Value Creation Through Stakeholder Management: Three Essays Assessing the Effects of Competitive Strategies, Environmental Performance Feedback, and (Inter)national Governance Institutions

Abstract

This dissertation is composed of three related yet independent studies, with a consistent theme on stakeholder management and value creation of organizations. Using the instrumental stakeholder theory lens, in Essay 1, I examine how generic competitive strategies influence the link between stakeholder management (SM) and firm financial performance. I develop a framework that highlights the synergistic effects of a differentiation strategy on SM, but also the trade-offs between a cost leadership strategy and SM in their consequences for financial performance. I further propose that for firms pursuing a low cost competitive advantage, secondary SM intensifies the trade-offs between SM and financial performance when compared with primary SM, whereas both primary and secondary SM are likely to improve financial performance for differentiators. Drawing from behavioral theory studies, Essay 2 of my dissertation examines how negative/positive performance feedback (i.e., the negative/positive attainment discrepancy between firms’ actual performance and aspirations) with respect to firms’ environmental performance can serve as a determinant of firms’ subsequent social orientation. I found a U-shaped relationship between negative environmental performance feedback and corporate social performance. I also found an inverted U-shaped relationship between positive environmental performance feedback and firms’ social orientation. The results suggest that when firms have extremely poor environmental performance far below aspiration levels, they are more motivated to perform better in addressing social issues, mainly due to legitimacy concerns. On the contrary, as firms’ environmental performance is well above aspirations, their motivation to improve social performance will be decreased significantly, partly because their legitimacy is already secured by the satisfactory environmental performance. Essay 3 examines the relationship between private voluntary governance institutions (via the compliance with the UN Global Compact) and corporate social responsibility (CSR), as well as how public governance (via the quality of national institutions) will condition this relationship. In particular, I argue that the positive impact of the UN Global Compact (UNGC) on CSR is likely to wear off over time. I further propose that national institutions moderate the UNGC-CSR relationship, such that the inverted U-shape between the UNGC and CSR is steeper when national institutions are stronger. The findings in this dissertation have implications for research on stakeholder management and value creation of organizations, CSR, behavioral theory and (inter)national governance institutions.