Stakeholders or shareholders? Board members' personal values and corporate identity.
| Autor | Barbero, Edson Ricardo |
| Cargo | Texto en ingl |
I Introduction
This paper seeks to explain the relationship between the individual values of board members and their companies' identities--whether pro-shareholders or pro-other stakeholders. To Schwartz (1992), individual values bring together various scientific fields interested in human behavior and are "criteria people use to select and justify actions" (p. 1). In parallel, Brickson (2005) reveals that corporate identity is a set of symbols, behaviors and processes that make an organization different from others that are similar to it. This author reveals that organizational identities can be either individualist or collectivist and that "the relationship with stakeholders constitute the prominent feature of organizational identity" (Brickson, 2005, p. 576). In this respect, organizations that tend towards collectivism are the ones which see themselves as members of society as a whole and which guide their decisions to multiple stakeholders (Bartlett, McDonald & Pini, 2015).
Adams et al. (2011) closely analyzed the abovementioned relationship by means of a quasi-experimental research in the individual context of decision makers. They found that there are positive correlations between collectivist values and decisions in favor of stakeholders who are not owners. However, those authors only studied the individual level of decisions, since they exposed directors to "laboratory" situations and measured the correlations between the decisions they made and their personal values. The conclusions of Adams et al. (2011) emphasize to the existence of the explanatory power of values in directors' trends towards exclusively to shareholders or towards other stakeholders.
From the research of Adams et al. (2011), therefore, a question arises: would the results be the same if the aforementioned relationship were analyzed within the context of an organization as a whole, and in a real (not experimental) situation? Thus, there is still a theoretical gap concerning the existence of relationships between the axiological profiles of business leaders and their companies' pro-shareholder or pro-stakeholder orientation. It is important to answer this question, because businessmen do in fact make decisions not only according to their personal convictions, but according to their context. To Jones et al. (2007), "although the focus of Stakeholder Theory has been managers as anonymous decision makers, these businessmen are deeply influenced by organizational context" (p. 137).
This study fills this gap. Instead of evaluating the individual decisions of board members, it identifies the greater or lesser presence of certain types of motivation in the board members of stakeholder-oriented companies. The insertion of the domain of entire organization has theoretical and practical relevance. From a theoretical perspective, no previous studies have undertaken research on individual values and corporate identity in favor of shareholders or other stakeholders. As well as Adams et al. (2011), who did not include organizational dimensions in their analysis, as mentioned, empirical studies show that values are related to creativity (Dollinger, Burke, & Gump, 2007), to reaction to organizational change (Sverdlik & Oreg, 2009), to cooperation and to competition (Sagiv, Sverdlik, & Schwartz, 2011).
In practical terms, understanding of this relationship sheds relevant light on the selection of board members who are most appropriate for a company. Recent literature indicates that leaders who harbor greater identification with the values of a company tend to be better stewards of the organization's interests (Boivie, Lange, McDonald & Wespahl, 2011). This paper contributes, finally, to the empirical understanding of an important public (board members), since Brazilian studies such as Bruere, Mendes-da-Silva and Santos (2007) did not advance as to the question of personal values.
Also as justification, we point out that many authors from the Stakeholder Theory have advocated the need to understand human complexity as a foundation for understanding the relationship between a company and its external stakeholders (Freeman & Phillips, 2002; Bosse, Phillips & Harrison, 2009). Bridoux and Stoelhorst (2014) point out that empirical evidence on human motivational heterogeneity suggests improvements to the Stakeholder Theory. Freeman and Phillips (2002) indicate that it is necessary to understand the topic beyond the default assumption that individuals only selfishly strive for their own results; they also warn us that "it is necessary to question oneself as to how values are created in a world where individuals have complex motivations" (p. 334). To Jones, Felps and Bligley (2007), finally, the convergent topic in Business Ethics is precisely the opposition between values which consider the interests of others and, in the opposite direction, those which consider only individual interests.
From these findings and justifications, this article's research problem emerges: What are the differences, in terms of individual values, between the board members of stakeholder-oriented companies and those belonging to other publicly traded companies? To answer this question, we carried out a survey with 74 board members from publicly traded companies operating in Brazil, and used the company's presence in BM&FBovespa's (Sao Paulo Stock Exchange) Corporate Sustainability Index as a proxy for corporate identity. As we will explain later on, this index is suitable for measuring this important aspect of the identity of a company: the relationship with its external publics (Brickson, 2005).
As main results, we identified the greater presence of individualistic board members in companies listed in the Sao Paulo Stock Exchange which are not part of the Corporate Sustainability Index (ISE). Moreover, 18 individual values from Schwartz's theory (1992) presented themselves as different between companies focused on stakeholders (ISE) and other companies listed in BM&FBovespa. In addition, motivational types Stimulation and Hedonism presented lower axiological priority among board members working in stakeholder-oriented companies. These findings reinforce--in part--the hypotheses of this article. As will be examined in more detail later, there are differences as to the findings of Adams et al. (2011). In this regard, specially, this article includes discussions about the Hedonism motivational type. The next item presents this debate's theoretical framework and establishes research hypotheses. After that, we present and discuss the results.
2 Theoretical framework and formulation of hypotheses
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I Origins and assumptions of the Stakeholder Theory
The theoretical debate about the relationship of a company with its external public is largely dichotomous. Fundamentally, it is divided in two opposing currents: the Theory of the Firm and the Stakeholder Theory. According to Boaventura, Cardoso, Silva and Silva (2009), the former's origins are in the eighteenth century, but its main work is in Friedman (1962). This conceptual line advocates that managers should make all decisions focused on increasing the long-term value of a company (Jensen, 2001). The Stakeholder Theory is more recent--Freeman (1984) is its seminal work--and considers that companies should coordinate the interests of various stakeholders. Friedman (1962) states that businessmen are the principal's agents and that their primary responsibility is to serve its interests.
While those who defend the Theory of the Firm indicate a role that is confined to maximizing value for shareholders, other critics consider that this theory has little empirical support (Clarke, 1998), advocating a more comprehensive role for companies. Davis, Schoorman and Donaldson (1997) point out other possibilities for the agency conflict, arguing that taking on an assumption of conflict is not reasonable for all types of men. While those who defend the theory of the firm presuppose a utilitarian trend, different theoretical currents argue against this claim, suggesting other factors as drivers of the decision-making process.
The Stakeholder Theory sees organizations as a collection of groups whose objectives must be coordinated by managers (Freeman, 1984). The classic definition of stakeholder is "any group or individual who can affect or is affected by the achievement of the organization's objectives" (Freeman, 1984, p. 46). In this sense, "a more comprehensive and ambitious understanding of the concept of stakeholder is a redefinition of organizations and of how they should be defined" (Friedman & Phillips, 2002, p. 1).
According to Laplume, Sonpar and Litz (2008, p. 1153), "the Stakeholder Theory is timely yet adolescent, controversial yet important." Timely because of the prevalence of corporations and of several ethical scandals; adolescent because empirical validation is still incipient in many of its propositions; and controversial, because it touches controversial issues. Margolis and Walsh (2003) argue that, because the Stakeholder Theory incites differences concerning deeply held values, its supporters and detractors tend not to converge. It is clear, too, that the increasing prominence of the Stakeholder Theory occurred because it is a proposition that moves people, also due to the emotional resonance that its assumptions generate in many individuals (Weick, 1999). The Stakeholder Theory, as well as its practice, therefore, seems to relate to people and to the ways in which they see the world. Hence the relevance of empirically connecting the conceptual framework of values and that which discusses the relationship of a company with its stakeholders.
Given these elements, we are led to realize that companies with different characteristics also must have equally different orientations with respect to the relationship with their publics. To Bridoux and Stoelhorst (2014), companies can develop relationships based on bargaining...
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