Signaling without Certification: The Critical Role of Civil Society Scrutiny

Kayser, Susan A.; Maxwell, John W.; Toffel, Michael W.

doi:10.2139/ssrn.2480097

Cited by 13 publications

(10 citation statements)

References 88 publications

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“…, p. 45; Kayser et al . ; Zerbini , p. 6), but these studies focused on single certifications and ignored the network aspect (which allows firms to produce an enhanced signal by combining certifications). We have also shown that stronger CSR performance correlates positively with higher eigencentrality values, even when the degree of the firms is kept fixed.…”

Section: Discussion and Policy Implicationsmentioning

confidence: 99%

“…Our holistic empirical approach goes beyond the current literature, which consists mostly of piecemeal studies of single CSR schemes or sectors (Dashwood ; Fransen & Burgoon ; Kayser et al . ; Berliner & Prakash ) . Another novelty of our empirical strategy is that it reaches past a mere topological analysis by seeking to examine the regulatory impact of the network as a whole (Bartley & Smith ; Green ; Fransen et al .…”

Section: Introductionmentioning

confidence: 99%

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Governance through global networks and corporate signaling

Perez

Cohen

Schreiber

2018

Regulation & Governance

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This article exposes a new form of global governance based on an emergent network of corporate social responsibility (CSR) schemes. Our study is the first to uncover the network structure of this system, based on a dataset that includes 61 transnational CSR schemes and 31,987 firms. We demonstrate that the network exhibits a significant level of cohesiveness, despite having evolved without any form of hierarchical control. Drawing on a social network analysis, we find a positive correlation among the sustainability performance of the firms, their membership in CSR schemes, and their network characteristics. We show that membership in multiple schemes and the firms' position in the CSR-schemes network constitute credible predictors of their sustainability performance, generating a separating equilibrium that distinguishes high from low CSR performers. We develop a model that explains the effectiveness of the CSR-schemes network based on the synergistic properties of the network and on a distinctive signaling dynamic. Our findings highlight the potential contribution of CSR to the resolution of global governance dilemmas.

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Section: Discussion and Policy Implicationsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Governance through global networks and corporate signaling

Perez

Cohen

Schreiber

2018

Regulation & Governance

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“…Similarly, if a firm voluntarily withdraws from the Compact, the UNGC announces the withdrawal publicly. By promoting scrutiny by civil society, programs such as UNGC can also mitigate adverse selection even without third-party certification (Kayser et al 2016).…”

Section: Csr Participation Data From United Nations Global Compactmentioning

confidence: 99%

“…Second, UNGC has a unified set of principles that all participants are expected to commit to and regularly report their progress on (annually in most cases), thereby mitigating issues related to firm-level heterogeneities in CSR standards that are inherent in the voluntary disclosure data, such as press releases. Although UNGC has no formal enforcement provisions, it publicizes firms' progress reports to encourage monitoring from external stakeholders, such as NGOs (Kayser et al 2016). Moreover, communications are monitored annually by the UN, and failure to engage in continuous communications will result in public expulsion from the program.…”

Section: Introductionmentioning

confidence: 99%

Does Corporate Social Responsibility Benefit Society?

2017

Proceedings

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In short, it depends on the ownership type. We construct an event-based outcome measure of firm-level environmental, social, and governance (ESG) impact for public and private firms globally from 2007 to 2015 using data from RepRisk. Then, we measure the societal impact of corporate social responsibility (CSR) engagements using participation in the United Nations Global Compact as a proxy. We demonstrate a striking difference between public and private firms: while private firms significantly reduce their negative ESG incident levels after CSR engagements, public firms fail to do so. We attribute this difference to the conflicts of interest between shareholders and stakeholders, which are more pronounced in public firms than private firms. We empirically validate this interpretation through examination of scenarios with varying levels of conflict intensity. We find that for issues types with higher conflict intensity such as collective bargaining, supply-chain-related issues, and controversial products and services, the performance gap between public and private firms is even more severe. For issue types with lower conflict intensity such as tax evasion, executive compensation, and overuse and wasting of resources, the performance gap is smaller and even public companies may do better post-commitment. Moreover, the performance gap is also wider for upstream firms than for downstream firms in supply chains. We also rule out a host of alternative interpretations related to time trends and endogeneity issues. Our results show that existing CSR engagements may not necessarily lead to better societal outcomes, and that policy interventions aimed at aligning the interests of different parties can potentially improve the overall outcome.

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“…To operationalize signaling clarity, we differentiate clubs that only outline a code of conduct from clubs that offer a certification (Kayser, Maxwell, and Toffel 2015 ). In the for-profit sector, a prominent example of the former is the United Nations Global Compact (Kell and Ruggie 1999 ).…”

Section: Variation In Signaling Strengthmentioning

confidence: 99%

Regulation by Reputation: Monitoring and Sanctioning in Nonprofit Accountability Clubs

Tremblay-Boire

Prakash

Gugerty

2016

Public Administration Review

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Nonprofits seek to enhance their reputation for responsible management by joining voluntary regulation mechanisms such as accountability clubs. Because external stakeholders cannot fully observe nonprofits' compliance with club obligations, clubs incorporate mechanisms to monitor compliance and impose sanctions. Yet including monitoring and sanctioning mechanisms increases the cost of club membership for nonprofits. What factors account for the variation in the strength of monitoring and sanctioning mechanisms in voluntary accountability clubs? An analysis of 224 clubs suggests that stringent monitoring and sanctioning mechanisms are more likely in fund-raising-focused clubs, clubs that offer certification (as opposed to only outlining a code of conduct), and clubs with greater longevity. The macro context in which clubs function also shapes their institutional design: clubs in OECD countries and clubs with global membership are less likely to incorporate monitoring and sanctioning mechanisms than clubs in non-OECD countries and single-country clubs, respectively. Practitioner Points• Th e greater role of nonprofi ts in policy has invited concerns about their managerial practices and accountability. • If stakeholders do not fi nd accountability clubs of the appropriate design, they can help in establishing ones that suit their preferences. • Stakeholders evaluating club design should recognize that high-cost clubs do not necessarily contribute to superior public policy if they attract too few participants. • Voluntary accountability clubs operate in the context of public law. If clubs fi ll governance gaps, the stringency of monitoring and sanctioning mechanisms will diff er across jurisdictions, depending on the levels of monitoring and sanctioning off ered by public law. • Stakeholders must evaluate the strength of accountability clubs while keeping in mind the quality of public law within which nonprofi ts function.

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Signaling without Certification: The Critical Role of Civil Society Scrutiny

Cited by 13 publications

References 88 publications

Governance through global networks and corporate signaling

Governance through global networks and corporate signaling

Does Corporate Social Responsibility Benefit Society?

Regulation by Reputation: Monitoring and Sanctioning in Nonprofit Accountability Clubs

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