Reciprocal Stakeholder Behavior

Company–Stakeholder Relationshipsand Normative Stakeholder Demands

The management literature widely uses the stakeholder approach to analyze and model the relationship between companies and their different constituents (for an overview on the stakeholder literature see Agle et al., 2008; Mitchell et al., 1997). An instrumental perspective defines and identifies stakeholders by their relevance for corporate success. Many scholars stress that for the understanding of company–stakeholder interactions, it is crucial to analyze and understand stakeholders’ influence on corporate behavior (den Hond & de Bakker, 2007; Frooman, 1999; Frooman & Murrell, 2005; Hendry, 2003; Rowley, 1997; Rowley & Moldoveanu, 2003). In this context, the literature often perceives stakeholder relations of companies as resource exchange relations (Frooman, 1999; Hill & Jones, 1992; Jawahar & McLaughlin, 2001; Jones, 1995; Näsi, 1995). Stakeholders provide resources and in exchange for providing resources they want firms to fulfill their claims (Hill & Jones, 1992). With reference to resource dependence theory (Pfeffer & Salancik, 1978), resources are all means that are required by organizations for survival. By providing resources, stakeholders become instrumental for company success and companies depend on vital stakeholder relationships. In the context of this article, the distinction between direct and indirect stakeholders is relevant (Rowley, 1997). Direct stakeholders are those actors who are involved in direct exchange relations with a company and thus have a direct influence on the company through the control of vital resources. By contrast, indirect stakeholders have an interest in a company’s activities and behavior but do not control resources and have no direct exchange relation with the company. Rather, they moderate and influence direct exchange relations between a company and direct stakeholders.

Prosocial organizational behavior refers to “positive social acts carried out to produce and maintain the well-being and integrity of others” (Brief & Motowidlo, 1986, p. 710). The literature on legitimacy theory and neo-institutionalism widely discusses the formation and adoption of normative demands for corporate prosocial behavior. Scholars argue that companies are embedded in a larger social environment (Campbell, 2007; DiMaggio & Powell, 1983; Meyer & Rowan, 1977; Scott, 1991). As a consequence, companies are subject to normative judgments that result in “generalized perception[s] or assumption[s] that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs and definitions” (Suchman, 1995, p. 574). In this context, stakeholder perceptions of corporate behavior are thus of crucial importance (Elsbach & Sutton, 1992). Such stakeholder perceptions and normative judgments of corporate behavior evolve in communicative discourses (Berger & Luckmann, 1966; Mitnick, 1995, 2000; Suchman, 1995) that represent a political process involving different stakeholders who compete with their different perspectives and normative, cognitive, and cultural backgrounds (Driscoll & Crombie, 2001; Lawrence et al., 1997; Massey, 2001; Neilsen & Rao, 1987; Rao, 1994; Scott, 1995). As a result “socially responsible corporate behavior may mean different things in different places to different people and at different times” (Campbell, 2007, p. 950). Thus in a specific situation, there may be competing perceptions of which corporate behavior stakeholders judge as legitimate, appropriate, and acceptable. In this context, stakeholders can adopt different or multiple roles depending on the specific situation and interaction they have toward a company. For instance, a customer or employee can at the same time be a local citizen or member of an NGO. Moreover, actors with a strong position, role, and influence within the stakeholder network of a company’s social environment are more likelyto dominate and shape social perceptions and judgments of a company’s legitimacy.

Previous research on stakeholders’ action suggests that next to interest other aspects such as identity play an important role (Rowley & Moldoveanu, 2003). The outcome-based perspective of interest cannot fully capture stakeholder action for normative demands. Because normative stakeholder demands refer to some wider societal interests and expectations (e.g., protecting the environment or alleviating poverty), outcomes and benefits of prosocial corporate behavior will, at best, only partly accrue to the stakeholders supporting such demands. Normative stakeholder demands are of collective nature and associated with many externalities. Therefore such demands often go beyond the individual benefits and affectedness of stakeholders, which limits the explanatory power of interest-based approaches to stakeholder action. Rowley and Moldoveanu (2003) complement interest with identity as a rule-based perspective on stakeholder action. In a similar vein, the argument here contends that a better understanding of the implementation of normative stakeholder demands calls for complementary, motive-based perspectives, however, without rejecting the interest-based mechanisms of stakeholder influence.

Normative Stakeholder Demands and Interest-Based Stakeholder Influence

The implementation of normative stakeholder demands for prosocial corporate behavior from both a firm and a stakeholder perspective departs from an interest-based stakeholder influence theory. This starting point provides the foundations for the subsequent introduction of the notion of reciprocal stakeholder behavior and the development of stakeholder reciprocity.

Main Characteristics of Reciprocal Behavior

Experimental economists have developed and postulated the model of reciprocal behavior over the last two decades (Fehr & Gächter, 1998; Gintis, 2000). This model builds on the empirical findings of a large number of game theoretical experiments (for an overview see, for example, Fehr & Falk, 2002a; Fehr & Schmidt, 2000b). Experimental economics investigates individual behavior in a controlled laboratory environment to test observed individual behavior under different strategic settings against predictions from theory (Roth, 1995). Usually, experimental games are played with monetary payoffs. Such experiments have shown that a substantial fraction of individuals—Fehr and Gächter (1998, p. 847) speak of 40% to 60%—do not behave in compliance with standard economic theory in that they do not behave selfishly but reciprocally (for early evidence see Güth, Schmittberger, & Schwarze, 1982). Furthermore, experimental economists find that reciprocal behavior is a robust behavioral phenomenon that persists under different strategic settings (e.g. Brown, Falk, & Fehr, 2002; Güth & van Damme, 1998; Hoffman, McCabe, & Smith, 1996; Sethi & Somanathan, 2003) and cultural settings (Costa-Gomes & Zauner, 2001; Hayashi, Ostrom, Walker, & Yamagishi, 1999; Henrich et al., 2001) as well as under high stakes conditions (Cameron, 1999; Fehr, Fischbacher, & Tougareva, 2002; Slonim & Roth, 1998). In contrast to standard neoclassical economics, experimental economists posit that there coexist different motives behind subjects’ behavior. The findings of experimental economics propose that—rather than a universal predominance of self-interest—different behavioral motives coexist that drive different actors’ behavior (Bowles & Gintis, 2000; Fehr & Gächter, 1998). Experimental evidence suggests that a fraction of around 40% to 60% of all subjects are motivated by reciprocal behavior (Fehr & Gächter, 1998, p. 847).

Reciprocity differs from selfish behavior in that reciprocal behavior is other-regarding rather self-interested and reciprocal actors willingly pursue reciprocal behavior even in the absence of economic incentives. Accordingly, reciprocal behavior is definable as norm-driven behavior characterized by the “willingness to sacrifice resources for rewarding fair and punishing unfair behavior even if this is costly and provides neither present nor future material rewards for the reciprocator” (Fehr, Fischbacher, & Gächter, 2002, p. 2). More specifically, there are three fundamental characteristics of reciprocal behavior (Kahneman, Knetsch, & Thaler, 1986):

First, reciprocal actors behave in a friendly way toward others if reciprocal actors perceive that those others to also behave in a friendly way. In turn reciprocal actors act spitefully when they believe they are facing spiteful behavior from others (e.g., Bowles & Gintis, 2000; Sethi & Somanathan, 2003; Sugden, 1984). In other words, reciprocal behavior is an in-kind response to friendly or unfriendly behavior. This definition leads to the distinction between positive and negative reciprocity: Positive reciprocity captures motives for rewarding friendly behavior, whereas negative reciprocity refers to punishing unfriendly behavior (e.g., Fehr & Gächter, 1998; Offerman, 2002).

Second, and unlike selfishly motivated actors, reciprocal actors are willing to reward friendliness and punish unfriendliness even if this conduct leads to additional net costs for them. Many experiments show that strong reciprocators retain costly reciprocal behavior under conditions where they cannot expect any future benefits from such behavior (Fehr et al., 2002; Fehr & Gächter, 2000a; Gintis, 2000). This finding leads to the distinction between weak and strong reciprocity. Weak reciprocators are driven by self-interest and elicit reciprocal behavior as a means of payoff maximization (Bowles & Gintis, 2000). By contrast, strong reciprocity is a behavioral motive for itself: that is, reciprocal behavior is maintained even if this conduct does not lead to payoff maximization. In what follows, the term reciprocity will refer to strong reciprocity only to focus on reciprocally motivated behavior. However, the reader should note that reciprocal behavior is different from altruistic behavior. While the latter denotes unconditional kindness, reciprocity refers to conditional kindness or unkindness (Bowles & Gintis, 2000).

Third, reciprocal actors follow implicit rules and norms that specify what is considered “friendly” or “unfriendly” (Fehr & Gächter, 2000b; Kahneman et al., 1986; Ostrom, 2000). For the description of reciprocal motives, the literature commonly refers to the notion of fairness and argues that reciprocal behavior is triggered by social fairness norms (Bolton & Ockenfels, 2000; Falk, Fehr, & Fischbacher, 2003; Fehr & Schmidt, 1999, 2000b; Rabin, 1993). Thus the question of whether a reciprocal actor considers an action of someone else as either friendly or unfriendly depends on whether the counterparty is perceived to behave in accordance with social fairness norms.

Furthermore, scholars commonly distinguish between direct and indirect forms of strong reciprocity. Direct reciprocity relates to the perceived friendliness or unfriendliness of a counterparty, that is, it refers to an interaction of two actors. Thus, in this case, the reciprocator is directly affected by the counterparty’s behavior. In contrast, indirect reciprocity involves at least three actors. The indirect reciprocator reacts to the perceived friendliness or unfriendliness of an initial actor toward a third actor (see Figure 1; Dufwenberg, Gneezy, Güth, & van Damme, 2001; Engelmann & Fischbacher, 2002; Fehr & Fischbacher, 2003). In this case, the reciprocator himself or herself is not directly affected by the initial actor’s behavior but reciprocates on behalf of another party who is incapable of reciprocation. Figure 1 illustrates the different forms of reciprocal behavior.

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Figure 1.

Different forms of reciprocal behavior.

Fairness Norms Trigger Reciprocal Behavior

Reciprocal behavior is norm-driven behavior. Whether reciprocal actors behave in a friendly or unfriendly way depends on how they perceive their counterparties’ behavior in the light of some underlying and implicit norms, beliefs, and rules. The literature on reciprocal behavior from experimental economics has coined the notion of fairness norms to operationalize these norms and rules. In this context, three types of fairness norms (distributional, intentional, and procedural) have been discussed and empirically tested. A similar well-established taxonomy that distinguishes distributive, procedural, and interactional justice exists in the field of social psychology (Colquitt, Wesson, Porter, Conlon, & Ng, 2001). However, the argument in this article is largely based on evidence from experimental economics and refers to the taxonomy of fairness norms used there. Such socially constructed fairness norms are at the base of reciprocal behavior as they provide the rationale behind perceptions of friendly and unfriendly behavior.

Norms for distributional fairness judge the fairness of a transaction on the basis of the material outcome of the transaction (Bolton & Ockenfels, 2000; Fehr & Schmidt, 1999). Actors thus perceive the behavior of transaction partners as fair, if this behavior contributes to achieve a final distribution that is perceived as fair. For this purpose, reciprocal actors compare their own outcome to the outcome of their peers. Thus reciprocal actors take into account not only their own outcome but also the situation of others.

Intentional fairness norms refer to the perceived or assumed behavioral motivation of actors. The behavior of reciprocal actors is triggered by their perception of the motivation of their counterparts (Falk et al., 2003; McCabe, Rigdon, & Smith, 2003). As reciprocal actors cannot directly observe the behavioral type or behavioral intentions of other subjects, reciprocal actors form beliefs about the intentions behind the actions of their transaction partners (Levine, 1998; Rabin, 1993). Reciprocal actors build such beliefs about the friendliness or fairness of behavioral intentions on the set of different alternatives available to actors.

Procedural fairness norms refer to how a decision is made and assess the fairness of the methods used to plan and implement decisions (Brockner, 2002; Konovsky, 2000). Reciprocal actors who follow norms for procedural fairness are willing to bear the cost of sanctioning transactions that result from procedures they perceive as unfair. However, in contrast to intentional fairness norms, procedural norms refer to the means rather than to the goals of organizational behavior.

However, none of the three conceptions of fairness can explain the full range of empirical observations of reciprocal behavior derived from behavioral experiments. Similar to competing perceptions of legitimacy, different fairness norms coexist and compete against each other (Bolton, Brandts, Katok, Ockenfels, & Zwick, 2002; Fehr & Falk, 2002a). Experimental evidence shows that strategic and institutional factors influence the type and specific content of the fairness norms that apply to specific situations (Bolton, Brandts, & Ockenfels, 2001; Frey & Bohnet, 1995).

The empirical findings on the fairness perceptions of reciprocal actors offer some fruitful insights into the determinants and strategic settings that influence the formation of normative judgments among stakeholders. In particular, the findings provide promising starting points for developing strategies for stakeholders to influence the formation of normative judgments in favor of their own expectations toward companies.

Reciprocal Behavior and the Enforcement of Prosocial Corporate Behavior

The experimental economics literature on reciprocal behavior argues that fairness perceptions trigger reciprocal reactions. In this context, one of the most important empirical findings is the power of reciprocity to enforce social norms (Fehr & Gächter, 2000b). In sociology, social norms represent informal rules that

specify what actions are regarded by a set of persons as proper or correct, or improper or incorrect. […] Norms are ordinarily enforced by sanctions, which are either rewards for carrying out those actions regarded as correct or punishments for carrying out those actions regarded as incorrect. (Coleman, 1990, p. 242)

Thus social norms specify socially desirable behavior. According to Coleman (1990), social norms occur whenever an action creates a positive or negative externality that cannot be redressed by transferable rights.

As pointed out above, normative stakeholder demands for prosocial corporate behavior often correspond to externalities so that profit-oriented companies typically see no incentives to obey these demands (Mackenzie, 2004; Rowley & Berman, 2000). However, empirical evidence from experimental economics suggests that there may be a considerable cost of norm-breaching behavior for self-interested actors such as companies due to the behavior of reciprocal actors. Reciprocal actors punish those who do not conform to societal expectations as prescribed by social norms because this nonconformity is perceived as unfriendly (resulting in negative reciprocal sanctions). On the other hand, reciprocal actors may reward corporate behavior that is in line with a social norm (i.e., positive reciprocal sanctions). Empirical evidence from experimental economics shows that, when given the opportunity, reciprocal actors make extensive use of sanctions and bear the costs that are associated with this sanctioning even at a net cost (Andreoni, Harbaugh, & Vesterlund, 2003; Fehr & Gächter, 2000a).

One of the most important implications of these findings is that through their reciprocal behavior, reciprocal actors can translate societal concerns into economic incentives. Evidence from experimental economics shows that as soon as the costs due to negative reciprocal sanctions (punishments) or the benefits that accrue from positive reciprocal sanctions (rewards) exceed the costs of prosocial behavior, it becomes economically rational for self-interested actors to obey social norms. Reciprocal sanctioning can thus alter the incentives for selfishly motivated actors in favor of complying with social norms (Fehr & Gächter, 2000b).

Reciprocity as a Behavioral Motive of Stakeholder Action

To address the question why reciprocal stakeholders act to influence companies in favor of prosocial behavior, the section first defines reciprocal stakeholder behavior. Subsequently, the section discusses the formation of normative stakeholder judgments based on fairness norms as such normative judgments trigger reciprocal behavior.

The Implementation of Normative Stakeholder Demands Through Reciprocal Behavior

Reciprocity as a strong mechanism to implement social norms (Fehr & Gächter, 2000b) becomes particularly relevant when companies face normative stakeholder demands for prosocial corporate behavior. The material below addresses the question of how reciprocal stakeholders try to influence companies in favor of prosocial behavior and when such influence is successful. Thus the focus is on how and under which conditions reciprocal stakeholder behavior can translate normative stakeholder demands into economic incentives for companies.

As defined above, reciprocal stakeholders will reward companies that they perceive to act in a desirable way and punish companies that they perceive to act in an undesirable way even if they cannot expect any benefits for themselves from such behavior (Fehr et al., 2002; Fehr & Gächter, 2000a; Gintis, 2000). Negative reciprocal sanctions (i.e., punishments) cause costs for companies, whereas positive reciprocal sanctions (i.e., rewards) induce benefits for companies. Following economic rationality, profit-oriented companies will only adopt normative stakeholder demands for prosocial behavior in the presence of economic incentives to do so. Companies often see no incentive to bear the costs of obeying such stakeholder demands. Companies do not benefit (sufficiently) from their implementation as such demands mostly put forward more general societal or third-party interests.

However, this situation can be changed through reciprocal stakeholder sanctions (i.e., though actors B in Figure 1) in two ways. (a) Through negatively reciprocal stakeholder sanctions, opposing normative stakeholder demands can become more costly for companies than to respond to such demands. (b) The benefits that accrue to companies due to positively reciprocal behavior can be higher than the costs of to the prosocial behavior. In either of the two cases, the incentive structure for companies regarding normative stakeholder demands for prosocial corporate behavior can change through reciprocal stakeholder behavior. The influence of stakeholder reciprocity on economic incentives for firms thus depends on the expectations of corporate decision makers on the effects of reciprocal stakeholder sanctions. Such sanctions are strong enough to alter the incentive structure for companies in favor of normative stakeholder demands if managers expect that (a) either the costs due to negatively reciprocal stakeholder behavior or (b) the benefits due to positively reciprocal stakeholder behavior exceed the expected costs of the demanded prosocial behavior.

This analysis leads to the two following fundamental propositions for the implementation of normative stakeholder demands for prosocial corporate behavior through reciprocal stakeholder behavior:

By implication, reciprocal stakeholders can influence companies to respond to normative stakeholder demands in two ways: Either through sufficient rewards of corporate compliance with normative stakeholder demands (i.e., positive stakeholder reciprocity) or through sufficient punishing of corporate noncompliance with normative stakeholder demands (i.e., negative stakeholder reciprocity).

Numerous experimental games show that successful reciprocal sanctioning depends on the strategic settings of a situation (Fehr & Gächter, 2000b). More specifically, the implementation of normative stakeholder demands through reciprocal behavior requires (a) scope and possibility for reciprocal sanctions, and (b) effective sanctions that are sufficiently important to persuade self-interested actors to comply with social norms (Fehr & Gächter, 1998; Güth & van Damme, 1998; Kagel & Wolfe, 2001).

Implications for Stakeholder Theory

This article represents a fundamental shift from the general assumption of self-interested stakeholder behavior to a more heterogeneous distribution of different behavioral types among stakeholders. This shift implies new types of interaction between profit-oriented companies and different behavioral types of stakeholders. As such, the argument offers some fruitful implications for further developing stakeholder theory and the analysis of company–stakeholder relations. Stakeholder theory as a genre of management theory provides a framework or a set of ideas that can “function in an array of settings and serve different purposes” (Parmar et al., 2010, p. 406). The key point relevant to the present article is that “stakeholder-based reasoning provides a practical motivation for firms to act responsibility” (Parmar et al., 2010, p. 418) in response to stakeholder demands.

First, because the argument rests on the notion of social embeddedness of economic activity, the interaction between stakeholders and companies on social issues is obviously the first and foremost areas to derive implications for further research. Reciprocal behavior provides a fundamental shift in perspective within the stakeholder literature of how to analyze and explain stakeholder behavior and firm’s strategies in response to stakeholder demands for prosocial corporate behavior beyond regulation. This shift in perspective suggests reviewing the recent developments and discussions in stakeholder theory building (Donaldson, 1999; Freeman, 1999; Frooman, 1999; Jawahar & McLaughlin, 2001; Jones & Wicks, 1999; Rowley & Moldoveanu, 2003; Winn, 2001) through the lens of reciprocal stakeholder behavior. Further application and analysis of reciprocal stakeholder behavior could provide an important avenue to systematize and clarify the relation between instrumental and descriptive approaches in stakeholder theory (Jawahar & McLaughlin, 2001; Jones, 1995) on one hand and normative approaches (Donaldson & Preston, 1995; Phillips, 1997) on the other. The notion of reciprocal stakeholder behavior may help to overcome the controversy between strategic and normative approaches in the stakeholder literature. Reciprocal stakeholder behavior explains how and under which conditions normative stakeholder demands for prosocial corporate behavior can become strategically relevant for corporate decision making.

In addition, applying reciprocity to stakeholder behavior provides an important empirical and conceptual foundation of the stakeholder approach based on behavioral economics. This foundation will help to further establish the stakeholder model. At the same time, the notion of reciprocal stakeholder influence as proposed in this article is limited as the argument is restricted to one single alternative behavioral model, namely, reciprocity. In this context, future research should not onlybe restricted to further analyzing reciprocal stakeholder behavior but should also address other behavioral types. Strong empirical evidence from experimental economics suggests that self-interested and reciprocal behavior may not be the only types of motivation behind human behavior (Bowles & Gintis, 2000; Brandts & Schram, 2001; Fehr & Fischbacher, 2002; Fehr & Gächter, 1998; Sethi & Somanathan, 2003). Thus other behavioral types than reciprocal stakeholders and self-interested corporate decision makers may exist. In this context, further understanding of reciprocal stakeholder behavior obviously requires a finer grained analysis in particular with respect to the different levels of stakeholder behavior on the individual and/or group level (Rowley & Moldoveanu, 2003; Winn, 2001). Another question that should be addressed by future research in this context is which reciprocal stakeholders act. The author undertakes no distinction or characterization of reciprocal stakeholders with regard to additional criteria such as power or connectedness.

For the purpose of this article, the argument applies behavioral motive of reciprocity only to some stakeholders while the assumption of self-interested motives is held for other stakeholders as well as corporate actors. The reciprocal stakeholder behavior model explicated in this article is thus limited. In particular, the author treats all companies as if profit-oriented entities. Keeping the standard assumption of self-interested corporate behavior represents a modeling choice because this article intends to show that stakeholder reciprocity can explain corporate compliance with normative stakeholder demands for prosocial corporate behavior even under most adverse conditions, that is, without assuming any corporate motives (other than profit seeking) in favor of doing so. This aspect seems particularly important in the light of recurring voices in the corporate social responsibility and stakeholder debate that posit that the responsibility of companies should not go beyond profit seeking (e.g., Jensen, 2002). Whether this assumption is a conservative choice or not is of course subject to well-intended criticism; and the point is undoubtedly arguable. This modeling assumption implies that stakeholders in a particular firm that are business entities (e.g., banks, suppliers, and corporate customers) are also profit-oriented and thus—at least as organizational actors—do not belong to the set of normative stakeholder demands being studied here. The relevant stakeholders for the present argument must be nonbusiness entities (e.g., nongovernmental organizations) or individuals (e.g., customers, consumers, employees, or externality impactees). However, in this context, stakeholders can adopt different or multiple roles with personal motives and interests potentially competing with certain institutional roles and duties. Business employees are arguably the most relevant category, as working for profit-oriented entities and ask making prosocial demands through reciprocal behavior within those entities. Further research should relax this limiting assumption and explore the role and implications of reciprocal motives of—at least some—corporate decision makers and other stakeholder demands than normative ones. In this context, the question how reciprocally motivated managers deal with potential tensions between their professional duties and their normative beliefs seems particularly interesting.

A full theory of corporate social responsibility and reciprocity would involve incorporating both prosocial concerns for all actors (corporate and other entities, and individuals including business executives and directors) and reciprocity motives by all those actors. But such expanded motives and behaviors are beyond the scope of the present study, even if urgently desirable in a full theory of corporate social responsibility and stakeholder reciprocity. The limited model here explores prosocial demands by stakeholders and corporate responses due to economic incentives (positive and negative) generated by those stakeholders’ behavior. The approach is thus limited to the analysis of normative stakeholder demands for prosocial corporate behavior and corporate response to such demand. A full theory is beyond the present article, which is a first step in that direction. The object of the present article is to help promote a deeper conversation among scholars about the importance of reciprocity and the findings of behavioral or experimental economics in that regard.

Conceptually, this article introduces behavioral motives as a new element in the analysis of stakeholder influence. The author argues and shows that explicitly addressing different behavioral motives such as reciprocity provides further understanding of the effectiveness of stakeholder influence. Thus further research should adopt behavioral motives as a specific element in the analysis of company–stakeholder interactions. Recently, the notions of interest and identity have been conceptualized as a driver of stakeholder action (Rowley & Moldoveanu, 2003). In this context, the questions if and to which degree behavioral motives such as reciprocity can serve as a common identity among stakeholders or can define or group common interests deserves closer examination. This becomes even more interesting as the fairness judgments that have been found to trigger reciprocal behavior depend to a considerable degree on the social, cultural, and ideological environment of stakeholders.

Implications for Stakeholder Influence Strategies

In the context of stakeholder influence strategies in favor of prosocial corporate behavior, the notion of reciprocal stakeholder behavior links approaches based on resource dependence theory (Frooman, 1999) with the notion of social embeddedness of economic action as brought forward by legitimacy theory and neo-institutionalism (Campbell, 2007; Granovetter, 1985; Oliver, 1991, 1996; Suchman, 1995). Most importantly in this context and based on the empirical findings from experimental economics, the article develops the conditions under which reciprocal stakeholder sanctions are possible and effective. Future research should thus develop and test stakeholder influence strategies based on reciprocity.

Reciprocal stakeholder behavior allows one to address the strategic situation of implementing normative stakeholder demands for prosocial corporate behavior. Both direct and indirect stakeholders can hold such normative demands toward corporate conduct. The insights from experimental economics on the use of fairness norms in different situations offer a promising starting point for developing strategies for how to dominate the communicative process of forming normative demands within the stakeholder network. In particular, this may also offer new perspectives to analyze the influence strategies indirect stakeholders, that is, stakeholders who do not exert control over resources, could use to facilitate reciprocal sanctions in favor of their demands and claims.

One of the most important aspects in the context of the implementation of normative stakeholder demands refers to the question of why direct stakeholders commit themselves to influencing corporate behavior based on normative grounds, that is, why direct stakeholders pressure companies in favor of prosocial corporate behavior that will rather benefit third parties or society in general than themselves. According to the notion of indirect reciprocity, reciprocal actors also support fairness concerns that refer to third parties. Reciprocal stakeholder motives may thus be essential in this context.

A particularly important distinction between tit-for-tat strategies and reciprocal strategies comes to the fore in this context. Unlike actors that follow tit-for-tat strategies (Axelrod, 1984) that have already been applied to stakeholder theory (Hill, 1990; Jones, 1995), reciprocal actors are characterized by the willingness to keep up reciprocal behavior even at a net additional cost to themselves. In contrast, tit-for-tat strategies serve the self-interest of an actor, whereas reciprocity behavior represents a behavioral motive in itself. One promising avenue for future research could thus investigate how reciprocal behavior of stakeholders can be triggered strategically and what types of reciprocal stakeholder influence tactics evolve from this triggering. The typology of stakeholder influence tactics developed by den Hond and de Bakker (2007) provides a relevant starting point for such an endeavor. In this context, stakeholder reciprocity adds the element of behavioral motives to existing approaches that refer to decreasing benefits or increasing costs and increasing benefits or decreasing costs of companies as stakeholder influence strategies based on coercion and compromise (Frooman & Murrell, 2005) or stakeholder tactics to generate material or symbolic damages or gains to companies (den Hond & de Bakker, 2007).

Conceptually, the notion of reciprocal stakeholder behavior contributes a motive-based approach to explain stakeholder influence on companies. This perspective complements interest-based (Frooman, 1999), identity-based (Rowley & Moldoveanu, 2003), capacity-based (Barnett, 2007), and ideology-based (den Hond & de Bakker, 2007) approaches. Like these approaches, the findings from this article underline the importance of adopting a stakeholder perspective to analyze and better understand firm responses to normative demands for prosocial corporate behavior (den Hond & de Bakker, 2007; Frooman, 1999; Rowley & Moldoveanu, 2003). In other words “the nature of stakeholders relationships—the types of stakeholders, their influence strategies and how firms respond” (Rowley & Berman, 2000, p. 409) cannot be well understood if company–stakeholder relations are only analyzed from a corporate point of view. Rather, a bidirectional approach to exchange relations between companies and stakeholders is necessary (Goodstein & Wicks, 2007).

Finally, there is a clear need to test empirically the propositions on reciprocal stakeholder behavior proposed in this article. Testing is particularly relevant given that the model of reciprocal behavior is limited by the fact that this model has been developed under controlled conditions in laboratory experiments that cannot account for all real-world contingencies that appear in company–stakeholder relations. Thus, to complement the comprehensive empirical evidence on reciprocal behavior in experimental economics gained from experiments under laboratory conditions, future research should test reciprocal stakeholder behavior in explorative and qualitative case studies of real world company–stakeholder interactions. Such qualitative case studies may provide further insight to the conditions under which stakeholders succeed to implement demands for prosocial corporate behavior vis-à-vis companies.

At the same time, future research should further develop “a finer grained stakeholder analysis” (Winn, 2001, p. 136) and include a much greater heterogeneity of different behavioral motives. The present article analytically separates between profit-oriented business entities and reciprocal stakeholders with normative demands for prosocial behavior. The modeling device is thus limited and intended to illuminate certain considerations rather than being a full theory of corporate social responsibility and stakeholder reciprocity. A full theory will involve heterogeneous behavioral motives for all actors and thus some mix of self-interested and other-regarding behavior on one hand and the effects on incentives on the other hand.