ATTENDING CONFLICTING LOGICS WHEN ‘DOING GOOD’: THE INFLUENCE OF EXTERNAL FIT OF CSR ACTIVITIES ON FINANCIAL PERFORMANCE
FABIO FONTI, RENNES SCHOOL OF BUSINESS
(CO-AUTHOR NONTUTHUZELO MASHABA, RENNES SCHOOL OF BUSINESS)
Organizations increasingly face the challenge to comply with multiple and often conflicting logics in many of their activities, as they aim to cater to their multiple stakeholders. Yet, our understanding of how the interplay between such logics affects their performance is still limited. We investigate this issue in the context of Corporate Social Responsibility (CSR) activities, a domain where such conflict routinely plays out. Being involved in CSR activities is a strategic issue for most organizations, with research showing its positive link with financial performance. Yet, engaging in CSR activities consistent with a community-focused logic often proves challenging for managers, as some stakeholders see such activities as contradictory to the business profit maximization logic. We clarify this apparent paradox by suggesting that the type of CSR activities companies engage in moderates the relationship between CSR activities and financial performance. Specifically, we argue that the extent to which CSR activities exhibit external fit with the industry’s business logic – i.e., are closer to the set of business activities typical of the industry to which the company belongs – will positively moderate the CSR-performance link. We also believe CSR activities exhibiting external fit with the industry’s community logic – i.e., that are more in line with the type of CSR activities other companies in the same industry typically engage in – will negatively moderate such relationship. Leveraging a dataset comprising the S&P 100 companies from 2002 to 2015, we examine the fit between CSR activities and industry-specific business and community logics using textual analysis (LIWC) and find support for our hypotheses. In addition to introducing the concept of external fit with different types of industry-specific logics, we contribute to the literature on institutional logics by suggesting how managers dealing with conflicting logics could turn a perceived dualism into a duality, thus benefitting from their simultaneous adherence to multiple logics.
Fabio Fonti is Full Professor in the Management & Organization area at Rennes School of Business. He received his PhD from the University of Illinois at Urbana-Champaign and held full-time appointments at Boston College and the Free University of Bozen-Bolzano. His research focuses primarily on the antecedents and consequences of intra- and interorganizational networks, and specifically on network evolution, network embeddedness, and network multiplexity. He is also interested in how networks affect – or are affected by – categorization processes, managerial cognition, and design. Recently, he has been working on the effects of (in)congruency across multiple institutional logics and/or classifications on organizations and/or individuals. His most recent projects look at the cross-audience effect of categorization processes, the role design processes play for idea generation and selection, and the implication of firms’ adherence to multiple (in)consistent logics on their performance. His papers have been published in Strategic Management Journal, Strategic Organization, and Advances in Strategic Management, among others. His work has been recognized with multiple best teacher, best paper, and best reviewer awards.
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