What Determines Principle-Based Standards Implementation? Reporting on Global Compact Adoption in Spanish Firms

Abstract

International Accountability Standards have proliferated in the last 20 years, with the UN Global Compact (GC) as the most widely accepted principle-based standard catalyzing voluntary participation by firms. This study aims to improve understanding about the factors that determine companies’ progress in adopting principle-based standards. Drawing on the resource-based view of the firm, we examine the direct and combined influences of different organizational resources (firm-specific resources, innovative capability, length of participation, and internationalization of the firm) on standard implementation as perceived by 213 Spanish GC signatories. Our results reveal that the level of firm-specific resources has a positive effect on the extent of GC principles implementation and that innovative capability and length of GC participation strengthen this effect. Contrary to our expectations, we find that the internationalization of firms does not have an effect on GC principles implementation. We discuss the implications of these findings for scholars and practicing managers.

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Fig. 1

Notes

  1. 1.

    One year after our data collection, the UNGC Differentiation Programme was launched (25 February 2011), which categorizes business participants based on their level of disclosure on progress made in integrating the Global Compact principles and contributing to broader UN goals. Based on a self-assessment covering the content of their COP, companies are classified in one of three categories: CG Advanced, GC Active, and Learner. Companies qualifying for the GC Advanced level have to meet 24 criteria, among others, that the COP is independently verified by a credible third party.

  2. 2.

    The company names were taken from the website of the Spanish Global Compact Network (www.pactomundial.org). We compared the list of company participants in the Spanish Global Compact Network with the list of the Global Compact Head Office (www.unglobalcompact.org), and identified four additional Spanish companies.

  3. 3.

    For testing the interaction effect of the quantitative variable “innovative capability”, both independent (firm-specific resources) and moderating variable (innovative capability) were centered before forming the product term.

  4. 4.

    Our initial analysis included financial performance as a control variable, but we decided not to include it because it did not prove to be significant in any of our models.

Abbreviations

AA:

AccountAbility

COP:

Communication on Progress

CSR:

Corporate Social Responsibility

GC:

Global Compact

IAS:

International Accountability Standard

ISO:

International Organization for Standardization

NACE:

Nomenclature statistique des activités économiques dans la Communauté Européenne

NGO:

Non-governmental organization

SA:

Social Accountability

SME:

Small and medium enterprise

OECD:

Organisation for Economic Co-operation and Development

RBV:

Resource-based view of the firm

UN:

United Nations

USA:

United States of America

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Correspondence to Silvia Ayuso.

Appendix: Measuring Instruments Used in the Survey

Appendix: Measuring Instruments Used in the Survey

Constructs

Firm-Specific Resources (RES)

Please assess your firm’s possession of the following resources (seven-point scale ranging from ‘1 = scarce’ to ‘7 = abundant’)

  1. a.

    Financial resources (RES 1)

  2. b.

    Physical resources (e.g., equipment) (RES 2)

  3. c.

    Human resources (RES 3)

  4. d.

    Organizational resources (e.g., having well-established quality control systems and cash management systems) (RES 4)

  5. e.

    Technological resources (e.g., unique technologies to produce quality products) (RES 5)

  6. f.

    Reputation (RES 6)

Innovative Capability (INN)

Relative to your major competitors, your firm focuses on (seven-point scale ranging from ‘1 = strongly disagree’ to ‘7 = strongly agree’):

  1. a.

    being the first to try new methods and technologies (INN 1)

  2. b.

    using the latest technology in production (INN 2)

  3. c.

    capital investment in new equipment and machinery (INN 3)

  4. d.

    being a leader in product innovation (INN 4)

  5. e.

    being a leader in process innovation (INN 5)

GC Principles Implementation Prior to GC Signature (PRI)

Prior to joining the GC, to what extent did your firm… (seven-point scale ranging from ‘1 = minimally’ to ‘7 = to a great extent’)

  1. a.

    support and respect the protection of internationally proclaimed human rights? (PRI1)

  2. b.

    make sure that it is not complicit in human rights abuses? (PRI2)

  3. c.

    uphold the freedom of association and the effective recognition of the right to collective bargaining? (PRI3)

  4. d.

    uphold the elimination of all forms of forced and compulsory labor? (PRI4)

  5. e.

    uphold the effective abolition of child labor? (PRI5)

  6. f.

    uphold the elimination of discrimination in respect of employment and occupation? (PRI6)

  7. g.

    support a precautionary approach to environmental challenges? (PRI7)

  8. h.

    undertake initiatives to promote greater environmental responsibility? (PRI8)

  9. i.

    encourage the development and diffusion of environmentally friendly technologies? (PRI9)

  10. j.

    work against corruption in all its forms, including extortion and bribery? (PRI10)

GC Principles Implementation (IMP)

Now as a GC participant, to what extent does your firm… (seven-point scale ranging from ‘1 = minimally’ to ‘7 = to a great extent’)

  1. a.

    support and respect the protection of internationally proclaimed human rights? (IMP1)

  2. b.

    make sure that it is not complicit in human rights abuses? (IMP2)

  3. c.

    uphold the freedom of association and the effective recognition of the right to collective bargaining? (IMP3)

  4. d.

    uphold the elimination of all forms of forced and compulsory labor? (IMP4)

  5. e.

    uphold the effective abolition of child labor? (IMP5)

  6. f.

    uphold the elimination of discrimination in respect of employment and occupation? (IMP6)

  7. g.

    support a precautionary approach to environmental challenges? (IMP7)

  8. h.

    undertake initiatives to promote greater environmental responsibility? (IMP 8)

  9. i.

    encourage the development and diffusion of environmentally friendly technologies? (IMP9)

  10. j.

    work against corruption in all its forms, including extortion and bribery? (IMP10)

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Ayuso, S., Roca, M., Arevalo, J.A. et al. What Determines Principle-Based Standards Implementation? Reporting on Global Compact Adoption in Spanish Firms. J Bus Ethics 133, 553–565 (2016). https://doi.org/10.1007/s10551-014-2412-4

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Keywords

  • International Accountability Standards
  • Corporate Social Responsibility (CSR)
  • Global Compact (GC)
  • Innovative capability
  • Internationalization
  • Resource-based view of the firm (RBV)
  • Spain