Business Strategy and Sustainability articles
Week 1 Background
Bansal & Roth Why Companies Go Green: a model
of ecological responsiveness
Core concept: Corporate Social Responsiveness (CER)
The article defines CER as a set of corporate initiatives intended to
mitigate a firm’s impact on the natural environment. These
initiatives are not about what a firm should do, but rather about the
specific changes to products, processes and policies that reduce its
ecological footprint.
For the purpose of this study corporate ecological responsiveness is
defined as a set of initiatives: such as changes to products, processes or
policies aimed at mitigating a firm’s impact on the natural environment.
The study identifies 3 primary conceptually distinct motivations for firms
to become ecologically responsive:
1. Competitiveness: the goal is to improve long-term
profitability.
Firms motivated by competitiveness use cost-benefit analysis to choose
initiatives that provide the highest financial returns, such as energy
savings, waste reduction or green marketing to increase the market share.
Firms seek sustained advantage through lower costs or higher
revenues.
Outcome = improved reputation, process efficiencies, product reliability
2. Legitimation: driven by the desire to improve the
appropriateness of the firm’s actin within established
regulations and norms.
The focus is on compliance and survival. Firms ‘’satisfice’’ (meeting but
not exceeding standards) and often mimic the actions of successful peers
to avoid sanctions or bad publicity license to operate
Firms typically adopt an imitative or passive stance, often “satisficing”
by meeting standards rather than exceeding them to avoid sanctions,
fines or bar publicity.
These firms should focus on those influential in prescribing legitimacy,
such as government agencies, industry association and the local
community.
3. Ecological responsibility: stems from a firm’s concern for
social obligations and ethical values.
,Decisions are based on what is considered the right thing to do, often
regardless of profitability. These firms frequently follow the lead of an
internal ‘’champion’’ or follow organizational values rather than strict
financial logic.
Focusing on what is the right thing to do, regardless of whether the action
is financially optimal.
These firms often choose independent and innovative courses of
action, frequently driven by a single individual or champion within the
organization.
Outcome = higher employee morale and individual satisfaction (feel-good
factors)
3 contextual factors
Three external and internal conditions influence which of the three
motivations a firm will adopt.
1. Issue salience = the extent to which an environmental issue has
meaning for constituents, determined by its:
o Certainty (how measurable it is)
o Transparency (how easily it is linked to the firm)
o Emotivity (the emotional response it triggers
High salience drives both legitimation and competitiveness.
2. Field cohesion = the density and intensity of network ties
within an industry. Firms are under intense scrutiny and tend to act
collectively or mimic each other for legitimation.
High cohesion discourages individual competitiveness and
ecological responsibility because it forces firms to conform to the norm.
3. Individual concern = the degree to which organizational members
value the environment and have the discretion to act on those
values.
This is the primary driver for ecological responsibility and supports
legitimation when individual values align with societal expectations.
Profiles for high ecological responsiveness
The model suggests that unusually high levels of green activity occur in
three specific ‘’configurational profiles’’:
1. The caring profile = driven by individual concern magnified by
high issue salience. A powerful individual uses a visible issue to
push the firm toward deep environmental change.
2. The competitive profile = occurs when there is individual
concern but low field cohesion. Because peers aren’t watching or
mimicking them, the firm can innovate and create a green strategic
niche to gain competitive advantage.
, 3. The concerned profile = created by high field cohesion and
high issue salience. In this scenario, an entire industry acts
collectively and aggressively to protect its legitimacy and ensure the
survival of its members (e.g. the chemical or forestry industries).
This study bridges anthropocentric views (focusing on human/firm interest
like profit and legitimacy) with ecocentric views (focusing on the intrinsic
value of nature, seen in the ecological responsibility motive). It highlights
that a firm’s response is shaped by a complex interaction of individual,
organizational and institutional levels of analysis.
This article:
Moves beyond drivers: earlier research often just listed ‘’drivers’’ like
legislation or stakeholder pressure. This study goes deeper by
explaining the mechanisms that turn those pressures into specific
corporate actions.
Integrating perspectives: the model bridges economic theory
(profit-seeking), institutional theory (following norms for survival)
and individual value systems (ethics).
Anthropocentric versus ecocentric: the study highlights that while
most firms act out of human-centered interest like profit or
legitimacy, the most holistic environmental responses come from
those motivated by a sense of social and ethical obligation.
Friedman the Social Responsibility of Business is
to Increase its Profits
focus is on his core arguments against CSR, which he views a
‘’fundamental subversive doctrine’’ in a free society. Friedman contends
that when business leaders claim to have a “social conscience” beyond
profit-making, they are inadvertently undermining the basis of free
enterprise.
Business has no social conscience
Friedman argues that business as a whole cannot have responsibilities
because only people have them. Businessmen that claim that
corporations have a social conscience regarding pollution, poverty or
discrimination are, in Friedman’s view ‘’preaching pure and under
adulterated socialism’’.
The agency relationship
Friedman’s argument is built on the relationship between owners and
executives.
The executive as agent: a corporate executive is an employee of
the owners (stockholders).
Primary responsibility: the executive’s direct responsibility is to
conduct the business in accordance with the owner’s desires, which
is generally to make as much money as possible while following
the rules of the game (law and ethical custom)
, Principal versus Agent: as an individual, an executive can spend
their own time and money on social causes. However, when they do
this as an executive, there are acting as a ‘principal’ using someone
else’s money.
The taxation argument (political principle)
Friedman argues that when an executive spends corporate funds for social
ends (e.g. reducing pollution beyond what is required by law of hiring less-
qualified worker to fight poverty), they are effectively imposing taxes
and deciding how that tax money is spent.
they are effectively spending someone else’s money.
The tax: by reducing profits, the executive “taxes” the
stockholders. By raising process to cover these costs, they “tax”
the customers. By lowering wages they “tax” the employees.
o Stockholders
o Customers
o Employees
o as stakeholders
Undemocratic process: in a free society, the imposition and
expenditure of taxes are governmental functions controlled by
constitutional and judicial checks.
Illegitimate civil servant: by exercising CSR, the executive
becomes a self-appointed legislator, executive and jurist who is not
democratically elected. This shifts the allocation of scarce resources
from market mechanisms to political mechanisms.
The problem of consequences (practicality)
Friedman questions whether a businessman even can discharge social
responsibilities effectively:
Lack of expertise: an executive is an expert in a running business,
not in solving complex problems like inflation of environmental
science.
o They have no way of knowing how much of a “cost” is justified
or what the specific impact of their spendings will be.
Accountability: If an executive’s social actions reduce profits, they
may be fired by stockholders, or their customers and employees
may desert them for less ‘’scrupulous’’ competitors.
Acceptance of socialism: the doctrine of social responsibility
suggests that political mechanisms, rather than market
mechanisms, are the appropriate way to allocate scarce resources.
Friedman believes this leads to a centrally controlled system and the
eventual “iron fist of government bureaucrats”.
Hypocritical window-dressing
Friedman acknowledges that many socially responsible actions are actually
in a firm’s long-term self-interest.
Example a major employes in a small town might improve local
government or amenities to attract better employees.
Week 1 Background
Bansal & Roth Why Companies Go Green: a model
of ecological responsiveness
Core concept: Corporate Social Responsiveness (CER)
The article defines CER as a set of corporate initiatives intended to
mitigate a firm’s impact on the natural environment. These
initiatives are not about what a firm should do, but rather about the
specific changes to products, processes and policies that reduce its
ecological footprint.
For the purpose of this study corporate ecological responsiveness is
defined as a set of initiatives: such as changes to products, processes or
policies aimed at mitigating a firm’s impact on the natural environment.
The study identifies 3 primary conceptually distinct motivations for firms
to become ecologically responsive:
1. Competitiveness: the goal is to improve long-term
profitability.
Firms motivated by competitiveness use cost-benefit analysis to choose
initiatives that provide the highest financial returns, such as energy
savings, waste reduction or green marketing to increase the market share.
Firms seek sustained advantage through lower costs or higher
revenues.
Outcome = improved reputation, process efficiencies, product reliability
2. Legitimation: driven by the desire to improve the
appropriateness of the firm’s actin within established
regulations and norms.
The focus is on compliance and survival. Firms ‘’satisfice’’ (meeting but
not exceeding standards) and often mimic the actions of successful peers
to avoid sanctions or bad publicity license to operate
Firms typically adopt an imitative or passive stance, often “satisficing”
by meeting standards rather than exceeding them to avoid sanctions,
fines or bar publicity.
These firms should focus on those influential in prescribing legitimacy,
such as government agencies, industry association and the local
community.
3. Ecological responsibility: stems from a firm’s concern for
social obligations and ethical values.
,Decisions are based on what is considered the right thing to do, often
regardless of profitability. These firms frequently follow the lead of an
internal ‘’champion’’ or follow organizational values rather than strict
financial logic.
Focusing on what is the right thing to do, regardless of whether the action
is financially optimal.
These firms often choose independent and innovative courses of
action, frequently driven by a single individual or champion within the
organization.
Outcome = higher employee morale and individual satisfaction (feel-good
factors)
3 contextual factors
Three external and internal conditions influence which of the three
motivations a firm will adopt.
1. Issue salience = the extent to which an environmental issue has
meaning for constituents, determined by its:
o Certainty (how measurable it is)
o Transparency (how easily it is linked to the firm)
o Emotivity (the emotional response it triggers
High salience drives both legitimation and competitiveness.
2. Field cohesion = the density and intensity of network ties
within an industry. Firms are under intense scrutiny and tend to act
collectively or mimic each other for legitimation.
High cohesion discourages individual competitiveness and
ecological responsibility because it forces firms to conform to the norm.
3. Individual concern = the degree to which organizational members
value the environment and have the discretion to act on those
values.
This is the primary driver for ecological responsibility and supports
legitimation when individual values align with societal expectations.
Profiles for high ecological responsiveness
The model suggests that unusually high levels of green activity occur in
three specific ‘’configurational profiles’’:
1. The caring profile = driven by individual concern magnified by
high issue salience. A powerful individual uses a visible issue to
push the firm toward deep environmental change.
2. The competitive profile = occurs when there is individual
concern but low field cohesion. Because peers aren’t watching or
mimicking them, the firm can innovate and create a green strategic
niche to gain competitive advantage.
, 3. The concerned profile = created by high field cohesion and
high issue salience. In this scenario, an entire industry acts
collectively and aggressively to protect its legitimacy and ensure the
survival of its members (e.g. the chemical or forestry industries).
This study bridges anthropocentric views (focusing on human/firm interest
like profit and legitimacy) with ecocentric views (focusing on the intrinsic
value of nature, seen in the ecological responsibility motive). It highlights
that a firm’s response is shaped by a complex interaction of individual,
organizational and institutional levels of analysis.
This article:
Moves beyond drivers: earlier research often just listed ‘’drivers’’ like
legislation or stakeholder pressure. This study goes deeper by
explaining the mechanisms that turn those pressures into specific
corporate actions.
Integrating perspectives: the model bridges economic theory
(profit-seeking), institutional theory (following norms for survival)
and individual value systems (ethics).
Anthropocentric versus ecocentric: the study highlights that while
most firms act out of human-centered interest like profit or
legitimacy, the most holistic environmental responses come from
those motivated by a sense of social and ethical obligation.
Friedman the Social Responsibility of Business is
to Increase its Profits
focus is on his core arguments against CSR, which he views a
‘’fundamental subversive doctrine’’ in a free society. Friedman contends
that when business leaders claim to have a “social conscience” beyond
profit-making, they are inadvertently undermining the basis of free
enterprise.
Business has no social conscience
Friedman argues that business as a whole cannot have responsibilities
because only people have them. Businessmen that claim that
corporations have a social conscience regarding pollution, poverty or
discrimination are, in Friedman’s view ‘’preaching pure and under
adulterated socialism’’.
The agency relationship
Friedman’s argument is built on the relationship between owners and
executives.
The executive as agent: a corporate executive is an employee of
the owners (stockholders).
Primary responsibility: the executive’s direct responsibility is to
conduct the business in accordance with the owner’s desires, which
is generally to make as much money as possible while following
the rules of the game (law and ethical custom)
, Principal versus Agent: as an individual, an executive can spend
their own time and money on social causes. However, when they do
this as an executive, there are acting as a ‘principal’ using someone
else’s money.
The taxation argument (political principle)
Friedman argues that when an executive spends corporate funds for social
ends (e.g. reducing pollution beyond what is required by law of hiring less-
qualified worker to fight poverty), they are effectively imposing taxes
and deciding how that tax money is spent.
they are effectively spending someone else’s money.
The tax: by reducing profits, the executive “taxes” the
stockholders. By raising process to cover these costs, they “tax”
the customers. By lowering wages they “tax” the employees.
o Stockholders
o Customers
o Employees
o as stakeholders
Undemocratic process: in a free society, the imposition and
expenditure of taxes are governmental functions controlled by
constitutional and judicial checks.
Illegitimate civil servant: by exercising CSR, the executive
becomes a self-appointed legislator, executive and jurist who is not
democratically elected. This shifts the allocation of scarce resources
from market mechanisms to political mechanisms.
The problem of consequences (practicality)
Friedman questions whether a businessman even can discharge social
responsibilities effectively:
Lack of expertise: an executive is an expert in a running business,
not in solving complex problems like inflation of environmental
science.
o They have no way of knowing how much of a “cost” is justified
or what the specific impact of their spendings will be.
Accountability: If an executive’s social actions reduce profits, they
may be fired by stockholders, or their customers and employees
may desert them for less ‘’scrupulous’’ competitors.
Acceptance of socialism: the doctrine of social responsibility
suggests that political mechanisms, rather than market
mechanisms, are the appropriate way to allocate scarce resources.
Friedman believes this leads to a centrally controlled system and the
eventual “iron fist of government bureaucrats”.
Hypocritical window-dressing
Friedman acknowledges that many socially responsible actions are actually
in a firm’s long-term self-interest.
Example a major employes in a small town might improve local
government or amenities to attract better employees.
