Do firms gain environmental legitimacy when they conform to external expectations regarding the natural environment? Drawing on institutional logic and signaling theory, we investigate sources of heterogeneity in the impacts of environmental actions on environmental legitimacy. Longitudinal data about 325 publicly traded U.S. firms in polluting industries support the notion that environmental actions help firms gain environmental legitimacy. However, some actions instead can harm this legitimacy if environmental performance deteriorates and the firm is subject to intense scrutiny from nongovernmental organizations. (...) Thus, an important contribution of this research is to identify conditions under which greenwashing can backfire. (shrink)

In this article, we empirically assess the impact of corporate ethical identity (CEI) on a firm's financial performance. Drawing on formulations of normative and instrumental stakeholder theory, we argue that firms with a strong ethical identity achieve a greater degree of stakeholder satisfaction (SS), which, in turn, positively influences a firm's financial performance. We analyze two dimensions of the CEI of firms: corporate revealed ethics and corporate applied ethics. Our results indicate that revealed ethics has informational worth and enhances shareholder (...) value, whereas applied ethics has a positive impact through the improvement of SS. However, revealed ethics by itself (i.e. decoupled from ethical initiatives) is not sufficient to boost economic performance. (shrink)

We theoretically discuss and empirically show how CEO power based on environmental expertise and formal influence over executives and directors, in the absence and presence of shareholder activism, spurs firms toward greener strategies. Our results support the idea that CEOs with informal power, grounded in expertise, reduce corporate environmental impact and this relationship is amplified when the CEO also enjoys formal power over the board of directors. Additionally, we found that any source of CEO power, whether informal or formal, is (...) a good catalyst for transforming shareholder activism into corporate greening. However, in the absence of such activism, only CEOs’ informal environmental expert power acts as a determinant of firm environmental performance. (shrink)

This article is a first attempt to line out the conditions under which executives might have a real self-interest in pursuing a broad stakeholder management (SM) orientation to enlarge their power. We suggest that managers have wider latitude of action under an SM approach, even when this is instrumental to financial performance. The causally ambiguity of the performance effects of idiosyncratic relationships with stakeholders not only makes SM strategy difficult for competitors to imitate but also increases managerial discretion. When managers (...) use this situation for their own benefit, they can undermine the purported goals of the SM approach. By analyzing some of the factors that might lead to such disfunctionalities, this article advances a theory of the potential dark side of SM. (shrink)

Prosocial organizations represent key actors in the quest to promote positive change, foster social impact, and revitalize cities. Notwithstanding their importance in tackling the increasing challenges threatening our society (e.g., pollution, socio-economic inequalities), these actors may not be perceived as salient in the eyes of different stakeholders, and thus their work may be jeopardized by multiple forms of resistance. Scant attention in research has been devoted to understand how prosocial organizations may acquire saliency and navigate these forms of resistance while (...) pursuing urban revitalization. We address this gap by engaging in a qualitative investigation of a Sicilian cultural center. We found that the prosocial organization in our study could navigate different occurrences of resistance and acquire saliency by enacting mechanisms that leveraged the engagement of supporting stakeholders and the idiosyncratic characteristics of place. Our study contributes to the literature about urban revitalization, prosocial organizations, and stakeholder theory—while also complementing research investigating the role of place in management. (shrink)

This paper is the Introduction to the Special Issue comprising a selection of papers submitted to the 19th IESE International Symposium on Ethics, Business and Society. The main topic of the Symposium was “Ethical Challenges in Strategic Management.” The paper presents the rationale and context of the Symposium. We begin with a brief historical overview of the evolution of the relationship between ethics and strategy. We propose four pillars that are at the core of a definition of strategy and elaborate (...) on how ethics can contribute to strategy. We present the six papers that make up this selection within the framework of the four aspects introduced in the previous section. We conclude with some proposals for further research that consider the content of the papers. (shrink)