Advertisement

A Leasehold Approach to Corporate Social Responsibility

  • Martin M. Greller
  • Sean R. ValentineEmail author
Article
  • 4 Downloads

Abstract

Corporate social responsibility (CSR) connects organizations with various environments and constituencies. CSR is enacted through governance and strategic processes, yet this can cause distortions as the process conforms to an agency theory narrative. This paper analyzes the role agency plays in CSR and offers an alternative (the leasehold approach) that uniquely describes the relationships among owners, organizational leadership, and contemporary management practices. An alternative to the existing paradigm is explored by 1) acknowledging the robust role of leaders in determining vision, strategy and CSR, 2) recognizing that governance balances obligations to multiple parties to whom leaders have committed, 3) allowing that those commitments determine the organization’s accountabilities necessary to demonstrate promised performance, 4) focusing on value creation more than distribution of surplus, and 5) highlighting that financial and social outcomes are equally legitimate. Implications for theory/practice are offered; leasehold indeed offers an open, autonomous, and accountable way to view corporate governance and CSR.

Keywords

Corporate social responsibility Leasehold Corporate governance Agency theory Stakeholder theory 

Notes

Acknowledgements

We wish to thank our colleagues Aida Rodriguez (The New School), Sherrill Shaffer (University of Wyoming), Grant Lindstrom (University of Wyoming), and Duane Helleloid (University of North Dakota) for their comments and recommendations on earlier versions of this paper.

Compliance with Ethical Standards

Conflict of Interest

The authors declare they have no conflicts of interest.

Informed Consent

No primary data were collected for use in this investigation.

References

  1. Aguilera, R. V., Rupp, D. E., Williams, C. A., & Ganapathi, J. (2007). Putting the S back in corporate social responsibility: A multilevel theory of social change in organizations. Academy of Management Review, 32, 836–863.Google Scholar
  2. Alexander, J. (2000). Adaptive strategies of non-profit human resource organizations in an era of devolution and new public management. Nonprofit Management and Leadership, 10, 287–303.Google Scholar
  3. Alkire, S., & Santos, M. (2010). Acute multidimensional poverty: A new index for developing countries. (Working Paper38). Oxford: Oxford Poverty and Human Development Initiative.Google Scholar
  4. Anderson, E. (1985). The salesperson as outside agent OR employee: MA transaction cost analysis. Marketing Science, 4, 234–254.Google Scholar
  5. Argyres, N. S., & Liebeskind, J. P. (1999). Contractual commitments, bargaining power, and governance inseparability: Incorporating history into transaction cost theory. Academy of Management Review, 24, 49–63.Google Scholar
  6. Arrow, K. J. (1970). Essays in the theory of risk bearing. London: North-Holland.Google Scholar
  7. Arthur, M. B., & Rousseau, D. M. (1996). The boundaryless career: A new employment principle for a new organizational era. Oxford: Oxford University Press.Google Scholar
  8. Arthurs, J. D., Hoskisson, R. E., Busenitz, L. W., & Johnson, R. A. (2008). Managerial agents watching other agents: Multiple agency conflicts regarding underpricing in IPO firms. Academy of Management Journal, 51, 277–294.Google Scholar
  9. Aupperle, K. E., & Pham, D. V. (1989). An expanded investigation into the relationship of corporate social responsibility and financial performance. Employee Responsibilities and Rights Journal, 2(4), 263–274.Google Scholar
  10. Austin, J., & Bartunek, J. (2004). Theories and practice of organization development. Handbook of Psychology, 12, 309–332.Google Scholar
  11. Bansal, P., & Song, H.–. C. (2017). Similar but not the same: Differentiating corporate sustainability from corporate responsibility. Academy of Management Annals, 11, 105–149.Google Scholar
  12. Barnett, M. L. (2007). Stakeholder influence capacity and the viability of financial returns to corporate social responsibility. Academy of Management, 32, 794–816.Google Scholar
  13. Bartlett, C. A., & Ghoshal, S. (1994). Changing the role of top management: Beyond strategy to purpose. Harvard Business Review, 6, 79–88.Google Scholar
  14. Basu, K., & Palazzo, G. (2008). Corporate social responsibility: A process model of sensemaking. Academy of Management Review, 33, 122–136.Google Scholar
  15. Bauer, R., Koedijk, K., & Otten, R. (2005). International evidence on ethical mutual fund performance and investment style. International Journal of Banking & Finance, 29, 1751–1767.Google Scholar
  16. Behn, R. D. (2003). Why measure performance? Different purposes require different measures. Public Administration Review, 63, 586–606.Google Scholar
  17. Berkley, R. A., & Watson, G. (2009). The employer-employee relationship as a building block for ethics and corporate social responsibility. Employee Responsibilities and Rights Journal, 21, 275–277.Google Scholar
  18. Berle, A., & Means, G. (1932). The modern corporation and private property. New York: Macmillan.Google Scholar
  19. B-Lab (2015). The B-Corp declaration. https://www.bcorporation.net/what-are-b-corps/the-b-corp-declaration. Accessed 30 October 2015.
  20. Blair, M. M., & Stout, L. A. (2001). Director accountability and the mediating role of the corporate board. Washington University Law Quarterly, 79(2), 403–447.Google Scholar
  21. Bower, J. L., & Paine, L. S. (2017). The error at the heart of corporate leadership. Harvard Business Review, 95, 50–60.Google Scholar
  22. Boyd, B. K., Haynes, K. T., & Zona, F. (2011). Dimensions of CEO-board relations. Journal of Management Studies, 48, 1892–1923.Google Scholar
  23. Bracker, J. S., & Kinicki, A. J. (1988). Strategic management, plant closings, and social responsibility: An integrative process model. Employee Responsibilities and Rights Journal, 1(3), 201–213.Google Scholar
  24. Brookman, J., & Thistle, P. D. (2009). CEO tenure, the risk of termination and firm value. Journal of Corporate Finance, 15, 331–344.Google Scholar
  25. Brouthers, K. D., & Bamossy, G. J. (1997). The role of key stakeholder in international joint venture negotiations. Case studies from Eastern Europe. Journal of International Business Studies, 28, 285–308.Google Scholar
  26. Bruton, G. D., Filatotchev, I., Chahine, S., & Wright, M. (2010). Governance, ownership structure, and performance of IPO firms: The impact of different types of private equity investors and institutional environments. Strategic Management Journal, 31, 491–509.Google Scholar
  27. Cantrell, J., Kyriazis, E., & Noble, G. (2015). Developing CSR giving as a dynamic capability for salient stakeholder management. Journal of Business Ethics, 130, 403–421.  https://doi.org/10.1007/s10551-014-2229-1.Google Scholar
  28. Carroll, A. B. (1979). A three-dimensional conceptual model of corporate social performance. Academy of Management Review, 4, 497–505.Google Scholar
  29. Carroll, A. B., & Shabana, K. M. (2010). The business case for corporate social responsibility: A review of concepts, research and practice. International Journal of Management Reviews, 12, 85–105.Google Scholar
  30. Christensen, L. J., Mackey, A., & Whetten, D. (2014). Taking responsibility for corporate social responsibility: The role of leaders in creating, implementing, sustaining, or avoiding socially responsible firm behaviors. The Academy of Management Perspectives, 26, 164–178.Google Scholar
  31. Coase, R. H. (1937). The nature of the firm. Economica, 4, (November) 386–405.Google Scholar
  32. Coff, R. W. (1999). When competitive advantage doesn't lead to performance: The resource-based view and stakeholder bargaining power. Organization Science, 10, 119–133.Google Scholar
  33. Cuevas-Rodríguez, G., Gomez-Mejia, L. R., & Wiseman, R. M. (2012). Has agency theory run its course? Making the theory more flexible to inform the management of reward systems. Corporate Governance: An International Review, 20, 526–546.Google Scholar
  34. D’Aprile, G., & Talò, C. (2015). How corporate social responsibility influences organizational commitment: A psychosocial process mediated by organizational sense of community. Employee Responsibilities and Rights Journal, 27, 241–269.Google Scholar
  35. Dale, E. (1960). Management must be made more accountable. Harvard Business Review, 38(2), 49–59.Google Scholar
  36. David, F. R., & David, F. B. (2003). It's time to redraft your mission statement. Journal of Business Strategy, 24, 11–14.Google Scholar
  37. Davis, K. (1973). The case for and against business assumption of social responsibilities. Academy of Management Journal, 16, 312–323.Google Scholar
  38. Delmas, M. A., Etzion, D., & Nairn-Birch, N. (2013). Triangulating environmental performance: What do corporate social responsibility ratings really capture? Academy of Management Perspectives, 27, 255–267.Google Scholar
  39. Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Academy of Management Review, 20, 65–91.Google Scholar
  40. Donaldson, T., & Walsh, J. P. (2015). Toward a theory of business. Research in Organizational Behavior, 35, 181–207.Google Scholar
  41. Eisenhardt, K. M. (1989). Agency theory: An assessment and review. Academy of Management Review, 14, 57–74.Google Scholar
  42. Epstein, M. J., & Yuthas, K. (2014). Measuring and improving social impacts: A guide for nonprofits, companies, and impact investors. San Francisco: Berritt: Koehler Publishers.Google Scholar
  43. Fama, E., & Jensen, M. (1983). Separation of ownership and control. Journal of Law and Economics, 26, 301–325.Google Scholar
  44. Filatotchev, I., & Nakajima, C. (2014). Corporate governance, responsible managerial behavior, and corporate social responsibility: Organizational efficiency versus organizational legitimacy? The Academy of Management Perspectives, 28, 289–306.Google Scholar
  45. Flammer, C. (2013). Corporate social responsibility and shareholder reaction: The environmental awareness of investors. Academy of Management Journal, 56, 758–781.Google Scholar
  46. Freeman, R. E. (1984). Strategic management: A stakeholder approach. Boston: Pitman.Google Scholar
  47. Freeman, R. E., & Phillips, R. (2002). Stakeholder theory: A libertarian defense. Business Ethics Quarterly, 12, 31–350.Google Scholar
  48. Freeman, R. E., Wicks, A. C., & Parmar, B. (2004). Stakeholder theory and “the corporate objective revisited”. Organization Science, 15, 364–369.Google Scholar
  49. Friedman, M. (1970, September 13). The social responsibility of business is to increase its profits. The New York Times Magazine, 122–126.Google Scholar
  50. Frooman, J. (1999). Stakeholder influence strategies. Academy of Management Review, 24, 191–205.Google Scholar
  51. Greller, M. M. (2015). Leasehold: An institutional framework for understanding nonprofit governance in a civil society context. Administrative Science, 5, 165–176.Google Scholar
  52. Hahn, T., Preuss, L., Pinkse, J., & Figge, F. (2014). Cognitive frames in corporate sustainability: Managerial sensemaking with paradoxical and business case frames. Academy of Management Review, 39, 463–487.Google Scholar
  53. Hamilton, S., Jo, H., & Statman, M. (1993). Doing well while doing good? The investment performance of socially responsible mutual funds. Financial Analysts Journal, 49(6), 62–66.Google Scholar
  54. Henderson, D. (2001). Misguided virtue: False notions of corporate social responsibility. London: Institute of Economic Affairs.Google Scholar
  55. Hermalin, B. E. (2005). Trends in corporate governance. Journal of Finance, 60, 2351–2384.Google Scholar
  56. Hill, C. W., & Jones, T. M. (1992). Stakeholder-agency theory. Journal of Management Studies, 29, 131–154.Google Scholar
  57. Hoskisson, R. E., Hitt, M. A., Johnson, R. A., & Grossman, W. (2002). Conflicting voices: The effects of institutional ownership heterogeneity and internal governance on corporate innovation strategies. Academy of Management Journal, 45, 697–716.Google Scholar
  58. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency cost, and ownership structure. Journal of Financial Economics, 3, 305–360.Google Scholar
  59. Jones, D. A., Willness, C. R., & Madey, S. (2014). Why are job seekers attracted by corporate social performance? Experimental and field tests of three signal-based mechanisms. Academy of Management Journal, 57, 383–404.Google Scholar
  60. Jonker, K., & Meehan, F., III. (2008). Curbing mission creep. Stanford Social Innovation Review, 6(1), 60–65.Google Scholar
  61. Jordi, C. (2010). Rethinking the firm's mission and purpose. European Management Review, 7, 195–204.Google Scholar
  62. Katz, D., & Kahn, R. L. (1978). Organizations and the system concept. The social psychology of organizations (2nd ed.). New York: Wiley.Google Scholar
  63. Key, S. (1999). Toward a new theory of the firm: A critique of stakeholder “theory”. Management Decision, 37, 317–328.Google Scholar
  64. Kiser, E. (1999). Comparing varieties of agency theory in economics, political science, and sociology: An illustration from state policy implementation. Sociological Theory, 17, 146–170.Google Scholar
  65. Klein, P. G., Mahoney, J. T., McGahan, A. M., & Pitelis, C. N. (2019). Organizational governance adaptation: Who’s in, who’s out, and who gets what. Academy of Management Review, 44, 6–27.Google Scholar
  66. Kumar, K. (1993). Civil society: An inquiry into the usefulness of an historical term. British Journal of Sociology, 44, 375–395.Google Scholar
  67. Lankoski, L., & Smith, N. C. (2017). Alternative objective functions for firms. Organization & Environment, 31, 1–21.Google Scholar
  68. Lee, M. P. (2008). A review of the theories of corporate social responsibility: Its evolutionary path and the road ahead. International Journal of Management Reviews, 10, 53–73.Google Scholar
  69. Letts, C. W., Ryan, W. P., & Grossman, A. (1999). High performance nonprofit organizations: Managing upstream for greater impact. New York: John Wiley & Sons.Google Scholar
  70. Lubatkin, M. H. (2005). A theory of the firm only a microeconomist could love. Journal of Management Inquiry, 14(2), 213–216.Google Scholar
  71. Maharaj, R. (2008). Critiquing and contrasting "moral" stakeholder theory and "strategic" stakeholder: Implications for the board of directors. Corporate Governance, 8, 115–127.Google Scholar
  72. Mahoney, J. T., Huff, A. S., & Huff, J. O. (1994). Toward a new social contract theory in organization science. Journal of Management Inquiry, 3(2), 153–168.Google Scholar
  73. Martin, G., Washburn, N., Makri, M., & Gomez-Mejia, L. R. (2015). Not all risk taking is born equal: The behavioral agency model and CEO's perception of firm efficacy. Human Resource Management, 54, 483–498.Google Scholar
  74. Nord, W. R., & Fuller, S. R. (2009). Increasing corporate social responsibility through an employee-centered approach. Employee Responsibilities and Rights Journal, 21, 279–290.Google Scholar
  75. Orlitzky, M. (2013). Corporate social responsibility, noise, and stock market volatility. The Academy of Management Perspectives, 27, 238–254.Google Scholar
  76. Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization Studies, 24, 403–441.Google Scholar
  77. Pajunen, K. (2006). Stakeholder influences in organizational survival. Journal of Management Studies, 43, 1261–1288.Google Scholar
  78. Pearce, C. L., Wassenaar, C. L., & Manz, C. C. (2014). Is shared leadership the key to responsible leadership? The Academy of Management Perspectives, 28, 275–288.Google Scholar
  79. Perido, A. M., Haugh, H. M., & McLean, M. (2017). Common property: Uncommon forms of social organizing. Journal of Business Venturing, 33(3), 1–12.Google Scholar
  80. Perrow, C. (1986). Economic theories and organization. Theory and Society, 15, 11–45.Google Scholar
  81. Pfeffer, J., & Salancik, G. R. (1978). The external control of organizations: A resource dependence perspective. New York: Harper and Row.Google Scholar
  82. Pless, N. M., Maak, T., & Waldman, D. A. (2012). Different approaches toward doing the right thing: Mapping the responsibility orientations of leaders. Academy of Management Perspectives, 26, 51–65.Google Scholar
  83. Porter, M. E. (1985). Competitive advantage: Creating and sustaining superior performance. New York: Simon and Schuster.Google Scholar
  84. Ross, S. A. (1973). The economic theory of agency: The principal’s problem. The American Economic Review, 63, 134–139.Google Scholar
  85. Rousseau, J. J. (1762/2017) The social contract. J Bennett (editor) https://www.earlymoderntexts.com/assets/pdfs/rousseau1762.pdf. Accssed 8 April 2019.
  86. Rousseau, D. M. (1995). Psychological contracts in organizations: Understanding written and unwritten agreements. Thousand Oaks: Sage Publications.Google Scholar
  87. Sanders, G., & Carpenter, M. A. (2003). Strategic satisficing? A behavioral - agency theory perspective on stock repurchase program announcements. Academy of Management Journal, 46, 160–178.Google Scholar
  88. Savage, G. T., Nix, T. W., Whitehead, C. J., & Blair, J. D. (1991). Strategies for assessing and managing stakeholders. Academy of Management Executive, 5, 61–75.Google Scholar
  89. Secchi, D. (2007). Utilitarian, managerial and relational theories of corporate social responsibility. International Journal of Management Reviews, 9, 347–373.Google Scholar
  90. Senge, P. (1990). The fifth discipline: The art and science of the learning organization. New York: Currency Doubleday.Google Scholar
  91. Shapiro, S. P. (2005). Agency theory. Annual Review of Sociology, 31, 263–284.Google Scholar
  92. Siebels, J., & zu Knyphausen-Aufsess, D. (2012). A review of theory in family business research: The implications for corporate governance. International Journal of Management Reviews, 14, 280–304.Google Scholar
  93. Smith, A. 1776/2007 Meta Library edition An inquiry into the nature and causes of the wealth of nations. https://www.ibiblio.org/ml/libri/s/SmithA_WealthNations_p.pdf. Accessed 8 April 2019.
  94. Stahl, G. K., & Sully De Luque, M. (2014). Antecedents of responsible leader behavior: A research synthesis, conceptual framework, and agenda for future research. The Academy of Management Perspectives, 28, 235–254.Google Scholar
  95. The Economist (2014). Green grows the market, O. Author (July 5), http://www.economist.com/news/finance-and-economics/21606326-market-green-bonds-booming-what-makes-bond-green-green-grow. Accessed 17 July 2014.
  96. Trevino, L. K., & Nelson, K. A. (2011). Managing business ethics: Straight talk about how to do it right (5th ed.). Hoboken: John Wiley & Sons, Inc..Google Scholar
  97. Valentine, S., & Godkin, L. (2017). Banking employees’ perceptions of corporate social responsibility, value-fit commitment, and turnover intentions: Ethics as social glue and attachment. Employee Responsibilities and Rights Journal, 29, 51–71.Google Scholar
  98. Verbeke, A., & Tung, V. (2013). The future of stakeholder management theory: A temporal perspective. Journal of Business Ethics, 112, 529–543.Google Scholar
  99. Weber, M. (1978). In G. Roth & C. Wittich (Eds.), Economy and society. Berkeley: University of California.Google Scholar
  100. Weiss, C. (1995). Nothing as practical as good theory: Exploring theory-based evaluation for comprehensive community initiatives for children and families. In J. Connell, A. Kubisch, L. Schorr, & C. Weiss (Eds.), New approaches to evaluating community initiatives. Washington, DC: Aspen Institute.Google Scholar
  101. Williamson, O. E. (1985). The economic institutions of capitalism. New York: Free Press.Google Scholar
  102. Williamson, O. E. (2002). The theory of the firm as governance structure: From choice to contract. Journal of Economic Perspectives, 16, 171–195.Google Scholar
  103. Wiseman, R. M., & Gomez-Mejia, L. (1998). A behavioral agency model of managerial risk taking. Academy of Management Review, 23, 133–153.Google Scholar
  104. Wiseman, R. M., Cuevas-Rodriguez, G., & Gomez-Mejia, L. R. (2012). Towards a social theory of agency. Journal of Management Studies, 49, 202–222.Google Scholar
  105. Wong, E. M., Ormiston, M. E., & Tetlock, P. E. (2011). The effects of top management team integrative complexity and decentralized decision making on corporate social performance. Academy of Management Journal, 54, 1207–1228.Google Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Milano School of Policy, Management and EnvironmentThe New SchoolWyomingUSA
  2. 2.Department of ManagementUniversity of North DakotaGrand ForksUSA

Personalised recommendations