Does corporate social responsibility put reputation at risk by inviting activist targeting? An empirical test among European SMEs.

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Abstract

Corporate social responsibility (CSR) is believed to improve a company’s reputation. However,CSR may also put reputation at risk by making the company a more attractive target for activists’campaigns. We test this effect on a sample of 1355 European small and medium-sized enterprises(SMEs). We find that CSR increases the future probability that an SME’s CSR is monitored by localnon-governmental organizations (NGOs) and that this moderates criticism of the SME’s CSR. Theresults imply that SMEs that only halfheartedly implement CSR are more vulnerable to publiccriticism than SMEs that do not engage in CSR at all. It is advisable that SMEs only positionthemselves as sustainable companies if their environmental policies have proven to contributeto sustainable development. When initiating stakeholder engagement, SMEs should preventdisappointment by tempering stakeholders’ expectations, as NGOs participating in a stakeholderdialogue can use inside information to raise public criticism.
Original languageEnglish
Pages (from-to)1-13
Number of pages13
JournalCorporate Social Responsibility and Environmental Management
Volume25
Issue number1
DOIs
Publication statusPublished - Jan 2018

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small and medium-sized enterprise
social responsibility
reputation
targeting
nongovernmental organization
non-governmental organization
stakeholder
criticism
test
corporate social responsibility
Small and medium-sized enterprises
Empirical test
Targeting
Corporate Social Responsibility
environmental policy
sustainable development

Keywords

  • CSR
  • environmental policies
  • NGOs
  • reputation
  • SMEs
  • stakeholder engagement

Cite this

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title = "Does corporate social responsibility put reputation at risk by inviting activist targeting? An empirical test among European SMEs.",
abstract = "Corporate social responsibility (CSR) is believed to improve a company’s reputation. However,CSR may also put reputation at risk by making the company a more attractive target for activists’campaigns. We test this effect on a sample of 1355 European small and medium-sized enterprises(SMEs). We find that CSR increases the future probability that an SME’s CSR is monitored by localnon-governmental organizations (NGOs) and that this moderates criticism of the SME’s CSR. Theresults imply that SMEs that only halfheartedly implement CSR are more vulnerable to publiccriticism than SMEs that do not engage in CSR at all. It is advisable that SMEs only positionthemselves as sustainable companies if their environmental policies have proven to contributeto sustainable development. When initiating stakeholder engagement, SMEs should preventdisappointment by tempering stakeholders’ expectations, as NGOs participating in a stakeholderdialogue can use inside information to raise public criticism.",
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AB - Corporate social responsibility (CSR) is believed to improve a company’s reputation. However,CSR may also put reputation at risk by making the company a more attractive target for activists’campaigns. We test this effect on a sample of 1355 European small and medium-sized enterprises(SMEs). We find that CSR increases the future probability that an SME’s CSR is monitored by localnon-governmental organizations (NGOs) and that this moderates criticism of the SME’s CSR. Theresults imply that SMEs that only halfheartedly implement CSR are more vulnerable to publiccriticism than SMEs that do not engage in CSR at all. It is advisable that SMEs only positionthemselves as sustainable companies if their environmental policies have proven to contributeto sustainable development. When initiating stakeholder engagement, SMEs should preventdisappointment by tempering stakeholders’ expectations, as NGOs participating in a stakeholderdialogue can use inside information to raise public criticism.

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