Home / Summaries / Summary business level strategy / actions-external-environmental

CORPORATE SOCIAL RESPONSIBILITY AND COMPETITIVE ADVANTAGE

55 important questions on CORPORATE SOCIAL RESPONSIBILITY AND COMPETITIVE ADVANTAGE

What does the study by Flammer (2013) focus on concerning shareholders and corporations' environmental footprint?

Examines sensitivity of shareholders to corporations' environmental footprint
Companies behaving responsibly towards the environment experience stock price increase
Companies behaving irresponsibly face stock price decrease

What does the study suggest about the value of environmental CSR according to external and internal moderators?

External pressure worsens punishment for eco-harmful behavior
External pressure reduces reward for eco-friendly initiatives
Environmental CSR has decreasing marginal returns and insurance-like features

How does the study contribute to existing theories regarding environmental CSR and stock prices?

Extends existing theories on the relationship between environmental CSR and stock prices evolution OVER TIME
Investigates changes in how shareholder reward/punishment towards corporations for behavior towards the environment over the past decade.

Based on the main contribution of the study, what does the conceptual framework focus on?

Environmental CSR generating new, competitive resources for firms
Stock market reacting positively to eco-friendly initiatives' announcement
Stock market reacting negatively to eco-harmful behavior's announcement

What are the hypotheses derived in the study concerning shareholders' reactions to corporate initiatives and events related to the environment?

Shareholders react positively to eco-friendly corporate initiatives' announcement
Shareholders react negatively to eco-harmful corporate events' announcement

How does the study by Flammer (2013) suggest that companies may face a decrease in competitive resources due to eco-harmful activities?

Eco-harmful activities may waste valuable resources
Companies may face reputation losses
Reputation losses may discourage customers and strategic partners

According to the study, what potential impacts can a firm's negative engagement with the environment have on its competitive resources?

Negative engagement might decrease a firm's competitive resources
Eco-harmful activities waste valuable resources
The firm may suffer reputation losses impacting customers and strategic partners

How does the study explain the stock market reaction to announcements of eco-friendly and eco-harmful corporate events?

Stock market reacts positively to eco-friendly initiatives' announcement
Stock market reacts negatively to eco-harmful behavior's announcement
Companies' positive engagement with the environment generates new, competitive resources

What are shareholder proposals?

Formal recommendations or requests submitted by shareholders for a vote at a company's annual meeting
Reflect shareholders' concerns or suggestions for the company's operations
Aim to influence corporate decision-making processes

How does external pressure impact environmental corporate social responsibility (CSR)?

Higher external pressure can amplify shareholders' negative reaction to eco-harmful behavior announcements
During times of higher environmental awareness, such behavior is more likely to damage a company's reputation
Shareholders may punish companies more for eco-harmful actions if going green is widely accepted in the industry

What is the relationship between shareholder reactions and environmental initiatives over time?

Shareholders' negative reaction to eco-harmful events tends to increase over time
Positive shareholder reaction to eco-friendly initiatives may decrease as going green becomes a norm in the industry
The competitive value of eco-friendly actions may lower as companies adopt green practices more widely

How does the value of environmental CSR depend on both external norms and internal performance?

Environmental CSR value is influenced by external norms and internal environmental performance levels
Companies with strong environmental performance may benefit relatively less from additional green initiatives
Firms facing severe environmental concerns may gain more from introducing eco-friendly practices

What is the concept of institutional theory in relation to environmental CSR?

Institutional theory suggests that companies act based on what is considered legitimate in their industry
Changes in institutional conditions can influence companies to engage in environmental CSR
Companies are more likely to adopt eco-friendly practices if it is institutionalized as the norm in their field

How do shareholders of companies with varying environmental performance react to eco-friendly initiatives?

Shareholders of companies with stronger environmental performance tend to react less positively to eco-friendly initiatives
In contrast, shareholders of firms facing severe environmental concerns may respond more positively to eco-friendly announcements
The reaction of shareholders can be influenced by the existing level of environmental performance in the company

What is the neoclassical economic theory's perspective on environmental resources and corporate initiatives?

Neoclassical economic theory suggests that environmental resources may exhibit decreasing marginal returns
Companies investing in green initiatives may experience diminishing returns for each additional eco-friendly action
Firms with a strong stock of environmental resources may benefit relatively less from introducing new green initiatives

What impact does a stronger environmental performance of companies have on shareholders' reaction to the announcement of eco-harmful behavior?

Shareholders of companies with stronger environmental performance react less negatively to eco-harmful behavior
Larger stock of environmental resources may comfort investors that the eco-harmful event is an anomaly
Mitigates shareholders’ negative reaction

What impact does having lower stocks of environmental resources have on shareholders' reaction to the announcement of eco-harmful events?

Shareholders of companies with lower stocks of environmental resources react more negatively
Less insured against eco-harmful events
Higher negative reaction due to lack of environmental insurance

What variables were considered in the study related to corporate environmental behavior?

Type of Corporate Environmental Behavior
- Determines whether the corporate event was eco-friendly or eco-harmful
Time Trend
- Linear time trend used to observe stock market reaction over 30 years
Environmental Strengths and Concerns
- Indexes from KLD database ranging from 0 to 7 indicating performance and concerns

What does the variable CAR measure in the study related to environmental corporate news?

- CAR (Cumulative Abnormal Return) measures the stock market's response to environmental corporate news.

How did the study conduct an evaluation regarding the announcement of corporate news related to the environment for US publicly traded companies between 1980 and 2009?

Conducted an event study around the announcement of corporate news mentioned in the Wall Street Journal
Evaluated environmental events for all US publicly traded companies from 1980 to 2009

What implications do the study's findings have on management areas such as strategy, innovation, and corporate venturing?

Shareholders value eco-friendly behavior, influencing management areas
Implications in strategy, innovation, intrapreneurship, corporate venturing
Effective environmental CSR policies may serve long-term objectives

How could research in management science benefit from the findings of the study regarding shareholder reactions to eco-friendly and eco-harmful corporate events?

Research could benefit by integrating environmental considerations into decision making
Shareholders value eco-friendly and -harmful business strategies
Environmental considerations should be integrated into managerial decision making

What is the limitation of the study regarding the stock market reactions and environmental CSR?

Only considers short-term stock market reactions
Doesn't address long-term effects of environmental CSR on shareholder value and performance
Potential endogeneity between CSR and firm value/performance presents challenges

What is the main focus of the research by Hawn and Ioannou (2016) in the context of corporate social responsibility (CSR)?

Explore interplay between firm's external and internal actions
Investigate effect on market value
Distinguish between external and internal CSR actions
Argue they contribute to intangible firm resources

According to the managerial summary, how do companies accumulate intangible assets through CSR actions?

Take internally and externally oriented CSR actions
Undertake more internal than external actions
Realize positive association with market value for both action types
Negative implications with a wider gap between internal and external actions

What are the three key contributions made by the article based on Hawn and Ioannou (2016)?

1. Integrate CSR literature with insights on organizational legitimacy
2. Conceptually distinguish between external and internal CSR actions
3. Introduce market value approach from innovation economics

How does the wider gap between external and internal CSR actions impact a firm's market value according to the research findings?

Associated with negative implications on market value
Firms do not fully benefit from internal actions
Lack of external communication affects market value
Particularly salient in CSR-intensive and natural resources industries

Why is the integration of CSR literature with organizational legitimacy insights considered a key contribution of the article?

Helps explore CSR actions as key unit of analysis
Theoretically distinguish external and internal actions
Enhances understanding of the relationship with market value
Advances strategic literature on CSR and firm performance

What does the research suggest about the impact of the joint and undermining dynamic interplay between external and internal CSR actions on a firm's market value?

Constitutes important determinants of market value
Undermining dynamic has negative implications
Joint interplay positively associated with market value
External communication crucial for realizing full benefits

How does the market value approach from innovation economics advance the study of the relationship between CSR actions and firm performance?

Resolves ambiguity about linking social and financial performance
Estimates impact of intangible assets created by CSR actions
Considers sum of and gap between external and internal actions
Contributes to understanding mechanisms between social and financial performance

What are the characteristics of CSR resources that make them "invisible resources" crucial for a firm's competitive advantage?

Unattainable with money alone
Time-consuming to develop
Capable of multiple, simultaneous use
Yielding multiple, simultaneous benefits

What are the two types of actions that firms take according to neo-institutional theory to meet institutional pressures and gain legitimacy?

INTERNALLY FOCUSED ACTIONS, aimed at achieving structural change
EXTERNALLY FOCUSED ACTIONS, aimed at gaining organizational endorsement by external constituents

What do internal actions entail in terms of accumulating LEGITIMACY for an organization?

Reflect inward-looking practices
Involve real actions to develop organizational capabilities
Meet expectations of critical social actors
Can limit internal flexibility due to their structural nature
Often require significant changes in core practices, norms, structures, routines

How are external actions related to the accumulation of LEGITIMACY for an organization?

Reflect public and highly visible initiatives
Involve ceremonies to gain legitimacy
Target public endorsement by outside audiences
Rely on media, organizational status, inter-organizational networks
Can lead to the accumulation of social capital through communication

What is the role of LEGITIMACY in firm survival and growth?

Critical for firm survival, predictability, growth, profitability
Reflects social judgment on appropriateness of organization's actions
Implies organization aligns with established norms, values, beliefs
Indicates organization acts according to societal or community conduct standards

Define LEGITIMACY in the context of an organization's actions within a social system.

Refers to perceived appropriateness, acceptability, desirability of organization's actions
Social judgment on whether organization aligns with established norms, values
Involves acting in accordance with societal or community-defined proper conduct
Critical for organization's acceptance within a given social framework

What are some examples of internal actions related to CORPORATE SOCIAL RESPONSIBILITY (CSR) that contribute to LEGITIMACY accumulation?

Implementing CSR-related change initiatives
Developing corporate policies aligned with social expectations
Making long-term investments to adapt organizational culture
Changes in core practices, norms, structures for CSR integration
Involves some level of risk due to significant structural adjustments

How does LEGITIMACY contribute to the predictability and profitability of an organization?

Critical for predictability, growth, and profitability of a firm
Creates a stable environment for operations and decision-making
Fosters trust among stakeholders, leading to investment and loyalty
Assists in attracting and retaining customers, employees, partners
Enhances reputation and long-term sustainability of the organization

What does the process of choice lead to in firms when they decide to take one course of action?

Abandonment of other options
Choices can either increase the gap between external and internal actions or decrease the sum of these actions
Selection of one course of action over others

According to the paper, what is the likely result of CSR intangible resources accumulation process?

Result of underlying differences in communication dynamics
Describe valuable CSR intangible resources
Joint contribution of prior internal and current external actions

How do external actions impact firm transparency and awareness, according to the paper?

Raise overall transparency and awareness about the firm
Extend to products, structures, and practices
Strengthen when aligned with established firm processes and competencies

Which stakeholders are particularly influenced by increased transparency and awareness from external actions?

Wide set of stakeholders
Especially investors and public equity markets
Relevant for a variety of stakeholders beyond just investors

Why are both prior internal and current external actions considered to positively affect market value in firms?

Each action enhances firm legitimacy
Actions jointly reduce information asymmetry
Positively impact market value for two primary reasons

How does the paper argue that external actions communicate progress or results to external audiences effectively?

The paper suggests external actions signify progresses or results from internal actions
Communicate progresses effectively to external audiences
Communicate values that external audiences, particularly capital markets, appreciate

What is the first hypothesis discussed in the text regarding a firm's CSR engagement and its market value?

The greater the sum of prior internal and current external actions a firm undertakes, the higher its market value.
If there is a misalignment between internal and external actions, with more internal actions than external, firm's credibility is undermined.
Alternatively, if a firm engages more in external actions than internal, it risks being seen as "GREEN-WASHING" and suffering lower valuations.

What is the second hypothesis put forward in the text regarding the relationship between a firm's current external and prior internal actions and its market value?

The wider the gap between a firm's current external and prior internal actions, the lower its market value.
If this gap exists and is either due to internal actions outweighing external actions unknowingly, or vice versa, stakeholders may challenge the firm based on transparency or credibility issues.

How are the hypotheses tested empirically in the study?

The hypotheses are confirmed through panel regressions using a sample of 1,492 firms from 33 countries between 2002 and 2008.
The study uses the market-value equation to analyze the relationship between a firm's CSR actions and its market value.

What are the independent, moderator, and dependent variables considered in the study?

Independent Variable: Internal and external CSR actions.
Moderator Variable: Natural Res. & Extractives and CSR-intensive industries.
Dependent Variable: Log(Tobin's q) measuring a firm's market value.

Define the gap in CSR actions as per the study's methodology.

- The gap in CSR actions is calculated as the absolute difference between a firm's current external actions and its lagged internal actions.

What does Tobin's q measure in the context of the study?

- Tobin's q is used to determine a firm's market value by calculating the ratio of market capitalization and total assets minus the book value of shareholders' equity over total assets.

How do natural resource & extractives and CSR-intensive industries interact as moderator variables in the study?

- These industry types interact with the gap variable to investigate how the gap between current external and prior internal actions impacts a firm's market value based on industry characteristics.

Where is the impact of the gap variable on market value especially apparent according to the researchers' findings?

The impact of the gap variable on market value is particularly noticeable in natural resources and extractive industries.
This significant effect is also seen in CSR-intensive industries.
These findings are indicated in Table 3 (Models 12 and 13) and Table 4 (Model 16).

What is depicted in Figure 2 regarding the relationship between "Real values of the gap" and "Percent change from average Tobin's q"?

Shows the relationship between the gap (difference between internal and external CSR actions) and Tobin's q change
Line on graph slopes upward, indicating higher gap leads to increased Tobin's q change
When internal actions surpass external, Tobin’s q is lowest
When external actions surpass internal, Tobin’s q is higher

How does firms' balance between internal and external Corporate Social Responsibility (CSR) actions impact their market value?

Firms should undertake more internal than external actions
The sum of internal and external actions positively affects market value
However, a wider gap between internal and external actions has negative implications

Why is it important for firms to communicate their internal CSR actions externally to key stakeholders and the investment community?

Firms do not realize the full benefits of internal actions without external communication
Lack of external communication can lead to negative implications despite positive actions

The question on the page originate from the summary of the following study material:

Summary business level strategy

View summary

A unique study and practice tool
Never study anything twice again
Get the grades you hope for
100% sure, 100% understanding

Remember faster, study better. Scientifically proven.