Corporate Motives for Social Initiatives by pbronn

CORPORATE MOTIVES FOR SOCIAL INITIATIVE: LEGITIMACY, SUSTAINABILITY OR THE BOTTOM LINE?

Peggy Simcic Brønn, DBA* Norwegian School of Management and Deborah Vidaver-Cohen, PhD* Florida International University

Journal of Business Ethics (2008), forthcoming

An earlier version of this paper was presented at the International Center for Corporate Accountability 2nd International Conference on “Globalization and the Good Corporation”, June 26-28, 2007 Baruch College, New York, NY.

*Authors are listed in alphabetical order. Both contributed equally to development of this article.

ABSTRACT

CORPORATE MOTIVES FOR SOCIAL INITIATIVE: LEGITIMACY, SUSTAINABILITY OR THE BOTTOM LINE?

This article presents results of exploratory research conducted with managers from over 500 Norwegian companies to examine corporate motives for engaging in social initiatives. Three key questions were addressed. First, what do managers in this sample see as the primary reasons their companies engage in activities that benefit society? Second, do motives for such social initiative vary across the industries represented? Third, can further empirical support be provided for the theoretical classifications of social initiative motives outlined in the literature? Previous research on the topic is reviewed, study methods are described, results are presented and implications of findings discussed. The article concludes with analysis of study limitations and directions for future research.

Key words: corporations, social responsibility, corporate citizenship, motives, reputation, legitimacy, image, sustainability.

CORPORATE MOTIVES FOR SOCIAL INITIATIVE: LEGITIMACY, SUSTAINABILITY OR THE BOTTOM LINE?

INTRODUCTION

In the wake of recent high profile corporate scandals around the globe, companies today face growing pressure from stakeholders to “do the right thing”. Customers increasingly expect business to consider human rights in their employment practices and demonstrate stewardship toward the natural environment. Individual and institutional investors have begun considering "citizenship programs" as a factor in their investment decisions. Job seekers are gravitating toward firms that demonstrate a strong social portfolio. And employees are showing greater loyalty toward companies that work for the betterment of society (see Aguilera et al, 2007; Davies, 2003; Ellen et al. 2006; Glaskiewicz and Colman 2006; Logsdon & Wood, 2002; Sen et al, 2006). External business observers have also begun to monitor corporate approaches to social issues and many well-known ranking measures in periodicals such as Fortune, Forbes and the Financial Times now include measures of social performance in their instruments. Over the last quarter century, these topics have captured the attention of mainstream management scholars, with studies of corporate citizenship, ethics and social responsibility appearing with greater frequency in top tier management journals. A recent special issue of Academy of Management Review (July 2007) takes stock of this literature, identifying several areas for further research. One article suggests: "An important new line of inquiry within this field is no longer if CSR (corporate social responsibility) works, but rather what catalyzes organizations to engage in increasingly robust CSR initiatives and consequently impart social change" (Aguilera et al, 2007, p. 3).

While a number of articles have investigated the topic in recent years, the issue remains relatively understudied when compared to other questions explored in the business ethics and social performance literature. Campbell (2007) notes the dearth of such research, observing that “little... attention has been paid to understanding why or why not corporations act in socially responsible ways” (p.946). And indeed most studies examining this question have been qualitative in nature, with few large-scale quantitative analyses conducted. Here we attempt to bridge this gap with a quantitative exploratory study conducted with managers from over 500 Norwegian companies, examining their views on why their own firms engage in social initiatives. The study addresses three key questions: First, what do managers in this sample see as the primary reasons their companies engage in activities that benefit society? Second, do motives for such social initiative vary across the industries represented? Third, can further empirical support be provided for the theoretical classifications of social initiative motives outlined in the literature? Answering these questions can make several useful contributions to the literature. On a general level, understanding corporate motives to engage in social initiatives can help organizational scholars predict when companies are likely to participate in such activities and explain different approaches toward implementation. Research on this topic can also help scholars, managers, policy makers and stakeholder groups develop more effective strategies for encouraging businesses to develop a social agenda. This research can also provide insight into how companies respond to changes in the external environment – a critical aspect of successful strategic management (see Bansal and Roth, 2000; Birth, et al, 2006; Hahn and Scheermesser, 2006, Vidaver-Cohen, 2007). Our work contributes to organizational scholarship on a specific level as well. By extending previous qualitative research on motives for social initiative, this

quantitative study adds to existing knowledge regarding antecedents of corporate social practices. Because the majority of studies on corporate social responsibility, corporate citizenship and sustainability address the consequences of such activities, studying antecedents can make a particularly useful contribution to the literature (see Aguilera et al, 2007). Findings from the study also provide a framework for developing theory about how social initiatives are handled in various types of organizations, how industries may respond differentially to institutional pressures for engaging in social initiatives, whether such activities can enhance organizational reputation and strengthen stakeholder relationships, and whether an active social agenda may help firms preserve their legitimacy in times of crisis or threat. Previous research on the topic is reviewed, our study methods are described, results are presented and implications of findings discussed. The article concludes with analysis of study limitations and directions for future research.

LITERATURE REVIEW

Social Initiative in the business context is defined here as any program, practice or policy undertaken by a business firm to benefit society. According to Hess, et al (2002, p. 110) social initiatives include not only the traditional practice of corporate philanthropy but can also encompass "a variety of forms and points of focus, ranging from corporate support for training and educating adults and youth in local communities, to nationwide programs helping welfare recipients get jobs, to globally focused efforts providing aid to developing countries". We deliberately use the term "social initiative" to differentiate from the related constructs of "corporate social responsibility", "corporate social performance" or "corporate citizenship" as these terms imply an underlying moral driver such as duty, accountability, stewardship, etc (see

Altman and Vidaver-Cohen, 2000; Matten and Moon, 2007; Waddock, 2004, Wood, 1991). Because the purpose of our study was to uncover both practical and moral motives, we attempted to select a term that contained no explicit normative overtones but rather focused on the behavioral dimension. Past research on corporate social performance reveals considerable public skepticism about the reasons companies engage in social initiatives, and many assume these activities are undertaken purely for self-interest (see BrĂ¸nn 2001, Webb and Mohr 1999, Mohr et al. 1998). However a closer look reveals a more complex array of motives -- ranging from the psychological to the sociological to the moral. Here we review this literature and identify key motives that anchor our research.

Theoretical Foundations In his classic 1973 article, Keith Davis outlined "the case for and against business assumption of social responsibilities". Arguing that changing social values impose new demands on economic organizations, he predicted that business engagement in social initiatives will become imperative for preserving social support in a "mature, global civilization" (Davis, 1973, p. 321). The first of his arguments focused on the notion of long-run self-interest â&#x20AC;&#x201C; specifically, that "society expects business to accomplish a variety of social goods and (business) must produce these goods if it expects to profit in the long-run" (p. 313). Second, he proposed that as society's values change, social initiatives may become more important than other aspects of performance for strengthening a firm's public image: "Social goals are now a top priority with members of the public, so the firm which wishes to capture a favorable public image will have to show that it

also supports these social goals" (p. 313). He advanced this logic further with notions of the institutional viability of business: "the institution of business exists only because it performs valuable services for society... if business wishes to retain its present social role and social power, it must respond to society's needs and give society what it wants" (p. 314). According to this argument, businesses can only remain competitive if they meet society's demands. And indeed, according to the "iron law of responsibility," introduced in an earlier work, he maintained that "those who do not use power in a way society considers responsible will tend to lose it" (Davis and Blomstrom, 1971, p. 95). Davis cited government regulation as one key way in which corporate power can be curtailed when the public perceives this power is exercised in an irresponsible manner: "Regulation is costly to business and restricts its flexibility of decision making. From the businessman's point of view it is desirable to retain freedom in decision making so that he can maintain the initiative in meeting market and social factors" (Davis, 1973, p. 314). Thus, Davis maintained, voluntary engagement in social initiatives can potentially help businesses avoid regulation. However he also noted that the legal system is not the only source of pressure on corporations to engage in activities that benefit society, suggesting that changing socio-cultural norms create behavioral expectations among business stakeholders that can affect companies as profoundly as technical, legal or market constraints. He explained, "If society moves toward norms of social responsibility as it is now doing, then the businessman is subtly and inevitably guided by these same norms. Though his decisions are not fully determined by these norms, his decisions are influenced toward a socially defined behavior which reflects some sense of social responsibility" (p. 315).

Davis also suggested that when corporations engage in initiatives that benefit society, stockholdersâ&#x20AC;&#x2122; interests can be advanced since problems can become profits. Specifically, he argued, "if business's innovative ability can be turned to social problems, many problems could be handled profitably according to traditional business concepts. It is recognized that not all problems can be handled in this way, but the fact that some can be should encourage business to become more active in social areas" (p. 317). He further proposed that business has the resources to solve social problems that may surpass the resources of other institutions. "Business has a substantial pool of management talent, functional expertise, and capital resources. Probably it is without peer among institutions in all three of these resources. For example, institutions that work in social areas seem to be especially deficient in management talent, and business is known worldwide for its investment in this resource; so perhaps the two types of institutions could be mated in a way that would bring beneficial results" (p. 316). And because private sector organizations can effectively solve social problems if given the opportunity, Davis suggested why not let business try. Finally, Davis maintained that prevention is better than cure: "If business delays dealing with social problems now, it may find itself constantly occupied with putting out social fires so that it has no time to accomplish its primary goal of producing goods and services. Since these social problems must be dealt with at some time, it is actually more economical to deal with them now before they grow into major conflagrations and consume most of management's time" (p. 317). In the decades since publication of Davis's influential work, his analysis has provided an anchor for normative and descriptive theory, as well as a useful framework for empirical

research. Here we review several key studies of motives for social initiative that build on his ideas and expand the framework he proposed.

Empirical Research As interest in the study of corporate social performance has grown over the years, scholars around the globe have empirically examined the question of why companies engage in activities that benefit society. Their research reveals that business managers are motivated by ethical as well as instrumental considerations, and by internal values as well as by external pressures. These motivations frequently overlap and it is often difficult to determine whether corporate social initiatives are genuinely guided by moral values or whether they are driven by more strategic concerns such as protecting profitability or preserving organizational legitimacy within the context of changing institutional norms (see Graafland and Van de Ven, 2006). The research reviewed here provides evidence for both perspectives. The Strategic Perspective: Consistent with Davis's predictions, numerous studies have demonstrated that managers in countries around the globe do perceive a strong strategic business case for engaging in social initiatives. These studies support two key motivational themes implied in Davis's analysis, labeled by other scholars as Instrumental Motives and Institutional Motives (see Hahn and Scheermesser, 2006). Instrumental motives revolve fundamentally around managerial beliefs that engaging in social initiatives can have a direct impact on profitability â&#x20AC;&#x201C; improving revenue or protecting existing profit levels. Several studies have shown that companies develop a social portfolio because managers believe these activities can build competitive advantage, provide new business opportunities, insulate the firm from costly regulation or help the company meet shareholder

demands (see Aguilera et al, 2007; Campbell et al., 2002; Fombrun and Shanley, 1990; Gardberg and Fombrun, 2006; Glaskiewicz and Colman, 2006; Graafland and Van de Ven, 2006; Hahn and Scheermesser, 2006; Hamil, 1997; Hess et al, 2002; Knox, et al, 2005; Maignan and Ferrell 2000; Matten and Moon, 2006; Moir and Toffler; 2004; Peloza, 2006; Sen and Bhattacharya, 2001; Tudway and Pascal, 2006; Utting, 2000; Young and Burlingame, 1996). For example, Tudway and Pascal (2006) found that shareholder value can be maximized when companies pursue a visible social agenda. Knox et al. (2005) found that in some firms, business outcomes can be linked to a firm's participation in social initiatives. Sen and Bhattacharya (2001) demonstrated a relationship between a firmâ&#x20AC;&#x2122;s social initiatives and consumersâ&#x20AC;&#x2122; purchasing decisions. And Peloza (2006) argued that that a visible social agenda provides "reputation insurance" that can protect a firm's profitability in times of crisis or threat. Because reputation is a critical intangible asset that can reduce transaction costs and increase product demand (Fombrun, 1996), some scholars maintain that the "reputational effects" of engaging in social practices provide the crucial link between social initiative and profitability. Social initiatives have been shown to significantly strengthen corporate reputation and help reduce corporate risk, thus investment in social initiatives can be as important for profitability as investment in advertising or R&D (Gardberg and Fombrun, 2006). The increasingly positive reputational impact of engaging in social initiatives can be seen as a function of changes in the institutional environment. As Davis argued, changing social values have created new legitimacy criteria for economic institutions: In addition to showing a strong bottom line, many businesses now believe a social agenda may also be necessary to maintain public support for their activities. This perspective provides a foundation for the notion

of Institutional Motives for social initiatives, suggesting that companies engage in social initiatives primarily due to institutional pressures. Studies have identified a range of institutional forces that compel companies to strengthen their social agendas. These include growing customer intolerance for corporate practices that damage the environment or neglect human rights, increasing public scrutiny of corporate governance practices that lack transparency, demands from local constituents that companies invest in improving community infrastructure, and stakeholder insistence that companies to impose swift and meaningful sanctions on executives who engage in misconduct. Researchers have also documented managers' beliefs that responding to these forces is critical for preserving company image, generating goodwill among stakeholders, or enhancing the legitimacy of the industry to which the company belongs (see Aguilera, et al, 2007; Bansal and Roth, 2000; Bertels and Peloza, 2006; Bruni-Celli and Marquez, 2005; Fombrun and Shanley, 1990; Gardberg and Fombrun, 2006; Hahn and Scheermesser, 2006; King et al, 2002; Jackson, 2004; Marquez and Fombrun, 2006; Marshall et al, 2005; Moon, 2003; Peloza, 2006; Schneitz and Epstein, 2005; Sen and Bhattacharya 2001; Vidaver-Cohen, 2007). Institutional pressures to develop a meaningful social agenda can emanate externally from customers, transaction partners, government agencies and local communities, internally from employees, and laterally from salient business references groups such as competitors and industry associations. Although most studies cited above focus on internal or external stakeholder influence, recent research has documented an increasingly strong lateral effect. Specifically, pressure to engage in social initiatives is often generated by the corporate community itself as much as by institutional forces outside the business arena. In such situations, where managers are pressured by their peers to engage in social initiatives, they

perceive their firm's viability may depend on their ability to respond effectively. For example, some studies showed that firms give more to charitable causes when senior executives move in so-called "elite" groups of business leaders where philanthropy and other forms of social initiative are widely promoted (Glaskiewicz and Colman, 2006, Galaskiewicz 1985, 1977; Useem, 1984). Others found that as "the bar is raised" to engage in social initiatives by companies in salient reference groups, firms feel compelled to increase their social initiative participation to match that of competitors in their industry (Peloza, 2006; Beliveau et al., 1994). Researchers have also documented the existence of a "reputation commons" wherein all companies within a given industry become "tarred by the same brush" when some industry members engage in misconduct or when the industry as a whole is perceived as lacking social awareness. In these industries, managers have begun investing extra effort and resources to appear “socially proactive” in the hope of differentiating themselves from their less responsible colleagues (Barnett, 2007; King et al, 2002). This new "social conscience" among companies around the globe suggests that managers no longer see social engagement as ancillary to economic performance but rather as an integral component of corporate strategy on which they will be judged by their constituents. The Moral Perspective. Moral motives for social initiative are anchored in the idea that business has an ethical duty to “give back” to society. Although many researchers contend that strategic reasons have replaced altruistic motives for corporate social engagement (see Kotler and Lee, 2005), others have found that personal moral values and the desire to make a positive contribution to society’s future continue to be powerful drivers of the corporate social agenda. Some studies have documented instances in which "doing the right thing" appears to be stronger motive for social initiative than the practical benefits these activities can generate for the

firm (see Bertoin Antal, 1992; Hahn and Scheermesser, 2006). Others have found that moral motives share the stage with strategic perspectives. To illustrate the latter, a recent study of Dutch managers showed that while respondents believed social initiatives could improve profitability, enhance reputation and strengthen employee commitment to the firm, they also expressed an equally strong desire to "make the world a better place" (Graafland and Van de Ven, 2006). In another study addressing motives for corporate philanthropy, Glaskiewicz and Colman (2006) found that whereas some participants focused on the way philanthropic activities could further their own personal “causes” or create value for the firm, many genuinely believed business has a duty to improve local communities and create a better world for the future. This notion of “sustainability” – wherein business seeks to fulfill demands of current generations “without compromising the ability of future generations to meet their needs and aspirations” has attracted increasing attention in recent years -- emerging as a particularly strong motive for corporations to engage in public-private partnerships on both a local and global scale (Steurer et al., 2005, p. 263). By sharing resources with non-profit organizations, sponsoring social initiatives in less developed countries, or taking pro-active steps to protect the natural environment, business can not only advance specific social causes but also can build bridges to the public sector that will insure a better future for society as a whole (see Bansal and Roth, 2000; Dees, 1998, Hess et al, 2002; Hahn and Scheermesser, 2006, Matten and Moon, 2006). Moreover, as Drucker (1999) has pointed out, strengthening relationships between business and the public sector can be central to creating new organizational knowledge. Because public organizations operate in an environment with many resource constraints, they may find novel ways of succeeding in their mission that can be instructive for business to understand.

Conversely, business expertise can potentially assist public service agencies in meeting their goals with greater efficiency. According to Waddock et al (2007), as business comes to recognize the fundamental interdependence of the social and economic sector and the blurring of local and global distinctions, public-private partnerships will become an increasingly common approach to solving social problems.

Summary The works cited above present a global snapshot of motives for corporate social initiative - including perspectives from the US, UK, EU, Latin America and Australia and examining a number of industries. Many of the studies are qualitative and conducted with a limited sample size or a within a small set of industries. Others are quantitative and represent a range of industry types. And some of the works cited are purely conceptual in nature. Taken together these studies show that motives for social initiative do tend to cluster around either strategic or moral justifications. Whereas some researchers found that moral motives dominated in the businesses they studied, others found greater support for a strategic rationale and still others found support for a balanced view. Because the studies above produce conflicting results, further research can help to clarify situations in which either strategic or moral motives act as the primary drivers of corporate social initiative, as well as situations in which both types of justifications operate in tandem. Large sample quantitative research such as the study described here can help accomplish this objective by showing whether motives are consistent or different across industries and whether additional empirical support exists for the classifications of social initiative motives suggested in the preceding literature review.

METHODS

Data were collected from over 500 Norwegian companies to answer three central questions: First, what do managers in this sample see as the primary reasons their companies engage in activities that benefit society? Second, do motives for such social initiative vary across the industries represented? Third, can further empirical support be provided for the theoretical classifications of social initiative motives outlined in the literature? No specific a priori hypotheses were tested. Rather the study was exploratory in nature to provide a foundation for developing grounded theory in the future (cf Kidder and Judd, 1986)

Data Collection The research population consisted of 1644 companies representing a range of industries. All were members of the Confederation of Norwegian Enterprise (NHO), the main representative body for Norwegian employers ranging from small family-owned businesses to large multinational corporations. Only firms with over 50 employees were sampled and only top or second level executives were invited to participate. A questionnaire was constructed to reflect key motives for social initiative suggested in the preceding literature reviewed (see Table 1). Two additional motives were added, based on a search of newspaper articles in the Norwegian media covering business reasons for sponsoring public service organizations. Respondents were asked to rate each â&#x20AC;&#x153;motive statementâ&#x20AC;? on a 7point Likert scale, ranging from 1 (Strongly disagree) to 7 (Strongly agree). As with any selfreport measure, the possibility of social desirability bias exists. However as our results will

show, participants seemed quite willing to acknowledge a number of â&#x20AC;&#x153;self-servingâ&#x20AC;? motives and therefore it is reasonable to conclude that such bias has little effect on their responses.

---------------------------------------------Insert Table 1 here ------------------------------------------The questionnaire was administered over e-mail using a professional system called QuestBack. 559 usable responses were collected, representing a response rate of 34%. As shown in Table 2, twelve industry groups with samples large enough for statistical analysis emerged. Several other industries with smaller respondent numbers were also identified and consolidated together in an "other" category (n=12). ----------------------------------Insert Table 2 here --------------------------------Data Analysis The data were analyzed using SPSS. Significance value was set at p < .05 for all analyses. To answer the first research question: "What do managers in the sample see as the primary reasons their companies engage in activities that benefit society?", we generated descriptive statistics across the full sample and ranked the 16 social initiative motives accordingly. To obtain additional information about response patterns, we then performed a modified Top-Box analysis (cf Gale 1994; Naumann and Giel 1995) that allowed us to identify the percentage of respondents who agreed that a particular motive reflected their company's reasons for engaging in social initiatives

(1)

To answer Research Question 2: "Do motives for corporate social initiatives vary across the industries represented?", we used descriptive statistics to determine motive rankings by industry, then performed Analysis of Variance (ANOVA), followed by a post-hoc Least

Significant Difference Test to identify which industries were significantly different in their motives from the others. A second Modified Top-Box Analysis was conducted to assess the exact nature of these differences as well. For Research Question 3: "Can further empirical support be provided for the theoretical classifications of social initiative motives outlined in the literature?", we performed an Exploratory Factor Analysis on the 16 motives to determine if they could be grouped into a reduced number of latent factors that might fit theoretical classifications (Varimax Rotation with Kaiser Normalization). As with Question 2, we performed Analysis of Variance and Post-hoc Least Significant Difference Test to identify industry differences on factor scores.

RESULTS

Results of the study reinforced certain conclusions from previous research and suggested several new areas for future investigation. Following a summary of our findings, we discuss these implications.

Reasons for Corporate Social Engagement With regard to the first research question: What do managers in the sample see as the primary reasons their companies engage in activities that benefit society?, we found that certain motives captured in the questionnaire were considerably more relevant to study participants than were others (see Table 3). For instance, both mean scores and Top-Box percentages showed, Improve Image and Be Recognized for Moral Leadership as the strongest reasons for corporate involvement in social

initiatives, followed closely by Serve Long-term Company Interests. Respondents also agreed in the majority with the statements that their executives engage the firm in social initiatives for Personal Satisfaction, to Fulfill Stakeholder Expectations, to Remain Competitive, and to Prevent Future Business Problems.

At the bottom of the list, respondents across the entire

sample rated Avoid Regulation and Solve Social Problems Better as the least relevant motives for their companies' involvement in social programs. -----------------------Insert Table 3 here --------------------------

Industry Differences on Social Initiative Motives Our analyses confirmed the second research question; Do motives for corporate social initiative vary across the industries represented? We found significant industry differences on 11 of the 16 motives (See Table 4), with the greatest differences observed for Service sector respondents (See Table 5). The Modified Top Box Analysis in Table 6 illustrates the specific nature of these differences. Areas of industry agreement on social initiative motives are also shown here. ------------------------------------Insert Tables 4, 5 and 6 here -------------------------------------

Classification of Social Initiative Motives Exploratory Factor Analysis answered the third research question, Can further empirical support be provided for the theoretical classifications of social initiative motives outlined in the literature?

Results shown in Table 7 confirm prior evidence for three distinct types of social

initiative motives. Tests of the dataâ&#x20AC;&#x2122;s suitability for factor analysis are shown in Table 8.

--------------------------------Insert Tables 7 and 8 here ---------------------------------

Most of the motives in Factor 1 reflect aspects of personal values and ethical obligation inherent in the "Moral Perspective" described above. However upon closer inspection, these motives appear to extend beyond the notion of personal ethics into the realm of "sustainability". As noted previously, corporate sustainability activities reflect managerial values regarding the importance of meeting needs of current generations "without compromising the ability of future generations to meet their needs and aspirationsâ&#x20AC;? (Steurer, et al, 2005, p. 263). Although much of the sustainability literature focuses on preserving the natural environment, strengthening the health of the human society is equally integral to sustainability concepts (see Gladwin, et al, 1995). Dyllick and Hockerts (2002, p. 134) propose that socially sustainable companies are those that "add value to the communities within which they operate by increasing the human capital of individual partners as well as furthering the societal capital of these communities". Specific corporate practices associated with the notion of social sustainability include investing in community infrastructures, creating multi-sectoral partnerships and building bridges across borders to become "global corporate citizens" (Marsden, 2000; Waddell, 2000). Although the motive Personal Satisfaction relates to individual moral values, four of the others -- Concern for Society's Future, Strengthen Global Networks, Learn from Social Agencies, and Share Resources with Society -- reflect this larger view.

We therefore suggest the label Sustainability Motives as

more precise than the term "Moral" motives used by other scholars. When combining the six items in Factor 1 as a scale, an acceptably high Cronbach's alpha reliability estimate of .802 was obtained (cf Nunnaly, 1978). The motive Prevent Future Business Problems loaded weakly on

this factor, as well as on Factor 3, but in neither instance was the loading strong enough to warrant its inclusion. The four motives in Factor 2 correspond to motives classified as "Institutional" in the “Strategic Perspective” described in the preceding literature review. However, because the term “institutional” is rather broad and because the motives in this factor focus specifically on preserving observers' positive perceptions of the firm, we seek to capture this perceptual quality by substituting the label Legitimacy Motives instead. Legitimacy has been defined as "a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions” (Suchman, 1995, p.574). As argued by scholars cited above, prevailing "norms, values, beliefs and definitions" regarding appropriate business conduct have now expanded beyond the simple goal of profitability to include social goals as well. Thus meeting social expectations is becoming increasingly important for business to maintain legitimacy in the public eye. When the four items in this factor were analyzed as a scale, the Cronbach’s alpha reliability estimate was acceptably high at .800. The five motives in Factor 3 also fall into the “strategic” category – reflecting the notion that engaging in social initiatives can yield positive financial results for the firm, either by generating new revenues or by protecting existing profit levels. Other scholars cited above have labeled motives in this category "Instrumental". However because instrumentality can refer to anything that furthers the corporate strategic agenda -- including responding to legitimacy threats or engaging in sustainability activities -- we seek to discriminate between motives in the other factors and those related specifically to monetary outcomes by labeling this factor Profitability Motives instead. Note that the motive Prevent Future Business Problems loaded weakly on this

factor as well. Although the loading was too weak for it to be included in the Profitability factor, intuitively it appears to fit the theme, and if the study were to be replicated a different result for this motive might be obtained. A satisfactory Cronbachâ&#x20AC;&#x2122;s alpha reliability estimate of .782 was attained when these motives were combined as a scale. As shown in Table 9, results from the ANOVA on the three motive factors revealed significant differences between industries on Sustainability Motives and Profitability Motives, suggesting that these two motive factors were stronger or weaker for some industries than for others. There were no significant differences between industries for the Legitimacy factor. ---------------------------Insert Table 9 here ------------------------------The Least Significance Difference Test in Table 10 identifies the exact nature of these differences and once more reinforces the uniqueness of Service sector respondents who differed significantly from respondents in other industries on both Sustainability and Profitability motives. Some motive differences were also found for Energy, Tourism and Transportation industry respondents but these were less striking than the Service sector differences. --------------------------------Insert Table 10 here --------------------------------------Summary To summarize the results of our analyses: First, we found strong support for certain social initiative motives suggested in the literature but weaker support for others. Second, we found significant differences in social initiative motives between industries, although these differences were confined to particular industries or certain specific motives. Third, our findings reinforced the theoretical classifications of social initiative motives identified in the literature. Below we

discuss the implications of our findings, review the limitations of our study and identify directions for future research.

DISCUSSION

Results of our research help to answer certain questions regarding corporate motives for participating in social initiatives. At the same time, the study raises new questions that may challenge existing ideas about the topic and provide interesting directions for future research. As noted above, our results reinforce several key themes suggested in the literature. In particular, we found strong empirical support for the tri-partite classification of corporate social initiative motives proposed by other scholars. We discuss our results in the context of these three themes.

Legitimacy Motives for Corporate Social Initiative Of the two "strategic" factors, the Legitimacy Factor contained the fewest and most conceptually consistent motives for corporate social initiative. Statements operationalizing three of the four Legitimacy motives received a larger number of "Agree" responses than did statements operationalizing motives in either of the other two factors. These findings support other scholarsâ&#x20AC;&#x2122; claims that the changing global business climate may now require companies to invest in a social agenda in order to maintain legitimacy within their organizational fields. Of the four motives in the Legitimacy Factor, the motives to Improve Image and to Be Recognized for Moral Leadership dominated the list. Consistently ranked the top two motives across all industries represented, they were followed closely by Serve Long-term Company

Interests and Meet Stakeholder Expectations. And as indicated by the two ANOVAs, no significant differences between industries were found either for the individual items in this factor or for the factor as a whole. Such consistency is not surprising in light of growing consensus among businesses worldwide that a strong social agenda may be critical for meeting stakeholder expectations and protecting reputation at a time when the internet and global media coverage spotlight corporate failings almost instantaneously. Corporate executives appear to increasingly agree that social initiatives can help a company build "reputational capital" and that "by doing good, managers generate reputational gains that improve a company's ability to attract resources, enhance performance and build competitive advantage" (Fombrun et al, 2000 p. 105). Indeed, in 2007, for the first time, respondents in Forbes Magazine annual survey of the World's Most Respected Companies identified "corporate citizenship" as the most salient determinant of a firmâ&#x20AC;&#x2122;s reputation among all the variables assessed (Weiss, 2007). These recent developments help to explain the exceptionally strong belief among the vast majority of our study participants that their companies engage in social initiatives to create an impression of legitimacy in the minds of organizational stakeholders. And it may be of particular interest to note that respondents in the Oil industry, perhaps the most "legitimacychallenged" industry in today's corporate landscape, agreed unanimously that their firms pursue a social agenda in order to Improve Image and nearly unanimously (92%) that Fulfilling Stakeholder Expectations was a salient rationale. Indeed, Oil industry agreement with these two motives was considerably higher than that of all other industries represented. The fact that members of this industry perceive such a strong link between social initiatives and legitimacy

perceptions raises the question of whether such perceptions also hold true among other industries confronting significant legitimacy threats â&#x20AC;&#x201C; an intriguing direction for future research.

Profitability Motives for Corporate Social Initiative As described above, the second "strategic" factor, Profitability Motives, emanates from the belief that engaging in social initiatives can yield direct financial benefits for the firm â&#x20AC;&#x201C; either by generating new revenues or by protecting existing profit levels. Contrary to some claims in the literature, few companies in our sample perceived a direct relationship between engaging in social initiatives and immediate financial outcomes. Indeed, motives comprising the Profitability Factor received far fewer "Agree responses" from study participants than did those in either the Legitimacy or the Sustainability factors. Four of the five Profitability Motives ranked at the bottom of the list, and the only highly rated motive in this factor was Remain Competitive. The discrepancy between this motive and the others in this factor may perhaps be explained by the complex nature of competitive advantage. Companies with the largest shares of a competitive market are not necessarily the most profitable. Instead they may retain advantage due to superior performance in non-financial areas or as a result of greater intangible resources than their competitors (see Barney, 1997). The low collective agreement with the other four statements in the Profitability Motives factor may have several respondent-specific explanations. For example, the fact that respondents across the sample agreed only slightly with the statement that their firms engaged in social initiatives to Avoid Regulation may be a function of the regulatory climate specific to Norway, the country sampled for this study. Norwegian companies are already highly regulated in the areas of health, safety and environmental performance, with very specific benchmarks for

compliance. Respondents in this sample may therefore perceive that reporting their “HSE” practices is sufficient to meet legal requirements, and that participation in voluntary social initiatives unrelated to “HSE” issues will do nothing to help them avoid further regulation (Ruud et al. 2005). In other countries, where "mitigation credits" are offered for companies that engage in social programs to offset damages caused by corporate actions, a different response pattern might be expected. Also of note was the strong agreement with Profitability Motives among respondents in the Service Sector when compared to respondents from other industries. Considering the nature of businesses represented in this sector (professional, medical, home and personal services) it is possible that this group finds more immediate strategic relevance for engaging in social initiatives than do members of industries that have less direct customer involvement. This interpretation is consistent with observations of other scholars who contend that although a strong case can be made for social initiatives acting as "profitability insurance", the success of this strategy depends to a large degree on the relationship between social initiative activities and the core business of the firm (See Peloza, 2006).

Sustainability Motives for Corporate Social Initiative As described above, Sustainability Motives for social initiative are driven by personal managerial values, a sense of organizational responsibility and the belief that corporations have a moral obligation to invest in making the world a better place for future generations. However, although other scholars have found strong support for such a values-driven approach, the Modified Top Box Analysis we performed showed that among the six motives in this factor, only Personal Satisfaction received a majority of “agree” responses from participants. Compared to

the higher level of concurrence with statements in the Legitimacy factor and with the motive to Remain Competitive (from the Profitability factor), these results suggest on the surface that respondents consider "moral" motives less relevant to their firms' engagement in social initiatives than motives related to strategic concerns. However, as the Modified Top-Box also showed, industries varied considerably in their agreement with the motives in this factor. For example, "Agree" responses for the motive Share Resources with Society ranged from 15 percent in the Automotive industry to 74 percent in the Service industry, with others reported agreement between 23 and 53 percent. The motive Concern for Society's Future also showed extreme range -- from 15 percent agreement among Energy industry respondents to 70% agreement among Tourism industry participants, with most industries reporting agreement in the 40-50% range. Such variation may reflect the greater availability in certain industries of surplus resources that can be devoted to social problem-solving. It may also reflect a selection artifact â&#x20AC;&#x201C;managers in highly interactive professions may be more interpersonally motivated and thus more genuinely concerned with assisting social causes. Future research could examine potential selection bias in more detail. Other directions for future research on the motives in this factor include closer examination of the way in which respondents understand the motive No Good Reason Not To. This motive received the second highest number of "Agree" responses in the Sustainability factor and as it bears no obvious relationship to the sustainability theme, the reasons why it loaded on this factor are open to speculation. Perhaps if companies in this sample failed to clearly communicate their reasons for engaging in social initiatives, or if they lack formal social initiative programs altogether, respondents may have perceived the firm has left the matter to the discretion of employees' individual conscience. Or agreement with this statement may simply

reflect participants' lack of information about the underlying rationale for their firm's social agenda. In-depth qualitative research would be necessary to shed further light on these results. The motive Strengthen Global Networks also warrants further examination as Oil industry respondents were alone in their majority agreement with this rationale for engaging in social initiatives. As Norway is a small country populated primarily by small firms, replicating the study across several nations or in a country with many global corporations might yield greater agreement with this motive among other industries. Finally, the motive Learn from Social Agencies received majority "Agree" responses only from participants in the Oil, Service and Tourism industries. As public-private collaboration is considered a key element in sustainable business practice (See Bendell 1998, Marsden, 2000; Payne 2006, Waddock, 2000), it is interesting to note that most respondents in this sample did not consider learning from social agencies a relevant motive for their firm's engagement in social initiatives. Perhaps because most social services in Norway are handled by the government and few private social service agencies exist when compared with other nations, a different response pattern on this motive might occur if the study were administered elsewhere.

LIMITATIONS

There are a number of limitations to the generalizability of our research findings. The most obvious is that the study was performed in a single Scandinavian country and with members of a single, although diverse, business association. Norway is characterized by a highly developed economy, an educated workforce, relative cultural homogeneity and very few

companies with more than 100 employees. As noted by Campbell (2007) Scandinavian corporations tend to be known for strong ethical work climates relative to firms in other geographical regions. While Norway was not listed among her ‘sisters’ of Finland, Sweden and Denmark in Campbell's article, she does share some of their characteristics, including extensive government regulation, voluntary industry self-regulation, and powerful, well-organized business associations and labor unions. These factors could contribute to considerable self-selection bias among study participants (cf Kidder and Judd, 1986), as could the fact that all respondents were members of a specific professional association, the Norwegian Confederation of Businesses (NHO).

Campbell points out that corporate social initiatives are typically more robust among

members of professional trade associations. And within NHO this may be particularly true as the Confederation played a leading role in helping members create guidelines for ethical business conduct and develop corporate social programs. Indeed the response rate of 34%, considered high for email questionnaires, suggests the likelihood of a self-selection bias in this sample. Industry generalizations may also be problematic in this study. Although NHO is the most influential business organization in Norway, many industries are under-represented and contributed only small samples to our study. Future research on this topic should attempt to find larger samples in the Oil, Automotive and Media industries in particular. For these reasons, inferences from our sample to populations in other countries, other industries, and other forms of business organization must clearly be exercised with caution. In addition to generalizability concerns, several other methodological limitations to the study exist. First, although social desirability bias seemed minimal in this study, a certain degree is inherent in any self-report measure and should be considered when interpreting these results. Second, it is possible respondents may have understood the term “social initiative” in different

ways, and that such differences could be industry-specific, thereby potentially affecting interpretation of our findings. Despite strong agreement about certain motives across industries and the high Cronbachâ&#x20AC;&#x2122;s alpha reliability coefficients for both the full scale and factor subscales that together suggest common understandings of the term, variations in understanding are always possible and future research could delve more deeply into this question. Finally, other motives for corporate social initiative may exist beyond those described in the literature and tapped in our questionnaire. Further inquiry could address this limitation.

CONCLUSION

The limitations outlined above suggest several directions for future research. First, the questionnaire could be administered to companies in parallel industries in other geographical regions to assess the cultural generalizability of our results. It could also be administered to firms in other industries beyond those represented here. Differences between large and small companies within a given industry could also be investigated, and research could be conducted within individual industries using larger sample sizes. Motives for social initiative could also be compared between companies with different levels of stakeholder interaction, between companies in different institutional environments, and between industries facing varying levels of legitimacy threat. The study could be replicated with qualitative methods to uncover underlying reasons for industry differences on motives for social initiative. And triangulation strategies could be employed to tap the perceptions of various corporate stakeholders regarding corporate motives for adopting a social agenda. These might reveal very different outcomes than research reporting only the perceptions of top management.

While some might argue that corporate motives for social initiatives are immaterial as long as valuable social benefits are achieved, understanding what compels corporate decisionmakers to direct a company's resources toward improving society can provide the key to encouraging more of such behavior over time. The study outlined here attempts to advance this effort.

Acknowledgements We would like to thank Peggy Brønn’s students Rune B. Borgen, Trond Andersen and JonYngve Bakke for their work in making this paper possible. We are also grateful to the Norwegian Confederation of Businesses (NHO) for their research support. We also thank Carl Brønn for his invaluable input. Endnotes: (1)

Standard top-box analysis calculates the percentage of respondents providing only the highest score on an item, whereas "modified" top-box analysis calculates percentages of all scores on the high side of the scale's midpoint (See Gale 1994; Naumann and Giel 1995). Here we calculated the percentage of respondents assigning scores from 5-7 for each item in the questionnaire.

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Table 1: English Translation of Norwegian Questionnaire and Motive Labels

1. Engaging in social initiatives serves our company's long-term interests. (Motive Label: Serve Long-term Company Interests) 2. Engaging in social initiatives can improve our image. (Motive Label: Improve Image) 3. We must engage in social initiatives to maintain our position against competitors. (Motive Label: Remain competitive) 4. If we do not engage in social initiatives, regulators will force us to do so. (Motive Label: Avoid Regulation) 5. People inside and outside our company expect us to engage in social initiatives. (Motive Label: Fulfill Stakeholder Expectations) 6. Our shareholders demand that we engage in social initiatives. (Motive Label: Meet Shareholder Demands) 7. As a private firm, we can solve social problems better than non-profit agencies. (Motive Label: Solve Social Problems Better) 8. Our company has valuable resources that can be used to solve social problems. (Motive Label: Share resources with society) 9. Our company can earn money by solving social problems. (Motive Label: Create Financial opportunity) 10. If we do not take action to address social problems, they could harm our primary business. (Motive Label: Prevent Future Business Problems). 11. People in our company are concerned about social problems and want to help. (Motive Label: Concern for Society's Future) 12. It makes us feel good to work on social problems (Motive Label: Personal Satisfaction) 13. There are no good reasons not to engage in social initiatives (Motive Label: No Good Reason Not To) 14. Engaging in social initiatives can build networks in foreign cultures. (Motive Label: Strengthen global networks) 15. We wish to be seen at the forefront of societyâ&#x20AC;&#x2122;s legal, moral and ethical standards (Motive Label: Be recognized for moral leadership) 16. To gain knowledge from social service organizations. (Motive Label: Learn from Social Agencies)

Table 2 â&#x20AC;&#x201C; Industry Classifications, Frequencies and Percent of Total Sample

Industry Classification

Frequency

Percent

Automotive: Auto Sales and Service

2.3

Construction: Developers, residential and commercial contractors

16.3

Energy: Electricity and other utility providers

4.8

Food: Food and beverage producers

9.1

Knowledge: Universities and research institutions

4.3

Manufacturing: Raw materials processing and production

12.7

Media: Newspapers and broadcast media

3.8

Oil: Oil producers and suppliers

2.1

Service: Professional, home, personal, and health services

9.8

Technology: Hi-tech R&D, engineering, marine systems etc

118

21.1

Tourism: Hotels, bars, restaurants, camping, etc

5.2

Transportation: Freight and passenger transportation

6.3

Other

2.1

559

100.0

TOTAL

Table 3 -- RQ1: Full Sample Motive Rankings - Means and Modified Top-Box Percentages

MEAN RANK

VARIABLE NAME

MEAN

S.D.

TOP-BOX % AGREE (Score 5-7)

TOPBOX RANK

Improve our Image

5.46

1.34

82.7%

Be Recognized for Moral Leadership

5.01

1.53

69.3%

2-3

Serve Long-term Company Interests

4.96

1.45

69.3%

2-3

Personal Satisfaction

4.61

1.52

58.9%

Fulfil Stakeholder Expectations

4.53

1.39

55.5%

Remain Competitive

4.40

1.74

53.7%

No Good Reason Not To

4.34

1.69

49.1%

Concern for Society's Future

4.26

1.61

47.3%

Prevent Future Business Problems

4.22

1.62

50.4%

Learn from Social Agencies

4.00

1.52

40.6%

Share Resources with Society

3.92

1.67

39.4%

Create Financial opportunity

3.75

1.74

37.0%

Strengthen global networks

3.55

1.65

31.0%

Meet Shareholder Demands

3.52

1.78

33.6%

Avoid Regulation

3.15

1.55

19.4%

Solve Social Problems Better

3.09

1.70

22.0%

Table 4 -- RQ3: One-way ANOVA on 16 motives by industry classification * p < .01

ANOVA

Sig.

Long-term company interests

1.027

.422

Improve image

1.216

.268

Remain competitive

2.744

.001*

Avoid regulation

2.300

.007*

Fulfill stakeholder expectations

1.121

.340

Meet shareholder demands

2.971

.001*

Solve social problems better

2.997

.000*

Share resources with society

4.801

.000*

Financial opportunity

6.282

.000*

Prevent future business problems

3.015

.000*

Concern for society's future

2.252

.009*

Personal satisfaction

2.740

.001*

No good reason not to

3.304

.000*

Strengthen global networks

2.989

.000*

Be recognized for moral leadership

1.723

.059

Learn from Social Agencies

1.434

.146

Table 5 -- RQ2 (c): Post hoc Least Significant Difference Test for Motives where industry sectors differed significantly from the others (p<.05)

MOTIVES

INDUSTRY DIFFERENCES

Remain competitive

Service

Avoid Regulation

Service

Meet Shareholder Demands

Service

Solve Social Problems Better

Service

Share resources with society

Service

Create financial opportunity

Service

Prevent Future Business Problems Concern for Society Personal Satisfaction No Good Reason Not To Strengthen global networks

Automotive, Transportation Service, Energy Service Energy, Media, Service, Tourism Energy, Oil, Service

Table 6 Industry Motives Modified Top-Box Analysis Percent of Respondents Agreeing with Statement (Score 5-7: Percentages rounded to nearest whole number) QUESTIONNAIRE ITEM NUMBERS (n)

INDUSTRIES

AUTOMOTIVE

54%

69% 39%

CONSTRUCT

74%

83% 58% 17% 55% 32% 25% 34% 42% 54% 33% 57% 44% 27% 66% 36%

ENERGY

72%

80% 64%

FOOD

74%

86% 62% 22% 62% 47% 16% 43% 35% 52% 44% 62% 56% 22% 83% 46%

KNOWLEDGE

79%

91% 46% 18% 59% 32%

MANUFACTURE 64% 69%

8% 38% 16% 16% 15% 16% 23% 31% 62% 36% 23% 69% 39%

4% 58% 48%

8% 38% 37% 44% 15% 41% 30% 18% 67% 30%

5% 39% 38% 30% 47% 52% 27% 48% 74% 50%

80% 46% 23% 55% 33% 17% 23% 27% 47% 48% 51% 44% 38% 70% 33%

MEDIA

84% 58%

5% 46% 32% 21% 53% 40% 65% 50% 80% 75% 40% 80% 30%

OIL

SERVICE

71%

81% 73% 27% 60% 54% 49% 74% 71% 55% 56% 73% 60% 40% 74% 57%

112

TECHNOLOGY

69%

86% 47% 17% 55% 27% 18% 36% 28% 59% 50% 55% 50% 28% 67% 38%

TOURISM

83%

89% 61% 25% 64% 29% 32% 39% 57% 60% 70% 75% 72% 36% 72% 55%

TRANSPORT

58%

71% 42% 13% 33% 13% 22% 23% 19% 29% 47% 62% 44% 23% 55% 31%

OTHER

50%

84% 33% 17% 42% 25% 25% 17% 17% 17% 33% 50% 25% 17% 50% 37%

534

TOTAL

70%

83% 54% 19% 56% 33% 23% 40% 36% 50% 48% 58% 49% 31% 69% 40%

84% 100% 50% 25% 92% 50% 25% 33% 42% 83% 49% 58% 67% 58% 75% 67%

ITEMS: 1 = Long-term interest 2 = Improve image 3 = Remain competitive 4 = Avoid Regulation 5 = Fulfil Stakeholders Expectations 6 = Meet shareholders Demands 7 = Solve Social Problems Better 8 = Share Resources

9 = Financial Opportunity 10 = Prevent future problems 11 = Concern for Society's Future 12 = Personal Satisfaction, 13 = No Good Reason Not To 14 = Strengthen Global Networks 15 = Be Recognized for Moral Leadership 16 = Learn from Social Agencies (c) 2007 BrĂ¸nn & Vidaver-Cohen: Motives for Social Initiative - 40

Table7: KMO and Bartlettâ&#x20AC;&#x2122;s test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .918 Bartlett's Test of Sphericity

Approx. Chi-Square Df Sig.

3488.664 120 .000

Table 8: Emerging Motive Factors. Extraction Method: Principal Component Analysis. Varimax Rotation with Kaiser Normalization (rotation converged in 7 iterations).

VARIABLES FROM SURVEY ITEMS

FACTORS, RELIABILITIES, % VARIANCE EXPLAINED Sustainability Motives

No good reason not to

.743

Concern for Society's Future

.720

Personal satisfaction

.673

Strengthen global networks

.663

Learn from Social Agencies

.578

Share resources with society

.513

Prevent future business problems

.464

Legitimacy Motives

Profitabili ty Motives

.413

Improve our image

.837

Serve long-term company interests

.772

Fulfill stakeholder expectations

.632

Be recognized for moral leadership

.620

Avoid regulation

.756

Solve social problems better

.655

Meet shareholder demands

.626

Create financial opportunity

.572

Remain competitive

.567

Variance Explained

22%

18%

Cronbach's Alpha Reliability

.802

.800

.782

Table 9: One-way ANOVA performed on three factors emerging from PCA. Factor NAME SUSTAINABILITY MOTIVES LEGITIMACY MOTIVES PROFITABILITY MOTIVES

Sig.

3.303 1.600 3.359

.000 .088 .000

Table 10: Post hoc Least Significant Difference Test Factors where single industries differed significantly from others (p<.05) MOTIVE FACTOR

SINGLE INDUSTRY

DIFFERING FROM:

Service

FACTOR 1: SUSTAINABILITY

Energy

Tourism

FACTOR 2: LEGITIMACY

Transportation

Service FACTOR 3: PROFITABILITY

Sig.

Auto Retail Construction Energy Food Knowledge Manufacturing Technology Transportation

.033 .000 .000 .006 .021 .002 .002 .012

Food Manufacturing Media Oil Service Technology Tourism

.024 .026 .001 .010 .000 .007 .000

Construction Energy Food Manufacturing Technology Transportation

.003 .000 .029 .013 .023 .038

Construction Energy Food Knowledge Oil Technology Tourism

.040 .002 .006 .006 .009 .035 .033

Auto Retail Construction Energy Food Knowledge Manufacturing Media Oil Service Technology Tourism Transportation

.000 .001 .004 .002 .000 .000 .000 .001 .000 .000 .000 .000