The stakeholder enterprise: Caring for the community by attending to employees

Abstract

A core issue in stakeholder theory is how firms can engender joint interests among competing stakeholders. We draw on theories of normative influence and reciprocity to identify how firms positively influence the relations between their internal and external stakeholders. We propose that firms can send credible corporate signals, such as philanthropy and sustainability reporting, to exert social influence on employees, but that employees’ own treatment by their firm and career prospects are also important in shaping their behavior toward the external community. We investigate these arguments in the context of Chinese firms’ donation behavior following the 2008 Sichuan earthquake. Empirical analysis shows that the credibility of corporate signals differs. Sustainability reporting that adheres to global standards has a direct bearing on employees’ behavior. In contrast, corporate giving by itself has no general influence on the willingness of employees to donate. However, firms that have either positive employee relations or have employees with superior career prospects and make donations to earthquake relief stimulate their employees to make their own donations too. In so doing, firms gain from the efforts of internal stakeholders to serve external stakeholders. We discuss the implications of our study for stakeholder theory and, in particular, the jointness of stakeholder interests.

Keywords

China corporate social responsibility stakeholder theory

Introduction

In firms’ long-term efforts to sustain their performance by balancing environmental, economic, and social considerations, they depend on both internal and external stakeholders who form “a constellation of cooperative and competitive interests” (Donaldson and Preston, 1995: 66). These actors provide various types of resources to firms while often placing different demands on firms. Firms thus need to accommodate the simultaneous demands of multiple stakeholders. Crucially, stakeholders can also have direct relationships with each other as evidenced in network models of stakeholder influence (Rowley, 1997).

In this study, we present an illustration of the role of firms in the interplay between internal and external stakeholders. In particular, we examine whether firms are able to engage their employees to contribute to company-selected issues through specific, credible corporate signals. As an example, firms establish strategic, integrative corporate programs to encourage employees to fulfill individual responsibilities toward broader society (Marquis et al., 2007). Indeed, most large firms in the United States have volunteer programs that encourage employees to contribute to community-related activities (cf. Peterson, 2004). Although such corporate programs potentially enhance firms’ reputation and performance in the eyes of their internal and external stakeholders (Gardberg and Fombrun, 2006), few studies have really examined how firms’ behaviors affect employees’ attitudes and their subsequent behaviors toward social issues (i.e. Ramus and Steger, 2000). The gap still exists for understanding such stakeholder management for both academia and practitioners.

Enlightened by these observations, in this article, we build and test theory about how executives can positively influence the relations between their firms’ internal and external stakeholders. Our point of departure from other stakeholder management studies is twofold. First, we examine how firms respond to the needs of the community through employee contributions, which nicely aligns the interests of two important stakeholder groups both internal and external to firms. Specifically, we apply theories of normative social impact (Latané, 1981; Nolan et al., 2008) to illustrate how firms use credible signals—that is, those which are costly (Spence, 1973) for the firm—to shape organizational norms and, thus, guide employees’ participation in company-sanctioned programs for their own benefit. Second, through the lens of reciprocity (Bosse et al., 2009; Falk and Fischbacher, 2006; Gouldner, 1960; Regan, 1971), we further argue that much of the engagement between a firm and its external stakeholders rests on the discretion of individual employees. Even when executives recognize external stakeholders (e.g. communities) as important, attending to the interests of external stakeholders at the expense of their employees may be shortsighted. Rather, by attending to their employees, they potentially engender positive attitudes of members of the firm to act toward external stakeholders.

These two theories collectively hold the potential to explain how social norms become established within firms. Whereas the normative social impact theories focus on the persuasiveness of signals to shape norms, the reciprocity perspective complements these by showing how actions of firms toward their employees shape the motivation of employees to comply with organizational norms.

We investigate these arguments in the context of Chinese firms’ donation behavior following the 2008 Sichuan earthquake and the willingness of employees to make donations to the same cause. Our study is consistent with the current literature on corporate philanthropy in times of natural disasters (Tilcsik and Marquis, 2013; Zhang et al., 2010), but our focus is to examine the responses of employees across firms rather than to examine corporate responses per se. Credible corporate signals—including, in the present context, corporate donations and standardized corporate social responsibility (CSR) reporting—are argued to influence the willingness of employees to make donations. Crucially, firms that have positive employee relations or have employees with superior career prospects induce their employees to match corporate donations to earthquake relief. When executives prioritize internal stakeholders (employees) or external stakeholders (communities), they take as given an inherent tension between stakeholders, which becomes reflected in the behavior of employees toward external actors. In contrast, when they attend simultaneously to internal and external stakeholders, they encourage employee identification with the firm and engender greater compliance with corporate norms. We discuss the implications of our study for stakeholder theory and, in particular, the role of reciprocity in helping executives to build affinity between distinct stakeholder groups.

Our contribution is a departure from conventional ways of understanding how firms meet the needs of their stakeholders. Although research on stakeholder theory has made significant progress in recent decades, CSR researchers have paid limited attention to how firms engender joint interests among competing stakeholders. Our study underscores that efforts to satisfy external stakeholders can benefit both from corporate signals that convey appropriate expectations and from positive relationships between the firm and its employees. While recognizing the trade-offs present when firms manage stakeholder relationships, firms may benefit by motivating their employees to contribute to the well-being of external stakeholders.

Theory and hypotheses

Although strategy researchers tend to focus their attention on firms’ direct relationships with their stakeholders, these stakeholders also have important relationships with one another (Rowley, 1997). These relationships between stakeholders have implications for how firms meet stakeholder needs. In particular, firms may depend on contributions from their employees to satisfy their external stakeholders because many actions that constitute social performance ultimately rest on the discretion of individuals inside the firm. Even if satisfying external stakeholders is a goal of the firm, employees have their own independent interests, and there is no guarantee that they will act in ways that ultimately serve corporate objectives (Coff, 1999). If firms stand to gain from the contributions that their employees make—both on and off the job—toward external, social actors, as empirical evidence confirms (Peloza et al., 2009), executives have an interest in shaping the orientations and actions of their employees.

Employees’ behavior is influenced by the social context (Ghoshal and Bartlett, 1994; Salancik and Pfeffer, 1977, 1978) in which they find themselves. Specifically, the organizational context may influence the attitudes and behaviors of managers and employees with regard to external stakeholders (Sharma, 2000; Somers, 2001). In explaining how the organizational context shapes employees’ behavior toward external stakeholders, two sets of theories are especially useful: theories of normative social influence and theories of reciprocity. Theories of normative social influence (Nowak et al., 1990) explain the effect of communicating norms on others’ behavior. Theories of reciprocity (Regan, 1971) explain the effect of cooperative tendencies on the maintenance of social norms. We draw on these theories in the subsequent sections to link executives’ attempts to embed social norms within their organizations about appropriate ways of responding to external stakeholders.

Employees’ responses to credible corporate signals

Theories of normative social influence (Nowak et al., 1990) explain the effect of group or organizational norms on behavior. Groups or organizations act as a social context that defines the expectations and consequences for individual behavior (Salancik and Pfeffer, 1978: 227); how they behave or what they promote will have a direct impact on individual behavior. To the extent that employees accept the norms of the firm, they adapt their actions to comply with their understanding of these norms (Bansal, 2003; Dutton et al., 2006; Marquis et al., 2010).

Social norms within firms can be shaped through members’ direct observation, experience, and imitation of their immediate context (Bandura, 1977, 1986), with firms’ activities, interactions, structures, and practices shaping this learning and the resultant behavior. However, more recent research demonstrates that the mere communication of relevant information can also stimulate changes in behavior (Parks et al., 2001). That is, although individuals adapt their behavior to conform to perceived norms when they observe the actions of their peers, simply providing information about what similar others are doing has an important influence on behavior (Goldstein et al., 2008; Griskevicius et al., 2006).

Features of the organizational context can induce employees to act in both prosocial and antisocial ways toward other stakeholders (O’Leary-Kelly et al., 1996). Some organizational actions, such as the use of codes of ethics (Somers, 2001; White and Montgomery, 1980), reward systems (Smith et al., 1983), and even languages (Treviño, 1990) guide employees’ behavior. The most credible actions are those that are costly (cf. Spence, 1973) and involve evidence of substantive conduct. Mayer et al. (2009) find that ethical leadership from top management is positively related to employees’ corporate citizenship. Lilius et al. (2011), for example, examine the impact of seven types of work practices (such as acknowledging one another’s efforts, offering help, etc.) on developing and routinizing norms relevant to helping others. In contrast, when groups behave inappropriately, individual members continue to act inappropriately even when they move to other settings (e.g. Glomb and Liao, 2003; Robinson and O’Leary-Kelly, 1998). Likewise, research has shown that releasing environmental reports has a positive impact on employees’ environmental initiatives by providing an important source of information for corporate socialization (Ramus and Steger, 2000).

As social responsibility is an inherently ambiguous construct (Devinney, 2009), with different understandings represented among employees of the same firm, firms may seek to signal through their CSR actions (Marquis et al., 2007) to employees the kinds of behaviors deemed appropriate. Employees use these social signals to interpret issues, develop attitudes, and decide on their individual actions (Bansal, 2003). Because employees can be distracted by numerous work-related concerns, they need salient, clear, and consistent signals regarding ethical standards and expectations of the firm (Brown et al., 2005; Treviño et al., 2000). In our study, we identify two CSR actions that may represent credible signals to employees in the context of employee giving.

On the one hand, corporate philanthropy—making donations to social stakeholders—is a potentially important signal, which may subsequently set an ethical standard that is acknowledged in the form of employees’ individual giving. By demonstrating concern for the welfare of external stakeholders such as local communities, firms signal through corporate giving that they are not entities apart from society. In so doing, they shape expectations as to how their employees will interact with outsiders (Brickson, 2005). Philanthropy decisions that show firms’ commitment to CSR are usually at the discretion of top managers (Galaskiewicz, 1997). They are authority figures, so their decisions on corporate donations will usually be salient signals of corporate ethical standards for their employees (Brown et al., 2005; Treviño et al., 2006). Employees may interpret such signals as a cue as to donate more of their own resources or be committed in other ethical or responsible activities (Aguilera et al., 2007), especially those selected by their employers.

On the other hand, firms may use their adherence to international standards such as Global Reporting Initiative (GRI) when reporting their CSR activities as another credible signal. A number of important features can make such reporting a credible signal to employees. Containing copious information about a focal firm’s CSR activities for the past year, these reports provide salient information to employees (Etzion and Ferraro, 2010). Of course, employees are unlikely to be aware of the details of their firms’ reports, so the mere provision of information is insufficient. When compiling formal CSR reports conforming to international reporting standards, however, firms need substantial input from employees to acquire data (e.g. figures on specific types and hours of employee volunteering or other specific social and environmental indicators). The compilation effort itself can serve as a social cue to employees, which informs their learning, imbuing them with a strong sense of organizational identity, that is, “who we are as an organization” (Albert and Whetten, 1985).

Furthermore, such reporting requires specific processes to be in place to define and measure metrics of important environmental and social contributions. Even employees not directly involved in reporting will often be aware of these processes. Compiling CSR reports to standards such as those of the GRI can thus accelerate and expand the institutionalization of prosocial values and norms among all employees (Dutton et al., 2006). In contrast, conventional CSR reports can serve merely as communication tools and, if so, are unlikely to represent a substantive commitment on the part of senior management (Weaver et al., 1999). Finally, preparing CSR reports that adhere to international reporting standards incurs substantial costs. Such investment by firms reinforces the credibility of the signal sent to employees.

In sum, firms may send various important, credible signals to employees and encourage them to engage in selected CSR programs (e.g. toward community). By doing this, firms establish social norms and sensitize employees to the expectations of senior management, which will result in employees’ compliance with these norms. Therefore, we propose that

H1: Credible signals through CSR actions by a firm are positively related to the level of donations by its employees.

Thus far, we have proposed that corporate signals can become norms reflected in the behaviors of employees toward external stakeholders. By itself, this proposition risks an over-socialized depiction of organizational behavior. Where behaviors are not prescribed by the firm—such as is the case with regard to employees’ private donations to good causes—employees still have the discretion to act as they see fit. In the subsequent section, we build on theories of reciprocity to propose two sets of circumstances under which these norm-building actions by executives are likely to be most effective.

The reinforcing influence of firm–employee relations

Theories of reciprocity state that individuals reward kind actions, which help embed social norms (Bosse et al., 2009; Falk and Fischbacher, 2006; Gouldner, 1960; Regan, 1971). When evaluating the kindness of an action, individuals are influenced both by the outcome and by the motivation that they ascribe to the action. For example, employees may make an assessment of signals sent by their organization and decide whether to reciprocate beneficial behavior. In particular, employees’ benevolence toward external stakeholders may be reinforced by reciprocity toward their firms with which they feel a strong degree of membership (Umphress et al., 2010). At the core of our argument is the idea that employees reward the benevolence shown to them by their firms by complying with corporate norms, driven by the affective dimension that underpins reciprocity.

A good relationship with one’s employer helps the employee feel valued, engendering a positive attitude toward the organization. This attitude may accumulate into affective commitment and identification (Lilius et al., 2011; Rioux and Penner, 2001). Aguilera, for one, argues that perceived justice toward oneself enhances individuals’ job attitudes and positive emotions in organizational settings (Aguilera et al., 2007). Likewise, Grant et al. (2008) propose that employees interpret firms’ employee support programs as positive and accordingly develop their own “prosocial identity,” which influences the level of their affective commitment to the company. Carmeli et al. (2007) also find that firms’ social performance (including “relations between management and other employees”) is positively related to employees’ organizational identification and job performance.

These arguments help explain why positive firm–employee relations reinforce the normative social influence of corporate signals as proposed in Hypothesis 1 because employees’ own treatment by their firm helps them interpret the intention and outcome of corporate actions toward other stakeholders. Employees with positive affective commitment are more likely to assimilate the organization’s values and beliefs (Grant et al., 2008). With more positive feelings toward their firm, employees may be receptive to normative messages from senior management, so information about the firm’s CSR beliefs and values is more likely to be assimilated. This increases the likelihood of employees reciprocating with their own prosocial behavior, especially toward social programs selected by their employers. For example, when employees sense that individual giving may have a positive impact on the firm due to effects such as building corporate reputation, they feel proud and are motivated to do good on behalf of their organization and act in ways consistent with its norms. In other words, they act as “good soldier” (Peloza and Hassay, 2006). In contrast, employees who perceive negative treatment from their employers might not only identify less with their firms but might also treat corporate signals related to CSR with skepticism.

Overall, this suggests that when employees are treated well or feel pride in their organization, they want to protect the firm’s reputation and benefit the firm by matching their behaviors to organizational norms (Umphress et al., 2010). Compassionate human resource management (HRM) practices may motivate employees to conform to their organizations’ community engagement activities (Walsh et al., 2003). In other words, good firm–employee relationship strengthens the positive impact of corporate signals on employee donations. Thus, we predict that

H2: The positive relationship between a firm’s credible signals and employee donation is reinforced in firms with good firm–employee relations.

The reinforcing influence of employees’ career prospects

Apart from the affective dimension underpinning reciprocity, reciprocity can be also driven by a largely rational component (Gouldner, 1960). That is, reciprocity is not only backward-looking but also forward-looking: The anticipation of future gains drives cooperation in the present (Axelrod, 1984; Van Lange et al., 2011). Reciprocity can be a function of how calculative individuals are in assessing the intention and consequence of corporate signals and their expectations of being rewarded (or sanctioned) in the future. We contend that such rational reciprocity is related to the career prospects facing employees.

Not all employees are equally likely to perceive benefits from complying with organizational norms. There is ample evidence that, even within the same context, individuals differ in how they respond to norms. For example, they react differently to pressures for civic participation such as volunteer work, voting, and blood donation (Baum and Ma, 2007). Although many drivers influence individuals’ sensitivity to norms (Parboteeah et al., 2004), even individuals who support well-meaning initiatives are ultimately concerned about the costs and benefits to themselves (e.g. Auger and Devinney, 2007). When employees recognize the potential benefits from supporting employer-sanctioned programs (i.e. networking with colleagues, good evaluation by supervisors, higher visibility in the firm, better career prospects, etc.) and expect to continue to benefit from the benevolence of their organization, they may be more willing to invest in behaviors that create value for the organization (Blair and Stout, 1999), including those that enhance its external reputation.

We argue that staff with superior career prospects in the firms for which they work will react more positively toward signals conveying organizational norms than staff with inferior career prospects. The former stand to benefit more than the latter from building social capital and relationships with coworkers and managers. In sum, superior career prospects are thus likely to strengthen the influence of signals sent by firms. Thus, we predict that

H3: The positive relationship between a firm’s credible signals and employee donation is reinforced in firms with a higher average level of employee career prospects.

Methods

Research setting

Before introducing our research data and methods, we provide a short description of our research context—the Sichuan earthquake in China. A major earthquake (8.0 on the Richter-scale degrees) occurred in the Sichuan province of China on 12 May 2008. It caused 69,227 fatalities and 374,176 personal injuries, making it the most deadly earthquake in China in the previous 30 years (Zhang et al., 2010). The disaster quickly prompted domestic donations. An estimated total of 3.2 billion Renminbi (RMB, Chinese currency) in cash and in-kind donations was received by 16 May, and approximately 82% of this sum was from domestic donors including major Chinese public corporations (Teets, 2009).

The Sichuan earthquake provides us with a unique research opportunity to test the relationship between corporate CSR actions, employee donations, and community engagement for two reasons. First, while we acknowledge that traditional values exist everywhere in the world, the Chinese context is especially useful for assessing the influence of CSR strategies on employee donations. Because of the strong influence of traditional values and recent sociopolitical developments, Chinese stakeholders (including employees) react favorably to corporate philanthropy (Wang and Qian, 2011). We consider that the normative pressure to make donations to earthquake relief might be expected to exert an important influence on employees’ prosocial behavior. In addition, in Chinese culture, the effect may be reinforced by the need to generate “face,” whereby peer pressure motivates individuals to engage in prosocial behaviors (Cheung et al., 1998; Ho, 1986). Second, corporations respond differently to the occurrence of such natural disasters due to firm, industry, or regional level differences (i.e. Tilcsik and Marquis, 2013; Zhang et al., 2010). In the present context, they took different actions in approaching employees and mobilizing them to make contributions. The following citation provides some of the more extreme evidence of executives’ expectations on employees to contribute:

The president of Hasee computer company in Shenzhen circulated a notice labeling the 1 percent of his employees who didn’t offer donations “coldblooded people” and said, “We hope they leave this company.” (Johnson, 2008)

Data and sample

The initial sample in this study consisted of all Chinese firms listed on either the Shenzhen or Shanghai stock exchange. Data on the firms were compiled from the China Stock Market and Accounting Research (CSMAR) database, corporate annual reports, CSR reports, and reports from China’s National Economic Research Institute (NERI). As one of the largest databases on Chinese listed firms, the CSMAR database was the primary source of information. Company annual reports and CSR reports were the main source of information on corporate giving and employee giving, respectively. Chinese annual reports normally list firms’ annual charitable and sponsorship giving. The CSR reports for 2008 usually listed employees’ donations to victims of the Sichuan earthquake.

The focus of this study is to examine the influence of a firm’s CSR actions on the level of its employees’ donation. However, not all firms reported employee donations, and firms reporting employee donations may differ systematically from those which did not. Factors affecting whether or not a firm reports employees’ giving may well be correlated with the amount of employee giving (the study’s key dependent variable). We used a two-stage Heckman selection model (Heckman, 1979) to correct for any such sample selection bias. In such analyses, parameter estimates from a first-stage probit model based on information that represents all the firms in the population are incorporated into the second stage. This two-stage approach is widely used in related research (e.g. Brammer and Millington, 2008; Wang and Qian, 2011). After merging the databases and removing observations with missing values, the final sample consisted of 1414 observations for the first-stage model and 262 observations for the second-stage model.

Measures

Dependent variable

Employee donation was measured as the total amount of RMB donated by a firm’s employees in connection with the Sichuan earthquake. Since the variable was skewed, we followed the lead of previous studies (e.g. Adams and Hardwick, 1998; Galaskiewicz, 1997) in using its natural logarithm in the analyses.

Independent variables

Credible signals were measured by two corporate CSR actions: corporate giving and the issuance of professional CSR reports. Corporate giving was the amount of charitable contributions reported for 2008 (in RMB) to all charitable causes.¹ We used the natural logarithm for analysis.

Since 2006, the number of CSR reports issued by Chinese public firms has increased annually, with around 1000 reports issued during the period 2006–2009. Some of these reports are based on the GRI 3.0 guidelines which firms adapted to the Chinese context. We created a dummy variable, professional CSR report, coded as 1 if the CSR report adopted GRI guidelines to a significant extent, and 0 otherwise.²

We sourced data on firm–employee relations from the firms’ CSR reports. In China, CSR reports normally include a section about the firm–employee relations. We followed the technique of D’Aveni and MacMillan (1990) and standardized the reports as PDF files with 12 font type. We then counted the number of lines that described firm–employee relations. A longer text was interpreted as representing the salience of employee well-being to senior management.³

We used the education level of a firm’s employees—the percentage of the employees with at least a college degree (Un, 2011)—as a proxy for the long-term career prospects of each firm’s employees. This is appropriate in the Chinese context where education is strongly linked to earnings and career prospects across all ethnic groups and for both men and women (e.g. Baum and Ma, 2007). Senior managers are very much recruited from among the ranks of graduate-level employees. In manufacturing-based firms with higher rates of low-skilled workers, prospects for career advancement are comparatively poor, and staff turnover is disproportionately high. This information was coded from company annual reports.

Control variables

We included a number of controls that potentially affect the tendency of employees to donate: firm age, firm size, slack resources, foreign sales, ownership nature, employee volunteering activity, firms’ salary expenses, firm reputation, regional development, and the geographic distance between a firm and the earthquake location. Firm age was measured as the number of years since the firm’s initial public offering. Firm size was measured as the natural logarithm of the firm’s total assets. Slack resource was measured as the sum of the cash flows from the firm’s operating, financing, and investing activities, scaled by its total assets. Internationalization was quantified as the percentage of foreign sales in the firm’s total sales (Hitt et al., 1997). We also determined whether each firm’s ultimate controller was a state body (a common situation among Chinese listed firms). We coded the dummy variable state-owned as 1 if the firm was owned by the Chinese government and its agencies, such as the Bureau of State Assets Management and the Ministry of Finance, and 0 if its ultimate owners were private shareholders. We measured employee volunteer activity by checking whether firms record the employee volunteering activities in the annual reports or CSR reports. In the context of employee donations, individual income will have a significant impact on individual employees’ capacity to donate, and employee salary was measured as the firm’s total salary expense divided by the number employees. The total salary expense was coded from the annual reports. The information on the number of employees came from the CSMAR database.

There is no general reputation ranking of Chinese firms such as Fortune’s annual list of the most reputable companies in the United States. We used the “China’s 25 Best Listed Companies” ranking (http://bbs.money.163.com/bbs/comment/162939502.html, in Chinese) to measure firm reputation. The ranking is organized by The Warren E. Buffett Journal, World Company Compete-Skill Lab, and Work Economists. Since 2004, they have selected the 25 best listed companies each year. The ranking is influential to the point of being referred to as the Nobel Prize for Chinese listed firms. The dummy variable firm reputation was coded as 1 if a firm was listed in this ranking in 2009. Regional development was measured as the gross domestic product (GDP) per capita of the province where the firm had its headquarters, and this was used to control for the economic strength of the community (Marquis et al., 2013; Tilcsik and Marquis, 2013). This value reflects each province’s level of development. The data are published each year by the Chinese Statistics Bureau. Moreover, we also controlled for the geographic distance between the focal firm and the location of the earthquake. It was measured as the number of kilometers between the city where a firm is located and the city of the earthquake. We log-transformed this variable.

Previous research has shown that well-performing firms may be more likely to make charitable contributions since they can better afford to do so (Adams and Hardwick, 1998; Brammer and Millington, 2004). Employees from more prosperous firms may also be more likely to donate. Firm profitability was measured as return on assets (ROA), calculated as net income over total assets. Likewise, executives’ political connections also increase donation activities. Consistent with prior research on the political connections of China’s listed firms (Fan et al., 2007; Wang and Qian, 2011), we used the CEO’s affiliation with the government as an indicator of the firm’s political connection, which was a dummy variable equal to 1 if the CEO was an official of the central government or local government, or of the military; 0 otherwise. The data were collected from the CEO biographical information contained in the annual reports. Furthermore, employee donations may also vary by industry, so we included 12 industry dummies to take account of the 13 industry categories⁴ identified by the China Securities Regulatory Commission (CSRC). Profitability, political connections, and industry effects are thought to affect the probability of an employee donating in a yes or no probit model, but are less likely to have any direct impact on the amount of the donation, so they served as valid instrumental variables.

Heckman two-stage estimation method

The first stage of the Heckman process involves estimating the probability of a firm’s employees making any reported donation to the earthquake relief, based on the relevant firm and industry factors. The likelihood of a firm’s employees donating was estimated by applying a probit model to the entire sample of firms in 2008, including firms in both the main sample and the control group. An adjustment term, the inverse Mills ratio, was calculated based on the first-stage probit regression results. We then included the ratio as a control variable in the main second-stage equation (Heckman, 1979) which examined the relationship between corporate CSR and the amount of employee donations using the sample of firms that reported employee donations.

In the second stage, we employed moderated ordinary least squares (OLS) regression analyses to test the propositions using STATA 11.0 and the “hireg” command. We standardized the independent and moderating variables before creating the interaction terms (Cohen and Cohen, 1983) to reduce multicollinearity problems.

Results

Tables 1 and 2 present the means, standard deviations, and correlations of all the variables for the first-stage and second-stage Heckman estimation, respectively. The maximum variance inflation factor (VIF) from the analyses was 2.84, and the mean VIF was 1.56, below the rule-of-thumb cutoff of 10 (Ryan, 1997).

Table 1.

Correlation matrix and summary statistics for the first-stage variables.

	Variables	Mean	SD	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16
1	Employee donation (yes = 1)	0.18	0.38
2	Firm age	11.90	4.03	−0.05
3	Firm size	21.53	1.30	0.41	−0.03
4	Slack resource	0.05	0.09	0.08	−0.10	0.07
5	Internationalization	9.95	20.03	−0.01	−0.15	−0.05	0.04
6	State owned (yes = 1)	0.63	0.48	0.13	0.06	0.28	0.04	−0.08
7	ROA	0.01	0.02	0.13	−0.11	0.14	0.28	0.02	−0.07
8	Political connection	0.22	0.42	0.06	0.01	0.01	−0.01	−0.04	0.02	0.08
9	Employee volunteer activity	0.05	0.22	0.36	−0.07	0.26	0.06	−0.02	0.03	0.07	−0.02
10	Salary expense	0.01	0.03	0.29	0.01	−0.03	0.04	0.01	0.02	0.04	−0.01	0.19
11	Firm reputation	0.02	0.13	0.18	−0.05	0.31	0.11	0.05	0.01	0.04	−0.04	0.20	0.01
12	Education level	0.32	0.24	0.20	0.05	0.18	−0.13	−0.11	0.02	0.10	0.03	0.10	0.00	0.09
13	Firm–employee relations	9.03	19.43	0.69	−0.09	0.42	0.09	0.00	0.09	0.15	0.02	0.44	0.21	0.27	0.13
14	Corporate giving	11.09	5.18	0.22	−0.08	0.34	0.09	0.02	0.03	0.16	0.06	0.14	−0.01	0.12	0.01	0.21
15	Professional CSR report	0.01	0.12	0.21	−0.05	0.28	0.08	0.02	0.04	0.02	−0.06	0.16	0.03	0.37	0.08	0.32	0.09
16	Regional development	10.27	0.56	0.06	0.00	0.16	−0.05	0.10	−0.03	0.06	0.00	0.09	−0.02	0.09	0.17	0.05	0.07	0.11
17	Geographic distance to Chengdu	7.39	0.46	0.01	−0.07	0.04	−0.04	0.08	−0.07	0.01	−0.01	0.03	−0.06	0.03	0.07	−0.02	−0.02	0.02	0.44

ROA: return on assets; CSR: corporate social responsibility; SD: standard deviation.

N = 1414; correlations with an absolute value ≥ 0.07 are significant at the p ≤ 0.01 level.

Table 2.

Correlation matrix and summary statistics for the second-stage variables.

	Variables	Mean	SD	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15
1	Employee donation (yes = 1)	3.01	2.26
2	Firm age	11.28	3.84	−0.06
3	Firm size	22.54	1.41	0.23	0.06
4	Slack resource	0.07	0.09	−0.01	−0.12	0.03
5	Internationalization	9.88	19.48	−0.08	−0.11	−0.10	0.11
6	State owned (yes = 1)	0.76	0.43	−0.03	0.01	0.25	0.15	−0.07
7	Employee volunteer activity	0.21	0.41	0.09	−0.06	0.03	−0.02	−0.09	−0.03
8	Salary expense	0.03	0.04	0.33	−0.09	−0.23	0.11	0.05	0.01	0.19
9	Firm reputation	0.05	0.22	0.14	−0.01	0.40	0.06	0.10	0.03	0.10	−0.10
10	Regional development	10.33	0.56	0.06	−0.15	0.18	−0.06	0.05	−0.03	0.10	−0.04	0.16
11	Geographic distance to Chengdu	7.39	0.44	0.01	−0.08	0.04	−0.10	0.05	−0.19	0.05	0.01	0.08	0.51
12	Education level	0.20	0.29	0.34	−0.03	0.05	−0.17	−0.05	0.05	−0.04	0.09	0.00	0.16	0.02
13	Firm–employee relations	39.51	26.47	0.10	−0.13	0.25	0.16	0.01	0.09	0.15	0.06	0.31	−0.02	−0.12	−0.11
14	Corporate giving	13.35	4.00	0.08	0.09	0.28	0.14	−0.07	0.00	0.04	−0.07	0.08	−0.01	−0.10	0.02	−0.03
15	Professional CSR report	0.06	0.24	0.20	−0.14	0.39	0.07	0.07	0.13	0.08	−0.07	0.39	0.21	0.05	0.03	0.28	0.11
16	Inverse Mills ratio	0.69	0.54	−0.22	0.09	−0.42	−0.17	0.02	−0.25	−0.22	−0.24	−0.16	−0.08	0.05	−0.09	−0.69	−0.18	−0.19

CSR: corporate social responsibility; SD: standard deviation.

N = 262; correlations with an absolute value ≥ 0.18 are significant at the p ≤ 0.01 level.

First-stage employee giving choice estimates

Table 3 presents the results of the first-stage Heckman selection model, which is a probit regression of the choice of employee charitable giving against the factors thought to predict whether or not a firm’s employees will engage in charitable giving. The dependent variable is the dummy variable employee donation indicating whether or not a firm reported donations by its employees to Sichuan earthquake relief. Model 1 is the baseline model that includes an intercept term, firm age and size, firm slack resources, internationalization, and state ownership. In addition, the instrumental variables of firm profitability (ROA), political connection, and industry dummies are entered in the model. As anticipated, employees from older firms are less likely to engage in charitable giving, but employees from larger firms are more likely. Firms’ slack resources and internationalization do not yield significant effects. Firms’ ROA and political connections both show positive relationships with the probability of employee giving. The coefficients of employee volunteer activity and salary expense are positive and significant (Model 2). Models 3 to 5 also show positive relationships between employees’ education levels, firm–employee relations, and corporate giving and employees’ donation behavior. In contrast, firm reputation, professional CSR reporting, the geographic development of China’s different regions, and distance from the earthquake are insignificant (Model 4).

Table 3.

Probit estimates from Heckman first-stage sample selection model regression of employee giving choice at 2008 on firm and industry predictors at 2007.

	Model 1	Model 2	Model 3	Model 4	Model 5
Intercept	−1.099***	−1.210***	−1.328***	−1.581***	−1.610***
	(0.215)	(0.235)	(0.254)	(0.271)	(0.275)
Firm age	−0.0938*	−0.110*	−0.075	−0.073	−0.071
	(0.049)	(0.054)	(0.065)	(0.065)	(0.066)
Firm size	0.570***	0.597***	0.395***	0.334***	0.331***
	(0.052)	(0.059)	(0.069)	(0.073)	(0.074)
Slack resource	0.025	0.032	0.079	0.072	0.073
	(0.049)	(0.052)	(0.062)	(0.063)	(0.063)
Internationalization	0.034	0.046	0.044	0.049	0.049
	(0.043)	(0.046)	(0.055)	(0.055)	(0.056)
State owned (yes = 1)	0.217*	0.241*	0.211	0.234*	0.249*
	(0.101)	(0.111)	(0.132)	(0.133)	(0.135)
ROA	0.277***	0.216**	0.007	−0.022	−0.024
	(0.080)	(0.081)	(0.096)	(0.099)	(0.099)
Political connection	0.207*	0.262*	0.251*	0.232*	0.239*
	(0.100)	(0.108)	(0.128)	(0.130)	(0.130)
Employee volunteer activity		1.249***	0.308	0.276	0.272
		(0.181)	(0.194)	(0.195)	(0.195)
Salary expense		0.325***	0.268***	0.279***	0.283***
		(0.032)	(0.035)	(0.035)	(0.036)
Firm reputation		0.128	−0.578	−0.557	−0.546
		(0.333)	(0.422)	(0.421)	(0.421)
Education level			0.278***	0.282***	0.284***
			(0.064)	(0.065)	(0.065)
Firm–employee relations			0.602***	0.594***	0.594***
			(0.040)	(0.041)	(0.041)
Corporate giving				0.275**	0.281**
				(0.093)	(0.094)
Professional CSR report				−0.106	−0.090
				(0.442)	(0.443)
Regional development					−0.039
					(0.066)
Geographic distance to Chengdu					0.072
Geographic distance to Chengdu					(0.073)
Industry dummies	Included	Included	Included	Included	Included
Pseudo R²	0.198	0.323	0.536	0.543	0.543
Log likelihood	−557.733	−470.706	−322.798	−317.992	−317.470
LR chi-square		174.42(3)***	295.39(2)***	9.61(2)**	1.02(2)

LR: likelihood ratio; ROA: return on assets; CSR: corporate social responsibility.

Indicates significance at the p ≤ 0.05 (**p ≤ 0.01; ***p ≤ 0.001) level of confidence (one-tailed test); standard errors are in the parentheses.

Second-stage employee giving amount estimates

Table 4 presents the results of the second stage of the Heckman estimation using the inverse Mills ratio from the first-stage probit model in Table 3 to account for selection bias. We use hierarchical multiple regression analysis to test for the relationships that we hypothesized. Model 1 includes all the control variables. Models 2 and 3 add corporate giving and the release of professional CSR reports. Model 4 includes the firm–employee relations indicators and the education level of the employees. Models 5–8 test the interaction hypotheses, whereas Model 9 is a full model including all interaction terms.

Table 4.

Estimates for Heckman second-stage models: regression of employee donations on firm and employee predictors.

	Model 1	Model 2	Model 3	Model 4	Model 5	Model 6	Model 7	Model 8	Model 9
Intercept	2.613***	2.584***	2.609***	2.623***	2.912***	2.585***	2.421***	2.631***	2.657***
	(0.421)	(0.504)	(0.501)	(0.552)	(0.578)	(0.572)	(0.553)	(0.553)	(0.588)
Firm age	−0.148	−0.149	−0.114	−0.075	−0.087	−0.070	−0.057	−0.071	−0.055
	(0.140)	(0.141)	(0.141)	(0.134)	(0.134)	(0.136)	(0.133)	(0.134)	(0.135)
Firm size	0.976***	0.972***	0.917***	0.799***	0.804***	0.801***	0.711***	0.779***	0.715***
	(0.144)	(0.149)	(0.151)	(0.146)	(0.145)	(0.146)	(0.149)	(0.149)	(0.150)
Slack resource	−0.040	−0.041	−0.056	0.122	0.127	0.124	0.106	0.108	0.112
	(0.114)	(0.115)	(0.115)	(0.114)	(0.113)	(0.114)	(0.113)	(0.116)	(0.114)
Internationalization	−0.195	−0.194	−0.208	−0.165	−0.193	−0.165	−0.196	−0.164	−0.226*
	(0.133)	(0.134)	(0.133)	(0.127)	(0.127)	(0.127)	(0.126)	(0.127)	(0.127)
State owned (yes = 1)	−0.953**	−0.949**	−0.968**	−0.826**	−0.831**	−0.823**	−0.815**	−0.794**	−0.802**
	(0.311)	(0.314)	(0.313)	(0.306)	(0.305)	(0.307)	(0.303)	(0.310)	(0.308)
Employee volunteer activity	−0.058	−0.059	−0.042	0.079	−0.015	0.092	0.041	0.080	−0.031
	(0.315)	(0.316)	(0.314)	(0.299)	(0.304)	(0.304)	(0.296)	(0.299)	(0.305)
Salary expense	0.645***	0.646***	0.645***	0.599***	0.581***	0.601***	0.637***	0.596***	0.622***
	(0.100)	(0.100)	(0.100)	(0.097)	(0.097)	(0.097)	(0.097)	(0.097)	(0.098)
Firm reputation	0.192	0.195	−0.096	−0.247	−0.183	−0.236	−0.295	−0.184	−0.177
	(0.557)	(0.559)	(0.575)	(0.566)	(0.565)	(0.568)	(0.560)	(0.573)	(0.575)
Regional development	0.069	0.069	0.044	−0.064	−0.074	−0.064	−0.051	−0.063	−0.065
	(0.154)	(0.154)	(0.154)	(0.148)	(0.148)	(0.148)	(0.147)	(0.148)	(0.147)
Geographic distance to Chengdu	−0.126	−0.124	−0.116	−0.038	−0.039	−0.034	−0.042	−0.039	−0.033
	(0.162)	(0.163)	(0.162)	(0.155)	(0.155)	(0.156)	(0.154)	(0.155)	(0.155)
Inverse Mills ratio	−0.007	−0.004	0.000	0.272	0.069	0.311	0.179	0.235	0.040
	(0.303)	(0.305)	(0.303)	(0.386)	(0.404)	(0.415)	(0.384)	(0.390)	(0.423)
Corporate giving		0.023	0.014	−0.009	−0.132	−0.003	0.222	−0.009	0.097
		(0.223)	(0.222)	(0.217)	(0.228)	(0.218)	(0.234)	(0.217)	(0.246)
Professional CSR report			1.088*	1.027*	0.942*	1.087*	1.125*	1.014*	1.169*
			(0.556)	(0.540)	(0.541)	(0.589)	(0.536)	(0.541)	(0.583)
Education level				0.710***	0.677***	0.715***	0.066	0.684***	0.046
				(0.131)	(0.132)	(0.133)	(0.294)	(0.136)	(0.297)
Firm–employee relations				0.100	−0.345	0.133	0.059	0.079	−0.361
				(0.182)	(0.327)	(0.221)	(0.181)	(0.185)	(0.331)
Firm–employee relations* Corporate giving					0.297*				0.329*
Firm–employee relations* Corporate giving					(0.182)				(0.186)
Firm–employee relations* Professional CSR report						−0.081			−0.196
Firm–employee relations* Professional CSR report						(0.318)			(0.334)
Education level* Corporate giving							0.524*		0.514*
							(0.215)		(0.221)
Education level* Professional CSR report								0.334	0.097
Education level* Professional CSR report								(0.483)	(0.505)
Number of observations	262	262	262	262	262	262	262	262	262
F value	11.09***	10.13***	9.75***	11.34***	10.87***	10.60***	11.22***	10.64***	9.62***
R²	0.328	0.328	0.338	0.409	0.415	0.409	0.423	0.410	0.430

CSR: corporate social responsibility.

Indicates significance at the p ≤ 0.05 (**p ≤ 0.01; ***p ≤ 0.001) level of confidence (one-tailed test); standard errors are in the parentheses.

As expected, firm size positively predicts the amount of employee donations. Salary expense also shows a significant and positive relationship with employee donations. Employees from state-owned firms donate substantially less to Sichuan earthquake relief.

Hypothesis 1 proposes a positive relationship between employee donations and a firm’s credible signals, measured by corporate giving and professional CSR report, respectively. In Model 3, the main effect of corporate giving is not significant, but the predictive power of publishing a professional CSR report is positive and significant. Hence, Hypothesis 1 is partially supported.

Hypothesis 2 predicts that the positive relationships between corporate giving, professional CSR reporting, and employee donations will be stronger in the presence of positive firm–employee relations. In Table 4, the interaction coefficient between firm-employee relations and corporate donations is positive and significant in Model 5. The coefficient between firm–employee relations and the release of a professional CSR report is not significant in Model 6, so Hypothesis 2 is supported when the credible signal is measured by corporate giving.

Hypothesis 3 predicts that the positive relationships between corporate giving, professional CSR report and employee donations will be stronger where employees have more promising career prospects. In Model 7, the interaction coefficient between education level—a proxy for career prospects in the Chinese context—and corporate giving is positive and significant, partially supporting Hypothesis 3.

Applying the approach pioneered by Aiken and West (1991), we plot the interactions one standard deviation above and below the mean. The figures are consistent with our predictions, lending further support to Hypotheses 2 and 3.

These effects are both statistically and practically significant. For example, compared to firms that do not issue professional CSR reports, firms with professional CSR reports have 3.025% more employee donations (log-transformed). In terms of interaction effects, for firms with better firm–employee relations, as corporate giving increases by one standard deviation, the level of employee donation increases by 1.705% (Figure 1). In addition, for firms with a higher level of employee education, as corporate giving increases by one standard deviation, the level of employee donation increases by 2.963% (Figure 2).

Figure 1.

Interaction between corporate giving and firm–employee relations in predicting employee donation.

Figure 2.

Interaction between corporate giving and employee education level in predicting employee donation.

Discussion

Strategy research stands to benefit from a deeper understanding of “stakeholder firms” and their approaches to resolve conflict among their diverse stakeholders (Mahoney and McGahan, 2007: 90). This study was intended to investigate the association between firms’ relationships with their internal stakeholders (employees) and employees’ actions toward an important external stakeholder group. We tested this relationship in the context of corporate and employee donations to victims of the 2008 earthquake in Sichuan, China. Our study emphasizes that efforts to satisfy external stakeholders can benefit from positive relationships between the firm and its employees are reinforced by credible information signals that convey expectations of appropriate behavior. Our findings have implications for research on stakeholder management.

First, we highlight the value of a multilevel conceptualization of stakeholder management. Much research on CSR discusses the antecedents of corporate social activities and the relationship between social and financial performance (e.g. Brammer and Millington, 2008; McWilliams and Siegel, 2001; Wang et al., 2008; Wang and Qian, 2011). The unit of analysis in most of these studies has been the firm or its top managers, with limited attention to actors at other levels (Aguilera et al., 2007: 839). Conversely, organizational behavior researchers investigating prosocial behavior (e.g. Brief and Motowidlo, 1986; Dutton et al., 2006) have pointed out employee discretion in responding to social dilemmas, largely attending to the individual level of analysis. There is value to examine the interaction between the actions of firms and employees to understand how the organizational context shapes employee behavior and attenuates the potential conflict that exists among internal and external stakeholders. In this study, we have shown the impact of corporate actions (e.g. donations and CSR reporting) on a nonfinancial outcome—the behavior of an internal stakeholder group through employees’ giving. This effort responds to the call by Aguilera et al. (2007) for research on employee prosocial behavior and illuminates stakeholder management from a new perspective.

Second, our attention to the organizational context illuminates how firms can set standards of appropriate behavior. Consistent CSR signals provide important norms for employees to imitate through their own prosocial behavior. In this study, we focused on the impact of two types of corporate signals: corporate philanthropy and CSR reporting. The internal credibility of these corporate signals differs. The first category, corporate donations, signals to external stakeholders the firm’s community engagement and sets up a model for employees to understand and emulate. However, we found that its influence within the firm depends on whether or not employees interpret it as hypocritical (as may be the case when firm–employee relationships are poor) and whether employees have a longer career prospect in firms that they work for (in which may depend on their level of education). Only when at least one of the two conditions is present, can corporate donations create a social environment that activates social learning and compassionate behavior among employees. We suspect that it is because of the spontaneous nature of corporate donations and that, in many cases, they can be decoupled from firms’ ongoing activities (Crilly et al., 2012; Weaver et al., 1999). Thus, actions such as one-off donations may not influence employees unless they are complemented by an appropriate organizational context.

In contrast, publishing credible CSR reports apparently serves by itself as a salient signal that activates employees’ individual prosocial behavior. Compiling reports that adhere to GRI guidelines is a more visible, complicated, and ongoing process which involves substantial effort from the employees as well as from the company (i.e. heavy compiling costs). In terms of preparing the documents, CSR reports by adherence to GRI standards require more employee involvement than corporate donation, as each CSR report needs to incorporate all of the social activities of the firm and its employees for the past year. Corporate leaders can thus use this as an opportunity to effectively signal their commitment to CSR, spread information on the importance of getting involved in prosocial issues, establish themselves as role models, and explicitly indicate that prosocial personal behavior will contribute to their evaluation of employees.

Furthermore, although CSR reporting according to GRI standards is not particularly onerous for those Western firms, which already have adequate reporting systems in place, the GRI’s own investigations in addition to our own data show that only a small fraction of Chinese firms issue CSR reports prepared according to the GRI guidelines. In other words, it probably is more onerous for Chinese firms who are less accustomed to collect data on their social and environmental actions. We suspect that Chinese firms, compared to their counterparts in the West, are more likely to publicize their adoption of GRI standards and use it as a credible signal to guide employees’ behaviors.

Third, whereas most studies of social influence focus largely on the strength of the source and the persuasiveness of normative messages, we extend this work by demonstrating the important interaction between reciprocity and weak normative signals (such as philanthropy). Reciprocity has two consequences for the maintenance of norms in the firm. First, employees who benefit from healthy firm–employee relationships appear to interpret normative messages from their organizations positively, presumably ascribing more credibility to these, and follow the corporate lead in prosocial activities. Thus, the relationship between the firm and its own employees is crucial in explaining how employees respond toward external stakeholders. Second, reciprocity can be calculative, and firms with better educated employees who arguably see more future career prospects in their firms have a greater interest to comply with the social norms supported by senior management.

We would further argue that benign personnel policies are very relevant when firms intend to influence individual behavior through their CSR activity. Recent experimental evidence demonstrates that graduates are attracted to firms with positive social reputations (e.g. those firms listed by the GRI), but place even greater weight on firms’ workplace reputations (Auger et al., 2013). Our study provides interesting insights into the interplay between these two dimensions and sheds light on how HRM practices may engage individuals to commit to citizenship (Walsh et al., 2003). More particularly, when employees are treated fairly by their organizations, they are more likely to interpret any prosocial behavior of their company as philanthropic and sincere. When a situation calls for their own prosocial activities, they will then be better motivated to participate out of feelings of affective commitment, organizational loyalty, and reciprocity.

Fourth, the results also suggest that the Chinese context offers interesting perspectives on understanding the role of employees on firms’ stakeholder management. We find evidence of a complementarity between internal and external stakeholders: the more executives attend to both internal and external stakeholders, the more benevolently internal stakeholders react in turn to external stakeholders. In other words, there are synergies and complementarities in terms of external and internal stakeholder management. This is perhaps symptomatic of the “both-and” mindset that appears more prevalent in Asia than in the West (Chen and Miller, 2010). However, stakeholder scholars have long been aware that stakeholders can hold joint interests, and the pattern we observe is consistent (Freeman et al., 2010). Whether the same specific pattern occurs in Western cultures deserves future research.

The organizational context might be particularly influential on employee behaviors in China. In China, many employee behaviors even outside of the firm are not strictly viewed as individual behavior in the way they are in the West. They are subject to heavy social influence. The CSR concept has started to gain the attention of stakeholders only in the past few years in China, but it has been spreading quickly. However, CSR activity is still perceived as a variant of marketing or as a propaganda tool, especially by corporations that lack political connections (Wang and Qian, 2011). In this situation, how employees interpret behavior such as corporate giving becomes relevant in guiding their own behavior. Our results indicate that corporate donations may often be understood as window dressing and therefore cannot effectively trigger the prosocial behavior of employees (Fassin and Buelens, 2011). Only when employees personally experience ethical standards of organizational behavior are they willing to positively interpret information on corporate giving and match this through their own behavior. Publishing CSR reports to GRI standards more effectively demonstrates commitment to prosocial activities.

While these findings highlight the impact of organization-level factors on employees’ actions toward a specific external stakeholder group, the results should be interpreted with caution. We focused on a particularly striking event—earthquake relief donations. This one-off setting provided reliable data on employee donations as an indicator of prosocial behavior, but this context may not properly represent the employees’ normal behavior patterns. We are encouraged that similar results hold whether we try to predict average corporate donations or corporate donations during the Sichuan earthquake in the analyses. Nevertheless, the results strictly apply only to interpreting employee prosocial behavior after unusual events or disasters. Linked to this event, some of our major constructs (e.g. corporate donations and employee donations) are self-reported data, which may make our empirical findings susceptible to biases inherent to the data. Likewise, the findings may be closely tied to the institutional context; we concede that the GRI reporting may function as a stronger signal in China than in the West, which could be explored in future studies.

Additionally, the study was cross-sectional, so we cannot infer any causal relationships. Although reporting adherence to GRI standards appears to influence employees’ socialization of prosocial values, these values could also influence firms’ propensity to report according to GRI standards. We would encourage longitudinal studies and, where applicable, field experiments to assess the causal relationships that underlie the patterns we observe. In understanding how organizational context shapes behavior, it would also be useful to understand the interplay between context and individual-level factors such as gender, personality, and perceptions. Taking a step in this direction holds the potential to extend the initial multilevel explanation of prosocial behavior that we propose in the current study. Ultimately, the “stakeholder firm” is composed of individuals who have discretion to act within a broader organizational and societal context.

Conclusion

Firms are faced with various types of stakeholders. Whereas internal and external stakeholders are often at loggerheads, firms equipped with salient, credible CSR actions are able to shape norms of giving and motivate employees to conform to such norms with their own contributions and thus build complementarity between potentially competing stakeholders. This finding helps to understand stakeholder management and bridge the gap between macro- and micro-level studies of the impact of CSR strategies and policies by using a unique catastrophe in China. Beyond this, the results also provide useful suggestions about personnel policies to support a prosocial culture.

Footnotes

Funding

This research received support through the Central Research Grant (G-YL38) from the Hong Kong Polytechnic University.

Notes

Author biographies

Na Ni is an Assistant Professor of Strategy at the Hong Kong Polytechnic University. Her research areas include corporate social responsibility (CSR) and the sociology of nonprofit organizations in China. She is also interested in the application of configurational methodologies. She has recently published in Business Strategy and the Environment, Journal of Business Ethics, and Research in the Sociology of Organizations. [email: msnina@polyu.edu.hk]

Cuili Qian is an Assistant Professor of Strategy at City University of Hong Kong. Her current research interests include CSR and corporate political strategies (with particular interests in transition economy context) and multinational corporations’ (MNCs) staffing and control of subsidiaries. Her recent work has been published in the Academy of Management Journal, Strategic Management Journal, and Organization Science. [email: Cuili.Qian@cityu.edu.hk]

Donal Crilly is an Assistant Professor of Strategy and Entrepreneurship at the London Business School. His research interests lie in the areas of managerial cognition and linguistics. Empirically, he studies how organizations and decision makers conceive of, and respond to, stakeholder pressures. His recent work has been published in the Strategic Management Journal, Academy of Management Journal, Organization Science, and Journal of International Business Studies [email: dcrilly@london.edu].

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