Journal of Business Ethics

, Volume 140, Issue 3, pp 551–565 | Cite as

Identity Claims and Diffusion of Sustainability Report: Evidence from Korean Listed Companies, 2003–2010

Article

Abstract

This study integrates theories of diffusion and social identity to conceptualize the diffusion of Sustainability Report (SR) as a result of a firm’s identification with its reference groups. Specifically, we first hypothesize four different sources of external stakeholder pressures driving the diffusion. Next, we argue that the source of external stakeholder pressures has a differential effect on the adoption of SR for firms that claim their identity on sustainability management. For firms with organizational identity claims, in-group stakeholder pressure will amplify whereas out-group stakeholder pressure will dampen the adoption. We test our theory using an event-history analysis of 675 publicly traded firms in Korea during the period of 2003–2010. The results show that all four sources of external pressure serve as mechanisms through which SR spread in Korea. More importantly, we find support for the moderating role of organizational identity claims in the effect of external pressures. We discuss how organizational identity matters in the diffusion of corporate social initiatives along with implications for policy makers.

Keywords

Sustainability Report Diffusion of a new practice Organizational identity Conformity pressure 

References

  1. Abrahamson, E., & Fairchild, G. (1999). Management fashion: Lifecycles, triggers, and collective learning processes. Administrative Science Quarterly, 44, 708–740.CrossRefGoogle Scholar
  2. Abrahamson, E., & Rosenkopf, L. (1997). Social network effects on the extent of innovation diffusion: A computer simulation. Organization Science, 8, 289–309.CrossRefGoogle Scholar
  3. 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.CrossRefGoogle Scholar
  4. Aiken, L. S., & West, S. G. (1991). Multiple regression: Testing and interpreting interactions. Thousand Oaks, CA: Sage.Google Scholar
  5. Albert, S., & Whetten, D. A. (1985). Organizational identity. In L. L. Cummings & B. M. Staw (Eds.), Research in organizational behavior (Vol. 7, pp. 263–295). Greenwich, CT: JAI Press.Google Scholar
  6. Allison, P. D. (1982). Discrete-time methods for the analysis of event histories. In S. Leinhardt (Ed.), Sociological methodology (pp. 61–98). San Francisco: Jossey-Bass.Google Scholar
  7. Ashforth, B. E., & Mael, F. A. (1989). Social identity theory and the organization. Academy of Management Review, 14, 20–39.Google Scholar
  8. Balmer, J. M., Fukukawa, K., & Gray, E. R. (2007). The nature and management of ethical corporate identity: a commentary on corporate identity, corporate social responsibility and ethics. Journal of Business Ethics, 76, 7–15.CrossRefGoogle Scholar
  9. Bansal, P., & Clelland, I. (2004). Talking trash: Legitimacy, impression management, and unsystematic risk in the context of the natural environment. Academy of Management Journal, 47, 93–103.CrossRefGoogle Scholar
  10. Bansal, P., & Roth, K. (2000). Why companies go green: A model of ecological responsiveness. Academy of Management Journal, 43, 717–736.CrossRefGoogle Scholar
  11. Berliner, D., & Prakash, A. (2014). The United Nations global compact: An institutionalist perspective. Journal of Business Ethics, 122, 217–223.CrossRefGoogle Scholar
  12. Brønn, P. S., & Vidaver-Cohen, D. (2009). Corporate motives for social initiative: Legitimacy, sustainability, or the bottom line? Journal of Business Ethics, 87, 91–109.CrossRefGoogle Scholar
  13. Campbell, J. L. (2007). Why would corporations behave in socially responsible ways? An institutional theory of Corporate Social Responsibility. Academy of Management Review, 32, 946–967.CrossRefGoogle Scholar
  14. Carroll, A. B. (1991). The pyramid of Corporate Social Responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34, 39–48.CrossRefGoogle Scholar
  15. Cetindamar, D., & Husoy, K. (2007). Corporate social responsibility practices and environmentally responsible behavior: The case of the United Nations Global Compact. Journal of Business Ethics, 76, 163–176.CrossRefGoogle Scholar
  16. Chih, H., Chih, H., & Chen, T. (2010). On the determinants of corporate social responsibility: International evidence on the financial industry. Journal of Business Ethics, 93, 115–135.CrossRefGoogle Scholar
  17. Colyvas, J. A., & Jonsson, S. (2011). Ubiquity and legitimacy: Disentangling diffusion and institutionalization. Sociological Theory, 29, 27–53.CrossRefGoogle Scholar
  18. Davis, G. F. (1991). Agents without principles? The spread of the poison pill through the intercorporate network. Administrative Science Quarterly, 36, 583–613.CrossRefGoogle Scholar
  19. Delmas, M., & Toffel, M. W. (2004). Stakeholders and environmental management practices: An institutional framework. Business Strategy and the Environment, 13, 209–222.CrossRefGoogle Scholar
  20. DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48, 147–160.CrossRefGoogle Scholar
  21. Dutton, J. E., Dukerich, J. M., & Harquail, C. V. (1994). Organizational images and member identification. Administrative Science Quarterly, 39, 239–263.CrossRefGoogle Scholar
  22. Elsbach, K. D., & Bhattacharya, C. B. (2001). Defining who you are by what you’re not: Organizational disidentification and the National Rifle Association. Organization Science, 12, 393–413.CrossRefGoogle Scholar
  23. Emirbayer, M., & Goodwin, J. (1994). Network analysis, culture, and the problem of agency. American Journal of Sociology, 99, 1411–1454.CrossRefGoogle Scholar
  24. Fiss, P. C., & Zajac, E. J. (2004). The diffusion of ideas over contested terrain: The (non)adoption of a shareholder value orientation among German firms. Administrative Science Quarterly, 49, 501–534.Google Scholar
  25. Galaskiewicz, J., & Burt, R. S. (1991). Interorganization contagion in corporate philanthropy. Administrative Science Quarterly, 36, 88–105.CrossRefGoogle Scholar
  26. Garriga, E., & Melé, D. (2004). Corporate social responsibility theories: Mapping the territory. Journal of Business Ethics, 53, 51–71.CrossRefGoogle Scholar
  27. Gioia, D. A., Price, K. N., Hamilton, A. L., & Thomas, J. B. (2010). Forging an identity: An insider-outsider study of processes involved in the formation of organizational identity. Administrative Science Quarterly, 55, 1–46.CrossRefGoogle Scholar
  28. Gladwin, T. N., Kennelly, J., & Krause, T. S. (1995). Shifting paradigms for sustainable development: Implications for management theory and research. Academy of Management Review, 20, 874–907.Google Scholar
  29. Global Reporting Initiative (GRI). (2002). Sustainability reporting guidelines. Boston, MA: GRI.Google Scholar
  30. Glynn, M. A., & Abzug, R. (2002). Institutionalizing identity: Symbolic isomorphism and organizational names. Academy of Management Journal, 45, 267–280.CrossRefGoogle Scholar
  31. Goodrick, E., & Salancik, G. R. (1996). Organizational discretion in responding to institutional practices: Hospitals and cesarean births. Administrative Science Quarterly, 25, 121–140.Google Scholar
  32. Granovetter, M. (1995). Coase revisited: Business groups in the modern economy. Industrial and Corporate Change, 4, 93–130.CrossRefGoogle Scholar
  33. Guler, I., Guillén, M. F., & Macpherson, J. M. (2002). Global competition, institutions, and the diffusion of organizational practices: The international spread of ISO 9000 quality certificates. Administrative Science Quarterly, 47, 207–232.CrossRefGoogle Scholar
  34. Hahn, R., & Lülfs, R. (2014). Legitimizing negative aspects in GRI-oriented sustainability reporting: A qualitative analysis of corporate disclosure strategies. Journal of Business Ethics, 123, 401–420.CrossRefGoogle Scholar
  35. Haunschild, P. R., & Beckman, C. M. (1998). When do interlocks matter?: Alternate sources of information and interlock influence. Administrative Science Quarterly, 43, 815–844.CrossRefGoogle Scholar
  36. Hess, D. (2008). The three pillars of corporate social reporting as new governance regulation: Disclosure, dialogue, and development. Business Ethics Quarterly, 18, 447–482.CrossRefGoogle Scholar
  37. Heugens, P. P. M. A. R., & Lander, M. W. (2009). Structure! Agency! (and other quarrels): A meta-analysis of institutional theories of organization. Academy of Management Journal, 52, 61–85.CrossRefGoogle Scholar
  38. Hogg, M. A., & Terry, D. J. (2000). Social identity and self-categorization processes in organizational contexts. Academy of Management Review, 25, 121–140.Google Scholar
  39. Hogg, M. A., Terry, D. J., & White, K. M. (1995). A tale of two theories: A critical comparison of identity theory with social identity theory. Social Psychology Quarterly, 58, 255–269.CrossRefGoogle Scholar
  40. Huang, C. L. & Kung, F. H. (2010). Drivers of environmental disclosure and stakeholder expectation: Evidence from Taiwan. Journal of Business Ethics, 96, 435–451.Google Scholar
  41. Jaccard, J., Turrisi, R., & Wan, C. K. (1990). Interaction effects in multiple regression. London: Sage.Google Scholar
  42. Jonsson, S. (2009). Refraining from imitation: Professional resistance and limited diffusion in a financial market. Organization Science, 20, 172–186.CrossRefGoogle Scholar
  43. Junior, R. M., Best, P. J., & Cotter, J. (2014). Sustainability reporting and assurance: A historical analysis on a world-wide phenomenon. Journal of Business Ethics, 120, 1–11.CrossRefGoogle Scholar
  44. Kennedy, M. T., & Fiss, P. C. (2009). Institutionalization, framing, and diffusion: The logic of TQM adoption and implementation decisions among U.S. hospitals. Academy of Management Journal, 52, 897–918.CrossRefGoogle Scholar
  45. King, B. G., Clemens, E. S., & Fry, M. (2011). Identity realization and organizational forms: Differentiation and consolidation of identities among Arizona’s charter schools. Organization Science, 22, 554–572.CrossRefGoogle Scholar
  46. King, B. G., Felin, T., & Whetten, D. A. (2010). Finding the organization in organizational theory: A meta-theory of the organization as a social actor. Organization Science, 21, 290–305.CrossRefGoogle Scholar
  47. King, A., Lenox, M., & Terlaak, A. (2005). The strategic use of decentralized institutions: Exploring certification with the ISO14001 management standard. Academy of Management Journal, 48, 1091–1096.CrossRefGoogle Scholar
  48. Kolk, A. (2004). A decade of sustainability reporting: Developments and significance. International Journal of Environment and Sustainable Development, 3, 51–64.CrossRefGoogle Scholar
  49. Kostova, T., & Roth, K. (2002). Adoption of an organizational practice by subsidiaries of multinational corporations: Institutional and relational effects. Academy of Management Journal, 45, 215–233.CrossRefGoogle Scholar
  50. Kreiner, G. E., & Ashforth, B. E. (2004). Evidence toward an expanded model of organizational identification. Journal of Organizational Behavior, 25, 1–27.CrossRefGoogle Scholar
  51. Labianca, G., Fairbank, J. E., Thomas, J. B., Gioia, D. A., & Umphress, E. E. (2001). Emulation in academia: Balancing structure and identity. Organization Science, 12, 312–330.CrossRefGoogle Scholar
  52. Livengood, R. S., & Reger, R. K. (2010). That’s our turf! Identity domains and competitive dynamics. Academy of Management Review, 35, 48–66.CrossRefGoogle Scholar
  53. Livesey, S. M., & Kearins, K. (2002). Transparent and caring corporations? A study of sustainability reports by the Body Shop and Royal Dutch/Shell. Organization Environment, 15, 233–258.CrossRefGoogle Scholar
  54. Martínez, P., Pérez, A., & del Bosque, I. R. (2013). Exploring the role of CSR in the organizational identity of hospitality companies: A case from the Spanish tourism industry. Journal of Business Ethics, 124, 1–20.Google Scholar
  55. Mizruchi, M. S. (1996). What do interlocks do? An analysis, critique, and assessment of research on interlocking directorates. Annual Review of Sociology, 22, 271–298.CrossRefGoogle Scholar
  56. Navis, C., & Glynn, M. A. (2010). How new market categories emerge: Temporal dynamics of legitimacy, identity, and entrepreneurship in satellite radio, 1990–2005. Administrative Science Quarterly, 55, 439–471.CrossRefGoogle Scholar
  57. Oliver, C. (1991). Strategic responses to institutional processes. Academy of Management Review, 16, 145–179.CrossRefGoogle Scholar
  58. Perego, P., & Kolk, A. (2012). Multinationals’ accountability on sustainability: The evolution of third-party assurance of sustainability reports. Journal of Business Ethics, 110, 173–190.CrossRefGoogle Scholar
  59. Petersen, T., & Koput, K. W. (1992). Time-aggregation bias in hazard-rate models with covariates. Sociological Methods and Research, 21, 25–51.CrossRefGoogle Scholar
  60. Porac, J. F., Wade, J. B., & Pollock, T. G. (1999). Industry categories and the politics of the comparable firm in CEO compensation. Administrative Science Quarterly, 44, 112–144.CrossRefGoogle Scholar
  61. Pratt, M. G. (1998). To be or not to be: Central questions in organizational identification. In D. A. Whetten & P. C. Godfrey (Eds.), Identity in organizations (pp. 171–208). Thousand Oaks, CA: Sage.Google Scholar
  62. Ravasi, D., & Schultz, M. (2006). Responding to organizational identity threats: Exploring the role of organizational culture. Academy of Management Journal, 49, 433–458.CrossRefGoogle Scholar
  63. Ravasi, D., & Van Rekom, J. (2003). Key issues in organizational identity and identification theory. Corporate Reputation Review, 6, 118–132.CrossRefGoogle Scholar
  64. Reger, R. K., & Huff, A. S. (1993). Strategic groups: A cognitive perspective. Strategic Management Journal, 14, 103–124.CrossRefGoogle Scholar
  65. Reger, R. K., & Palmer, T. B. (1996). Managerial categorization of competitors: Using old maps to navigate new environments. Organization Science, 7, 22–39.CrossRefGoogle Scholar
  66. Rogers, E. M. (2003). Diffusion of innovations. New York: Free Press.Google Scholar
  67. Rosch, E. (1978). Principles of categorization. In E. Rosch & B. L. Lloyd (Eds.), Cognition and categorization (pp. 27–48). Hillsdale, NJ: Erlbaum.Google Scholar
  68. Selznick, P. (1969). Law, society, and industrial justice. New Brunswick, NJ: Transaction Books.Google Scholar
  69. Shipilov, A. V., Greve, H. R., & Rowley, T. J. (2010). When do interlocks matter? Institutional logics and the diffusion of multiple corporate governance practices. Academy of Management Journal, 53, 846–864.CrossRefGoogle Scholar
  70. Still, M. C., & Strang, D. (2009). Who does an elite organization emulate? Administrative Science Quarterly, 54, 58–89.CrossRefGoogle Scholar
  71. Strang, D., & Meyer, J. W. (1993). Institutional conditions for diffusion. Theory and Society, 22, 487–511.CrossRefGoogle Scholar
  72. Strang, D., & Soule, S. A. (1998). Diffusion in organizations and social movements: From hybrid corn to poison pills. Annual Review of Sociology, 24, 265–290.CrossRefGoogle Scholar
  73. Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20, 571–610.Google Scholar
  74. Tajfel, H., & Turner, J. (1979). An integrative theory of inter-group conflict. In W. G. Austin & S. Worchel (Eds.), The social psychology of intergroup relations (pp. 33–47). Monterey, CA: Brooks-Cole.Google Scholar
  75. Terlaak, A. (2007). Order without law? The role of certified management standards in shaping socially desired firm behaviors. Academy of Management Review, 32, 968–985.Google Scholar
  76. Terlaak, A., & Gong, Y. (2008). Vicarious learning and inferential accuracy in adoption processes. Academy of Management Review, 33, 846–868.CrossRefGoogle Scholar
  77. Tolbert, P. S., & Zucker, L. G. (1983). Institutional sources of change in the formal structure of organizations: The diffusion of civil service reform, 1880–1935. Administrative Science Quarterly, 28, 22–39.CrossRefGoogle Scholar
  78. Vanhamme, J., & Grobben, B. (2009). “Too good to be true!” The effectiveness of CSR history in countering negative publicity. Journal of Business Ethics, 85, 273–283.CrossRefGoogle Scholar
  79. Vasi, I. B. (2007). Thinking globally, planning nationally and acting locally: Nested organizational fields and the adoption of environmental practices. Social Forces, 86, 113–136.CrossRefGoogle Scholar
  80. Weaver, G. R., Treviño, L. K., & Cochran, P. L. (1999). Integrated and decoupled corporate social performance: Management commitments, external pressures, and corporate ethics practices. Academy of Management Journal, 42, 539–552.CrossRefGoogle Scholar
  81. Whetten, D. A. (2006). Albert and Whetten revisited: Strengthening the concept of organizational identity. Journal of Management Inquiry, 15, 219–234.CrossRefGoogle Scholar
  82. Zuckerman, E. W. (1999). The categorical imperative: Securities analysts and the illegimacy discount. American Journal of Sociology, 104, 1398–1438.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media Dordrecht 2015

Authors and Affiliations

  1. 1.Robert H. Smith School of BusinessUniversity of MarylandCollege ParkUSA
  2. 2.College of BusinessKAISTSeoulKorea

Personalised recommendations