Human Values and Corporate Actions Propensity

Abstract

This dissertation abstract and reflection essay presents the work of Dr. Joel Marcus. The research examines the behavioural underpinnings of corporate actions that either benefit or harm society, defined as strength and concern actions respectively. Specifically, the author explores how different personal values relate to the propensity to engage in strength or concern actions across the economic, social, and environmental domains. This extended abstract explains the research question, setting, and methods. The reflection essay in the appendix discusses the author’s journey in the research process as a junior scholar.

Keywords

human values corporate actions propensity business–society–nature interface social issues environmental management sustainability scale development policy capturing

Global society is currently facing a series of interrelated challenges that cross the economic, social, and environmental domains. Widespread market instability, corporate fraud, social unrest, failing states, environmental degradation, and climate change (Brown, 2008) represent just a few of the most salient issues with which we are having to contend, and which could long affect future generations. Corporations, as the dominant institutions of our time, will necessarily play an important role in our ability to address these sustainability challenges. In this research I examine the behavioural underpinnings of corporate actions that either benefit or harm society, defined as strength and concern actions respectively. Specifically, I explore how different personal values relate to the propensity to engage in strength or concern actions across the economic, social, and environmental domains.

The apparent leap from the macro systemic challenges at the societal level to psychobehavioural individual-level factors within corporations reflects a number of premises on which this work is based. First, it is recognized that business, society, and nature (B–S–N) are not discrete, independent, or separable domains but rather interrelated, nested, and complex systems. Addressing problems of sustainability thus requires a comprehensive and integrative approach rather than the dyadic focus on either business–society relations or business–nature relations common within business and society (B&S) and organizations and the natural environment (ONE) research respectively (cf. Cohen, Smith, & Mitchell, 2008). In particular, there have been recent concerns that sustainability has been predominantly defined as an environmental issue with an emphasis on industrial processes and technological solutions, to the neglect of the social, relational, and innately human aspects of sustainability (Gladwin & Berdish, 2010; Pfeffer, 2010). Throughout this work the conceptual analyses and typological frameworks reflect the comprehensive and multidimensional nature of societal welfare and sustainability.

The second premise is that corporations are the dominant institutions of our day, and as such the actions they undertake have a profound impact on all aspects of societal welfare. Corporate actions that degrade economic, social, or environmental value make the prospect of long-term sustainability increasingly uncertain. In contrast, actions that strengthen the economic, social, and environmental foundations of society potentiate a more sustainable future.

However, corporate actions are really a form of collective action and derive from the aggregated behaviours of the individuals who make up the corporation. Subsequently it is important to examine the root causes of human behaviour, particularly within the corporate context and in relation to the types of corporate actions that either benefit or harm society. Values, as deeply held and enduring beliefs about desirable end goals and the means to their attainment (Rokeach, 1973; Schwartz & Bilsky, 1987) are considered one of the most basic drivers of human behaviour (Locke, 1991). As such, I chose in this research to examine how individuals’ values relate to their propensity to engage in different types of corporate actions across the economic, social, and environmental domains. Thus, the psychological constructs that form the core of the empirical analysis are conceptualized and structured directly in relation to the broad context of business, society, and nature.

Overall strong support was found for the majority of the hypotheses using a broad student sample enrolled in a variety of university programs. As predicted, the results indicate that individuals with strong economic values have a significantly greater propensity to engage in all types of concern actions as compared to individuals with different values profiles. Strong economic values were also shown to decrease the propensity for social and environmental strength actions. An unanticipated but significant finding concerns gender effects on both values and corporate actions propensity.

This research also makes a number of conceptual and methodological contributions that help to advance research at the interface of business, society, and nature. In developing the contextual groundwork for this research, I outline three conceptions of the B–S–N relationship evident within the management literature. I argue that an embedded view, in which business, society, and nature are viewed as nested systems, is conceptually most valid and subsequently provides the best foundation for research addressing problems of sustainability. In addition, I build upon the existing social and environmental management literatures to develop comprehensive conceptual typologies and corresponding measures for both the main constructs in this research. A multistep scale development process established evidence pertaining to the reliability and validity of a new measure of corporate actions propensity. A new policy-capturing approach to values measurement was also used in this research and holds a number of advantages over existing normative and ipsative (i.e. forced-choice) techniques.

Conceptual and Methodological Contributions

The embedded view of the business–society–nature interface represents an integration and extension of the social issues and environmental management literatures that together tend to portray an intertwined view of the B–S–N interface (commonly depicted as three interlocking circles; cf. Adams, 2006; Cohen et al., 2008; Stead & Stead, 2009). As compared to the intertwined view, the embedded view (depicted as three nested circles; cf. Gibson, 2001; Porritt, 2006; Victor, 2008) more directly implies the need to comprehensively assess the economic, social, and environmental domains when considering issues of sustainability, and prompts a shift away from the predominant focus on organizational (primarily financial) outcomes to the multidimensional components of societal welfare. Building from the embedded perspective and previous research on values and corporate actions, I developed parallel typologies for my primary constructs using the tripartite economic, social, and environmental classification. In the absence of suitable existing measures, I set out to develop and validate a new scale of corporate actions propensity and a new method for assessing personal values.

A Six-Type Measure of Corporate Actions Propensity

Corporate actions propensity formed the primary outcome variable of interest in this research and was defined as the propensity to engage in, support, or endorse a given type of corporate action. Behavioural propensity is similar to the concepts of behavioural intention (Ajzen & Fishbein, 1980) and behavioural expectation (Warshaw & Davis, 1985) but relates to a probabilistic estimate or likelihood of doing something as opposed to a firm intent, and behavioural propensity can be applied to situations or contexts that the respondent may not necessarily expect to be in. Examining actions propensity as opposed to a direct measure of actions allowed me to sample a much broader array of corporate actions across the relevant domains than would have been possible otherwise, given the inherent limitations of job scope and personal experience.

Drawing terminology from the widely used Kinder Lydenburg Domini (KLD) social ratings indices (Hillman & Keim, 2001; Mattingly & Berman, 2006; Waddock & Graves, 1997), in this work I defined strength actions as corporate actions associated with a positive societal impact, which help build a stronger, more sustainable society. In contrast, concern actions are those that have the potential for, or result in, real societal harm. Crossing the domains of societal impact with the positive/negative valance results in six-type classification of corporate actions consisting of (a) economic strength, (b) economic concern, (c) social strength, (d) social concern, (e) environmental strength, and (f) environmental concern.

Following the scale development procedures outlined by Hinkin (1998), I have been able to demonstrate evidence on number of fronts pertaining to the validity of the corporate actions propensity measure. Through two different rating procedures, items derived from a comprehensive analysis of social ratings indices and sustainability-related statements of principle were first content validated using a panel of graduate student judges. Then, across multiple applications of confirmatory factor analysis (CFA) with two independent samples and two modes of assessment (online and pen-and-paper), the hypothesized six-factor model consistently fit the data better than the alternative theoretically viable models. Finally, the strong support found for the hypothesized relationships relating values to corporate actions propensity further established the discriminant and convergent validity of the measure.

The final measure comprises a total of 41 items with six to eight items per subscale. In addition to the validity evidence, the iterative process used to develop and refine scale items resulted in the six subscales having strong internal consistency, indicated by alpha coefficients very near or above 0.80. Although there is of course need to further validate the scales with different samples and in relation to other relevant variables, the measure has to this point demonstrated strong psychometric qualities and provides behavioural scholars a new and seemingly robust tool with which to address sustainability issues.

A Policy-Capturing Approach to Values Measurement

The measure of values used in this research also represents a conceptual and methodological advance. Building from the economic versus stakeholder values distinction made by Sully de Luque, Washburn, Waldman, and House (2008), I proposed that stakeholder values are better represented as two distinct though related constructs, namely social and environmental values. In addition, to address limitations of existing normative and ipsative values-measurement techniques (Meglino & Ravlin, 1998), I employed a policy-capturing methodology (Aiman-Smith, Scullen, & Barr, 2002) to assess individuals’ economic, social, and environmental values. Though widely used in organizational research to understand decision-making processes (Hobson & Gibson, 1983; Kristof-Brown, Jansen, & Colbert, 2002; Webster & Treviño, 1995; Zedeck & Kafry, 1977), policy capturing as employed here allows for an assessment of relative-values strength while being less susceptible to priming effects and social desirability influences.

As with the corporate actions propensity measure, evidence relating to the validity of the policy-capturing measure was demonstrated in a number of ways. First, the pattern of relationships between the values variables conformed to expectations, with the externally oriented social and environmental values sharing a significant positive relationship with each other and a significant negative relationship with the self-oriented economic values. The policy-capturing values also showed convergent and discriminant validity with the normative measures of economic and stakeholder values used by Sully de Luque et al. (2008). In addition, and perhaps most convincingly, the three policy-capturing values were shown to be differentially predicted by students’ program of study and also to differentially predict respondents’ corporate actions propensity thus showing criterion-related validity. Overall, the policy-capturing measure performed as expected in this research and appears to hold considerable promise for future values research within the B–S–N context.

Key Research Findings

The conceptual and methodological contributions just described were foundational to examining the primary questions of interest, which concern the differential relationships between values and corporate actions propensity. At the outset of this research four questions were posed: (1) Are specific values at the individual level related to specific types, or dimensions, of corporate action?; (2) Do some values positively predict propensity toward certain dimensions of corporate action and negatively predict propensity toward others?; (3) Do individuals with certain values have a greater propensity to adopt, support, and engage in actions of societal strength, or alternatively, actions of societal concern?; and, (4) Can we identify factors associated with different values orientations? Based on the empirical findings of this research, each of these questions can be answered quite strongly in the affirmative.

With respect to the first question, highly significant relationships were found between the primary values types and each of the six dimensions of corporate actions propensity. The distinctive pattern of relationships that emerged also confirmed that different values have different relationships with the actions propensity variables. Particularly notable is the total contrast between economic values on the one hand, and social and environmental values on the other. In every case where economic values had a positive relationship with an actions variable, the latter values had a negative relationship with the same variable. Furthermore, the pattern of relationships with economic values, though it confirms the hypotheses, paints a generally negative picture. On the positive side and not surprisingly, economic values had a strong positive relationship with economic strength actions. However, economic values also had a strong negative relationship with social and environmental strength actions, and perhaps more unsettling, a strong positive relationship with every one of the concern actions types.

Regression results extended the relational findings and demonstrated that values do differentially predict the various outcome variables. This outcome was particularly important as it showed the distinctiveness of the social and environmental values constructs, which could have been questioned based on the pattern of correlations. Instead, social values predicted both social actions types but not environmental actions, and environmental values predicted both environmental actions types but not social actions. Economic values were a significant predictor of almost all the outcome domains and again contrasted sharply with social and environmental values by significantly and positively predicting each of the concern actions types.

Although the regression results almost universally supported the hypotheses, a strong and unanticipated finding emerged with one of the control variables. When the values variables were regressed with controls, gender was found to be a highly significant predictor of almost all of the actions propensity types. The direction of the significant beta coefficients across the different criterion domains is particularly notable. For all of the concern actions types, being female was a highly significant negative predictor. For social and environmental strength actions, being female was a highly significant positive predictor. Interestingly, gender did not significantly predict economic strength actions. On the whole then, it appears that females are predisposed toward strength actions and away from concern actions, whereas the opposite is true for males. It is also worth repeating that despite the strong findings related to gender, I still found full support for the hypotheses relating values to corporate actions propensity when controlling for gender.

The third question mentioned above queries whether individuals’ values increase the propensity for either strength or concern actions. The overall results and in particular the tests of group differences confirm that this is the case. When compared to individuals with balanced, strong social, or strong environmental values, individuals with strong economic values were found to have a significantly greater propensity for concern actions and a significantly decreased propensity for social and environmental strength actions. When groups were constructed on the basis of gender, it was females who were significantly more likely to engage in social and environmental strength actions, and males who showed greater propensity for the three concern actions types.

Although the question of additional factors associated with individuals’ values was not the primary focus of this research, two variables were found to be highly related to values. The first, program of study, was found to differentially predict the three values types. As expected, business, social work/sociology, and environmental studies/geography enrollment positively and independently predicted economic, social, and environmental values respectively. Of course, from the nonexperimental design of this research it is not possible to determine whether program of study causally affects values, or whether values instrumentally affect individuals’ choice of program. One suspects that both causal relationships are at play.

The second variable found to have a significant and meaningful relationship with values was gender. Not only was gender a highly significant correlate of all three values, but as already mentioned, gender was the strongest overall predictor across the different types of corporate actions propensity. The values profiles associated with the gender types are particularly interesting. Females’ social and environmental values were significantly stronger than their economic values. In contrast, males’ economic values were significantly stronger than their social and environmental values. For both groups there was no difference in the strength of social and environmental values.

This latter finding, that social and environmental values on average group together in distinct gender-specific ways, is consistent both with the theoretical self versus other orientation of the different values types and also with Gilligan’s (1982) work on women’s moral development. Gilligan found that whereas men tend to frame moral issues in terms of rights and issues of justice, the notion of responsibility within an ethic of care is central for females who tend to be more relationally oriented. She states: “While an ethic of justice proceeds from the premise of equity—that everyone should be treated the same—an ethic of care rests on the premise of nonviolence—that no one should be hurt” (Gilligan, 1982, p. 174). The empirical finding that females are significantly less likely than males to engage in concern actions—actions that have the potential for, or result in, real societal harm—aligns closely with this basic distinction in moral orientation.

Implications and Conclusion

This research has implications for both management practice and education. From a practice standpoint, managers wishing to engage in strength actions across the economic, social, and environmental domains are likely to face a considerable challenge in organizations characterized by strong economic values and could seek to align employee values with sustainable outcomes through employee education programs and proactive hiring practices. Similarly, given the strong relationship between business program enrollment and economic values, mitigating the behavioural propensities associated with overly strong economic values may be the most critical task for management education going forward. Notwithstanding the study’s limitations and the significant opportunities to extend this research, the findings here confirm that peoples’ basic values have important implications for the types of corporate actions they are likely to support or engage in, and subsequently for the sustainability challenges we are currently facing across the economic, societal, and environmental spheres.

Footnotes

Appendix

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

Bio

Joel Marcus is assistant professor of Organizational Behavior and Human Resource Management at Wilfrid Laurier University, School of Business & Economics, where he received his PhD in Management. His dissertation supervisor was Lorne Sulsky. The other members of his dissertation committee were Greg Irving and Barry Colbert. His conceptual and empirical work addresses the complex challenges that cross the business–society–nature interface. His work has appeared in Business & Society previously.

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