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Stakeholder Influences and Organization Responses: A Case Study of Corporate Social Responsibility Suspension

Published online by Cambridge University Press:  15 July 2015

Yuhuan Liu ,
Tianli Feng  and
Suichuan Li
Yuhuan Liu
Affiliation:
University of Electronic Science and Technology of China, China
Tianli Feng*
Affiliation:
University of Electronic Science and Technology of China, China
Suichuan Li
Affiliation:
University of Electronic Science and Technology of China, China
*
Corresponding author: Tianli Feng ([email protected])
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Abstract

In this study, we use the context of corporate social responsibility (CSR) suspension and provide a case study from China to show how conditions allowed shareholders to seize power and alter a firm's mission. We show that managers reacted to a change in shareholder power by changing their priorities to correlate with shareholder influences. Our dynamic model first highlights the importance of precipitating events that allowed shareholders to seize power. In response, managers rebalanced their priorities, paid more attention to the shareholders who demanded higher profits, and suspended ethical and discretionary responsibilities as a result. We further present evidence that CSR suspension subsequently harms relationships between stakeholders and threatens firm survival. We contribute to stakeholder theory by providing a dynamic model for interpreting stakeholder influences and managers’ subsequent responses. We add to corporate social responsibility studies by providing a more nuanced understanding of CSR suspension.

Keywords

corporate social responsibilityCSR suspensionprecipitating eventstakeholder influence
Type
Special Issue Articles
Information
Management and Organization Review , Volume 11 , Issue 3: Special Issue Building Sustainable Organizations in China , September 2015 , pp. 469 - 491
Copyright
Copyright © The International Association for Chinese Management Research 2015 

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