" in the relationship with a decoupler organization (i.e. receiving resources from the company) evaluate its social performance positively, irrespective of actual implementation. On average, resource-receiving stakeholders rate corporations over one point more generously on the 0-10 scale.
Stakeholders with focused experience and attention in a single domain (be it labour rights, environment or anything else) have a superior capacity to access and interpret specialized data and, in turn, greater insight into organizational practices. "They don't evaluate all corporations harshly, but discriminate between integrator and decoupler corporations", the scholars say. On average, their evaluation of decoupling companies is 1.5 points lower in the 0-10 scale.
The study provides results that differ from previous works restricted to financial stakeholders. The financial community seems inclined to give credit to corporations announcing the adoption of long-term incentive plans or share buy-back programs even when they are not implemented, while CSR stakeholders, whose role is crucial in building a corporate image, seem harder to deceive.