Rethinking business growth through the case of social enterprises

[We’re pleased to welcome authors Thomas Bauwens of Utrecht University, Benjamin Huybrechts of Emlyon Business School, and Frédéric Dufays of KU Leuven. They recently published an article in Organization & Environment entitled “Understanding the Diverse Scaling Strategies of Social Enterprises as Hybrid Organizations: The Case of Renewable Energy Cooperatives,” which is currently free to read for a limited time. Below, they reflect on the motivations and innovations of their research:]

What motivated you to pursue this research?

Economic organizations do not always pursue endless business growth. Rather, they may focus on “scaling” or, in other words, strategies to maximize societal impact that include, but are not restricted to, business growth. Arguably, this holds especially true for social enterprises, i.e. companies that develop economic activities with the explicit mission of addressing social or environmental issues and that reinvest their profits as a means to achieving this mission rather than as an end in itself.

Looking at renewable energy cooperatives in Flanders, a specific type of social enterprise which enables citizens to collectively own and manage renewable energy projects at the local level, we observed that these organizations adopted contrasted scaling strategies. Some strategies entailed a certain degree of conventional business growth (growing the membership, investing in large renewable energy production assets, etc.), while others were more disconnected from it and aimed at diffusing social innovations or deepening social impact, for example tackling energy poverty and helping energy-poor households reducing their energy bills through energy conservation and efficiency measures. Some organizations also clearly combined (moderate) organizational growth with open diffusion to maximize societal impact. This observation motivated us to shed light on the rationale behind this diversity of scaling strategies.

Were there any specific external events—political, social, or economic—that influenced your decision to pursue this research?

With increasing awareness of environmental problems amongst society in recent years, the role of community- or citizen-led sustainable initiatives, including renewable energy cooperatives, has attracted growing attention. For instance, in 2016 the European Commission recognized for the first time, in a proposed legislative measure of the Clean Energy Package, the role of community-based energy projects in the energy transition. These initiatives, however, can oftentimes face several challenges with growth. For example, when they seek financing to scale their impact, they run the risk of mission drift because investors often have demands that are contradictory with their values.

In what ways is your research innovative, and how do you think it will impact the field?

We find that the different scaling strategies can be understood through the choices made at the founding stage, in particular, how the organizational mission is positioned on the continuum between mutual interest, i.e. serving the interests of the members, and general interest, i.e. serving the broader interest of society or specific disadvantaged target groups. Moreover, through examining three organizations active in a common field, we find mutual influences, as the scaling choices of each organization are also influenced by the positioning of the other organizations in the field. Therefore, we highlight how social enterprises may collaborate to collectively achieve the pursuit of their multiple missions.

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Listening to the Heart or the Head? Exploring the “Willingness Versus Ability” Succession Dilemma

[We’re pleased to welcome authors Melanie Richards of University of Bath, Nadine Kammerlander of WHU–Otto Beisheim School of Management, and Thomas Zellweger of the University of St. Gallen. They recently published an article in the Family Business Review entitled “Listening to the Heart or the Head? Exploring the “Willingness Versus Ability” Succession Dilemma,” which is currently free to read for a limited time. Below, they reflect on the influences and possible impact of this research:]

What motivated you to pursue this research?

When talking to entrepreneurs, we increasingly realized that finding a willing and able successor from the family was often a challenge. Often, the incumbents reported about very capable children who were, however, not willing to take over the business but wanted to start a different career. In other cases the successors showed willingness, but lacked the ability, according to their parents. Thus, we started to wonder whether willingness or ability was more important to the incumbents.

Were there any specific external events—political, social, or economic—that influenced your decision to pursue this research?

In the year 2019, succession is generally not considered a “hot topic” – neither in academia nor in the public press. Yet it is of utmost relevance. Each year, tenthousands of small- and medium-sized (family) business are up for succession in Germany and Switzerland only. Those businesses are the backbone of our economy, they provide a large number of job positions and trainee jobs. Hence, keeping them up and alive should be of interest not only for incumbents, but also for politicians and basically everyone interested in the continued prosperity of the economy. As such, I find it particularly important to understand how successor decisions and succession decisions are made. I hope that our study on successor preferences makes it clear that there are many important research gaps left in the field of succession and that they are worth being closed.

In what ways is your research innovative, and how do you think it will impact the field?

In this study, we provided a scenario – or case vignette – to the respondents of our study. That is, we describe a specific retirement situation and availability of succession candidates to them and ask them whom they would choose. Such survey based “policy capturing” has several advantages over traditional, questionnaire-based research asking for past successions or asking for intentions. The big advantage is that we can really learn about preferences here, which are undistorted by the specific situation of the entrepreneur. Thus, they help us to build up a better conceptualization and theorizing of how the entrepreneurs make sense and decide.

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The Selective Use of Graphical Information in Corporate Annual Reports

[We’re pleased to welcome authors Andrea Melis and Simone Aresu of the Università degli Studi di Cagliari. They recently published an article in the International Journal of Business Communication entitled “Analyst Following, Country’s Financial Development, and the Selective Use of Graphical Information in Corporate Annual Reports,” which is currently free to read for a limited time. Below, they briefly describes their research and its significance.

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What motivated you to pursue your research?

Data visualization is a buzzword in the corporate world today. The use of graphs is widespread in corporate reports because graphs are eye-catching and easy-to-read communication tools. They are used, for instance, in financial and sustainability reports, presentations of quarterly results, and corporate websites. Graphs are also one of the few formats in financial reporting where the preparer has an ample discretion both in the content and the design. Previous research has shown that graphs are used for impression management purposes, i.e. they systematically provide a favorable impression of the company’s results. However, no prior study has investigated whether and how the demand for information at the country-level and firm-level influences the likelihood of impression management via graphs. The demand for information might, on the one hand, exert a ‘monitoring’ effect reducing the opportunity for self-serving, non-neutral, presentations. On the other hand, it creates more pressure on the preparer to provide a favorable communication of the company’s results. The study has tried to fill this gap, by conducting a longitudinal analysis on the KPI graphs in the annual reports of 200 large European companies.

Were there any specific external events—political, social, or economic—that influenced your decision to pursue this research?

The major economic and social event that influenced our research was the global financial crisis. This event drove our curiosity in investigating the role of the demand for information on impression management during this period of economic and financial instability. The single company’s financial results were not necessarily affected by the crisis. However, its reporting choices were likely to be affected as companies, and their senior managers, were exposed to intense public scrutiny and reputational threats.

In what ways is your research innovative, and how do you think it will impact the field?

We found evidence that a higher demand for information, at both country and firm-levels, serves as an incentive, rather than as a curb, for a selective use of KPI graphs in annual reports. Companies are more likely to use KPI graphs selectively in those contexts where the pressure to perform is higher, i.e. in highly financially developed countries and/or when companies have a higher analyst coverage. Even when unable to affect the most sophisticated users, self-presentations can help preparers and companies to control the impressions of themselves, with self-enhancing and self-confirming messages. The study contributes to the literatures on impression management and visual language in corporate communication by showing that preparers change their communication strategies when the financial community (at both country and firm-levels) exerts a stronger pressure to perform. The study also offers practical implications. We suggest annual report readers to be aware that companies can use graphs selectively without providing a comparable, neutral account of their performance in those contexts where the pressure to perform is higher. We also suggest policymakers a clear guidance on graphs’ usage within corporate reporting.

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Does Wealth Matter for Responsible Investment?

[We’re pleased to welcome authors Trond Døskeland and Lars Jacob Tynes Pedersen of the NHH Norwegian School of Economics. They recently published an article in Business & Society entitled “Does Wealth Matter for Responsible Investment? Experimental Evidence on the Weighing of Financial and Moral Arguments,” which is currently free to read for a limited time. Below, they reflect on the motivations and challenges of this research:]

Abstract

Responsible investment is increasingly prevalent, and both financial and moral concerns can drive such investment. In this article, we investigate how responsible investors of different wealth weigh financial and moral arguments. Prior research on different factors that may co-determine responsible investment behavior yield competing predictions about the influence of personal wealth on investment. We conduct a large-scale natural field experiment on responsible investment, wherein we treat investors with financial, moral and no arguments, respectively. We find that there is a statistically and economically significant difference in responsiveness to financial and moral arguments between investors of different wealth. Specifically, financial arguments are more effective than are moral arguments for high wealth investors but not for low wealth investors, and the effect is particularly high for the wealthiest investors. The findings hold for several different measures of wealth. Our findings contribute to the understanding of the moderating effect of wealth on responsible investment choice. Furthermore, these insights may enable more fine-tuned strategies to stimulate responsible investment among different individual investor segments.

What motivated you to pursue this research?

We are two colleagues – one finance scholar and one business ethics scholar – who suddenly found ourselves working together at the same department. At the time, responsible investment was taking off in Norway, both as a consequence of the early efforts of the Norwegian Sovereign Wealth fund and their pioneering responsible investment efforts, and in the market for private individual investors. We realized that our complementing research interests and knowledge made it possible for us to do interesting work on this emerging topic together.

What has been the most challenging aspect of conducting your research? Were there any surprising findings?

It is challenging to conduct experimental research in close collaboration with companies, because it requires an alignment of the objectives of the research team and the managers of the company. Our field experiment on responsible investment was carried out in the Norwegian bank Skandiabanken. We were fortunate that the managers of the company really valued doing empirical research practice, and we succeeded in designing a project that had research value from a theoretical point of view and value for the company in practical terms. However, typically the time horizons of researchers and business managers are different, and we have different “currencies” – they want actionable insights that can inform business decisions, while our goal is scientific publication. However, we believe that we managed to achieve both objectives in this study.

In what ways is your research innovative, and how do you think it will impact the field?

We run large-scale natural field experiments to understand the decisions of individuals and firms, and we believe that this methodology is very valuable (and still underexploited) to study questions relevant to business and society. We were happy to see that the journal Business & Society called for more experimental work in a recent piece by the journal’s editors, and we hope to see many more field experiments in this field.

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A Different Perspective on the Nonfamily vs. Family CEO Debate

[We’re pleased to welcome authors Rüveyda Kelleci of Hasselt University, Frank Lambrechts of Hasselt University, Wim Voordeckers of Hasselt University, and Jolien Huybrechts of Maastricht University. They recently published an article in the Family Business Review entitled “CEO Personality: A Different Perspective on the Nonfamily Versus Family CEO Debate,” which is currently free to read for a limited time. Below, they reflect on the inspiration for conducting this research:]

What motivated you to pursue this research?

Current family business research on family firm CEOs has mainly focused on the characteristic of “family kinship” to explain the differences and the performance effects of nonfamily vs. family CEOs; however, such research has neglected other aspects of CEOs that may better explain their behavior. Indeed, we argue that the strategy and success of the family firm critically depends on the leadership behavior of the firm’s CEO, which is largely driven by CEO personality. Given that CEO personality has been largely unexplored in the family business domain, we wanted to address this substantial knowledge gap. Therefore, based on a unique, hand-collected dataset, we examined the personality traits of nonfamily and family CEOs in privately held Belgian family firms.

In what ways is your research innovative, and how do you think it will impact the field?

Our research is one of the only studies to empirically examine the very hard to come by data on personality of family firm CEOs. Therefore, our study can serve as a foundation for future research in this unusual, yet important area. We offer a fresh new perspective on the debate about nonfamily vs. family CEOs and thereby alter the way in which differences between the two CEO types are commonly viewed. We argue that family kinship alone cannot fully explain or predict the differences between nonfamily and family CEOs and that we must incorporate their personalities. We find significant differences between nonfamily and family CEOs with regard to nine personality traits: independent minded, democratic, data rational, behavioral, detail conscious, conscientious, relaxed, worrying, and trusting. The findings suggest a very balanced personality profile for nonfamily CEOs and a rather strong-willed personality for family CEOs. Our findings also reveal several personality traits of nonfamily CEOs that are significantly associated with firm financial performance. Surprisingly, for family CEOs, we find no such indications. Moreover, our results call into question some assumptions in the literature about how family CEOs and nonfamily CEOs differ and provide a deeper understanding of prior work. We hope our study will become an important springboard for future research on CEO personality in family firms.

What advice would you give to new scholars and incoming researchers in this particular field of study?

One approach to advance our knowledge of family firm CEOs is to integrate family business research with insights from research on personality. This can help family business scholars to deepen and/or question current assumptions and predictions about differences in behavior between family and nonfamily CEOs. Moreover, as prior research has found that the success of the family firm reflects CEO personality, we argue that a deeper understanding of the personality traits of CEOs in family firms will further the debate on the conduct and performance of family firms. The findings of our study provide numerous fruitful avenues for future research.

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When Does Corporate Social Performance Pay for International Firms?

[We’re pleased to welcome author Alan Muller of the University of Groningen. Dr. Muller recently published an article in Business & Society entitled “When Does Corporate Social Performance Pay for International Firms?,” which is currently free to read for a limited time. Below, Dr. Muller reflects on the impact and innovations of this research:]

What motivated you to pursue this research?

I was inspired to pursue this research because I wanted to better integrate the literature on corporate social performance and internationalization. There is a rich body of research on the link between social performance and financial performance, and an equally rich body of research on the link between internationalization and financial performance. Yet thus far the two had not been connected in any meaningful way. This paper seemed like a great opportunity to link these two streams.

Were there any specific external events—political, social, or economic—that influenced your decision to pursue this research?

The financial crisis that began in 2008 had profound consequences for both corporate social performance and internationalization. Society’s demands for greater responsibility grew louder while it became painfully clear that international success should not be taken for granted. In a way, the crisis intensified scrutiny of both realms, and led to increased recognition that we need to attend to both the costs as well as the (highly uncertain) benefits associated with both. I began thinking that the costs and benefits of both are likely mutually contingent and unequally distributed.

What has been the most challenging aspect of conducting your research? Were there any surprising findings?

The challenge is not so much in the empirics as it is in the positioning of the research. Given the split between the social responsibility literature and the international business literature, the question is: to which audience should the paper be aimed at? To be honest, I positioned it initially as a contribution to the international business literature, but in hindsight it fits better as a business and society paper.

In what ways is your research innovative, and how do you think it will impact the field?

I hope it will function as a bridge between the two bodies of scholarship, and spur more rigorous dialogue with the aim of linking the two more systematically. Because in this day and age, I do not know how the performance effects of social performance and internationalization could be conceptualized in isolation. I also incorporated a few robust analytical techniques that I hope will inspire others.

What did not make it into your published manuscript that you would like to share with us?

I initially had a role in mind for firms’ consumer orientation, because I expected that the legitimacy effects of social performance would work differently for consumer-oriented industries. I incorporated consumer orientation as an additional moderator to an already moderated U-shaped curve. My findings indicated that consumer-oriented firms had even more difficulty benefiting from their social performance internationally, which made sense to me. However, all my friendly reviewers told me that a four-way interaction was a bridge too far!

What advice would you give to new scholars and incoming researchers in this particular field of study?

Follow your passion! But remember that your story, no matter how inspiring to you, will not sell itself. Be clear who is in the audience you are speaking to, and how your story matters for them.

What is the most important/ influential piece of scholarship you’ve read in the last year?

This is difficult, but probably “The Role of Short-Termism and Uncertainty Avoidance in Organizational Inaction on Climate Change”, by Slawinski, Pinkse, Busch, & Banerjee (Business & Society, 2017): https://doi.org/10.1177%2F0007650315576136

A close second would be “Do‐no‐harm versus do‐good social responsibility: Attributional thinking and the liability of foreignness”, by Crilly, Na, and Jiang (Strategic Management Journal, 2016): https://doi.org/10.1002/smj.2388

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The Transformational Change Challenge of Memes Around Marriage Equality

[We’re pleased to welcome authors Sandra Waddock of Boston College, Steve Waddell of SDG Transformations Forum, and Paul S. Gray of Boston College. They recently published an article in Business & Society entitled “The Transformational Change Challenge of Memes: The Case of Marriage Equality in the United States,” which is currently free to read for a limited time. Below, they reflect on the impact and innovations of this research:]

Shifting norms around marriage equality in the US provided a perfect setting to look at the role of changing memes in a major cultural transformation and draw insights from the process. Marriage equality—or the right of lesbian, gay, bisexual, and transgender (LGBT) individuals to marry—literally transformed the role of same sex relationships. Such relationships were outlawed and considered a “mental disorder” by the American Psychiatric Association until 1974. In 2015, they were brought within the social pillar of marriage across the nation when the US Supreme Court ruled marriage equality a constitutional right. We used an abbreviated case study with empirical work on core memes associated with the transformation used in a variety of public media.

Memes are core units of culture, according to Susan Blackmore who studied them extensively. They include widely replicated words, phrases, symbols, and images. We studied how the usage of key phrases or memes shifted in the media and scholarly work. Memes studied included gay rights, same-sex partner, civil union, gay marriage, freedom to marry, domestic partner, same-sex marriage, and marriage equality. The thinking behind our study, articulated by Waddock earlier, was that memes provide the foundation for societal narratives that influence thinking, attitudes, and ultimately behaviors, policies, and practices. We wanted to know whether the memes associated with marriage equality had shifted along with activists’ strategies to inform the public narrative.

The results, presented in a series of charts, suggest that indeed transformational change towards marriage equality in the US was accompanied by corresponding shifts in the popular use of different terminology. The chart below illustrates these shifts, highlighting the use of eight different memes describing what ultimately was known as marriage equality from 1970-2015 in the US’s two leading newspapers, The New York Times and The Washington Post. As activists focused in on marriage equality, three key memes begin to take off: first, gay marriage, followed by same sex marriage, and in the ten years before the Supreme Court’s ruling, marriage equality. Other more in-your-face terms like gay rights, which had earlier been the leading meme, while still in use, experienced a decline in usage over the same period.
Systemic transformation like marriage equality is never easy and is fraught with conflict as the case attests. What is too often overlooked, however, is the vital role that the underlying language—or memes—plays in shifting the contextual narrative, which in turn can help change attitudes and ultimately behaviors, policies, and practices as happened in this instance. Nine particular insights into transformation are identified in the article.

Further reading:
Blackmore, S. (2000). The meme machine (Vol. 25). Oxford, UK: Oxford Paperbacks.
Waddock, S. (2015). Reflections: Intellectual shamans, sensemaking, and memes in large system change. Journal of Change Management, 15(4), 259-273.

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