ORIENTATION AND CORPORATE SOCIAL STRATEGY
In the previous sections, I reviewed the literature on CSR, upper echelons and
institutional theory building hypotheses regarding the relationship between an open
executive orientation and a firm’s corporate social strategy. What emerges then is a
longitudinal, mixed determinant, multi-level model of the relationship between executive
orientation and corporate social strategy over time.
Both Wood (1991) and Clarkson (1995) argued that the work conducted under the
broad umbrella of CSR has not been careful in ensuring the use of proper levels of
analysis. This multi-level model starts with the individual level drivers of CSR by
articulating the demographic factors inherent in the established construct of executive
orientation, specifically as it relates to CEO openness to change and experience. This
open executive orientation is then linked to CEO selective perception, interpretation,
construed reality and ultimately strategic choice of CSS (Finkelstein et al., 2009;
Hambrick & Mason, 1984). At the firm level, through the mechanism of selective
perception (or imperceptions), executive orientation will affect a company’s choice of
breadth and depth of CSS ultimately resulting in disengaged, derivative, diffuse,
dedicated or devoted CSS profiles. At the industry level, institutional norms will attenuate
the relationship between the executive orientation and CSS. Given the multiple levels of
analysis, a mixed determinant, cross level model is appropriate (Kozlowski & Klein,
2000). Figure 4.1 visually depicts the mixed-determinant model, specifying these
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Figure 4.1: A Longitudinal, Multi-Level Model of Executive Orientation and CSS
The organizing principle behind the model, therefore, is that executive orientation,
through the process of selective perception, affects the strategic choices pursued by the
firm and therefore the total aggregate, as well as the breadth and depth of corporate social
strategy in which the firm engages. Importantly, this model explicitly includes change, in
that executive orientation is also predicted to affect a firm’s rate of adoption of CSS. To
date, no other model in the CSR domain, of which I am aware, does this.
It is critical in longitudinal, multi-level models to be very clear about the units of
analysis (Ployhart & Vandenberg, 2010). Here, despite a focus on the CEO, the unit of
+
Institutional Factors Open Executive Orientation Corporate Social Strategy Firm Level of Analysis Level of: Total CSS Breadth of CSS Depth of CSS Managerial Discretion Industry Norms Industry Level of Analysis Individual Level of AnalysisCEO Worldview (Liberal +) Type of Functional Background (Output +), Breadth of Functional Experience (+), Education (MBA -, JD/LLB -) International Experience (+) Rate of Adoption: Total CSS Breadth of CSS Depth of CSS
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analysis is nonetheless the firm given that the outcome variables occur at the firm level.
As such, I am interested in both the intra-unit change over time in CSS (within firms) as
well as the inter-unit differences in change over time between firms and the inter-unit
difference in change over time between industries. As depicted in the model, I suggest
that an open executive orientation, as captured by a liberal worldview, output functional
background, greater breadth of functional experience, educational specialization and
international experience, can help predict both initial firm levels of CSS as well as the
change in CSS over time. Further, the model differs from extant research in this domain
as it is meant to highlight that CEOs of firms make choices regarding the corporate social
strategy they pursue; not only is the total CSS important, but the breadth and depth of
CSS pursued over time may also vary significantly.
Although multi-level theories and models are complex, there has been an increased
call for their use in the study of organizations (Hitt, Beamish, Jackson & Mathieu, 2007).
Theoretically, several authors have already attempted multi-level theories of CSR and like
constructs (Starik & Rands, 1995). For example, Aguilera, Rupp, Williams and Ganapathi
(2007) put forth a multi-level model of CSR which focuses on different motives for CSR
at the individual, organizational, national and transnational (intergovernmental and NGO)
levels. The role of the CEO and TMT in this model is also to direct strategic decisions
with regards to CSR as upper echelons have “the most direct power to influence the
firm’s engagement in CSR by developing corporate strategy and allocating resources to
different firm programs and practices” (Aguilera et al., 2007: p. 845). However, Aguilera
et al. (2007) do not incorporate the process of selective perception in this strategic choice.
Rather, they argue that “first and foremost, managers will implement CSR initiatives
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increasing firm competitiveness and profitability so that managers can ensure firm
survival and raise their compensation packages, which are generally tied to profitability”
(p.847). This suggests that CEOs will only act if they see an instrumental value to
themselves of the proposed CSS. In contrast, rather than speculate on motives, I argue that an open executive orientation will affect the selective perception and interpretation of
stakeholder and social issues which will in turn affect strategic choice.
Aguilera et al.’s (2007) model does, however, account for some field level
motivators such as governments and NGOs in determining a firm’s propensity to engage
in CSR (although it neglects the important role of industry norms). Bamberger (2008)
specifically points out the need for increased multi-level theorizing that includes context
theorizing, so that one can understand how firms are influenced by the phenomena in
which they are nested. Context theorizing requires researchers to build situational
conditions directly into theory, as I have done here. A multi-level model of strategic
leadership and corporate social strategies thus answers numerous calls for increased use
of multilevel theorizing in strategic management (Bamberger, 2008, Hitt et al. 2007,
Kozlowski & Klein, 2000).
In the next section I turn to the methodology used for testing the model and the