Value allocation to stakeholder employees and its effect on the competitiveness of the banking sector.
| Autor | Brandao, Isac de Freitas |
I INTRODUCTION
There is a multiple dependence relationship between companies and interested parties (stakeholders) in the process of raising funds and supplying goods and services. In this context, corporate social responsibility (CSR) is approached not only as a company's moral obligation to society, but also as a means of aligning the company's interests with those of its stakeholders so as to reduce hazards and ensure business continuity. CSR practices can be internal (i.e., geared towards employees), external (i.e., towards the external public--such as customers, government, and suppliers)--and environmental (i.e. towards environmental preservation) (Crisostomo, Freire, & Vasconcelos, 2011).
Amongst these dimensions, internal CSR is a primary vector for financial performance, since employees supply the workforce necessary to productive activities. The relationship between companies and their employees enhances satisfaction and motivation, which may reflect on a company's financial performance through its employees' greater productivity (Boaventura, 2012; Huselid, 1995; Huselid, Jackson, & Schuler, 1997). In the banking sector, internal CSR is even more relevant to financial performance, and it may be a source of competitive advantages. Bartel (2004) suggests that direct contact between customers and employees in the service sector requires the extensive adoption of socially responsible practices.
Based on this analysis, the following object of research emerges: What is the relationship between the adoption of CSR practices geared towards stakeholder employees and the competitiveness of the Brazilian banking sector? This paper discusses value allocation to stakeholder employees through adoption of social responsibility practices and the competitive differential in the Brazilian banking sector, thus contributing to an increase in employees' productivity and to higher financial performance, contrary to the cost reduction policy and to the deterioration of working conditions for the sake of productivity gains.
Therefore, this paper starts from the assumption that the allocating value to stakeholder employees may yield gains in competitiveness. These gains derive from greater job satisfaction, productivity, and organizational commitment. Focus on competitiveness is geared towards its impact on financial performance indicators such as: efficiency, growth, and profitability (Hamel & Prahalad, 1989). In this context, the study carried out by Brito & Brito (2012) must be highlighted, since it proposes measurement of financial performance based on sales profitability and growth as a proxy of competitive advantage.
Since the relationship between CSR and competitiveness is not as yet totally clear, the question is in the identification of policies or strategies that are capable of developing CSR that strengthens competitiveness factors. Accordingly, this paper analyzes the relationship between corporate social responsibility practices geared towards employees and the competitiveness of Brazilian banks, explained by employees' higher productivity in companies that adopt better people management practices.
To achieve the goal proposed here, the following section presents the theoretical references which contemplate the influence of CSR practices geared towards stakeholder employees on organizational performance, and research hypotheses. Next, we present the methodology used when collecting data regarding the internal CSR of 21 banks whose shares are listed in BM&FBovespa and their impact on the financial performance of those institutions over the 2010-2014 period. Finally, results are presented and discussed, followed by the final considerations to this study.
2 Theoretical references
2.1 The impact of corporate social responsibility and stakeholder management on competitiveness
Competitiveness is a latent construct observed according to the position of a company in relation to its competitors (Brito & Brito, 2012). Vilanova, Lozano & Arenas (2009) point out that the general notion of competitiveness is defined by the market, in that its critical factors are given in view of how financial analysts evaluate a given company. Ajitabh & Momaya (2004) state that competitiveness can be categorized according to five fundamental dimensions: financial performance, in which profit and sales growth stand out (Hamel & Prahalad, 1989); quality of products/services, which refer to satisfying consumers' needs (Barney, 2000); productivity, in terms of efficiency; innovation in products/ services or in the process of image management, in which trademarks are made evident in order to achieve a good reputation; and trust in the relationship with stakeholders (Kay, 1993).
Motivated by intense competitiveness in the market, companies began to assess their relationships with their stakeholders so as to empower these relationships--and, thus, gain competitive advantages, which involves appreciating and compensating cooperative, ethical, transparent behavior (Feitosa, Souza, & Gomez, 2014). Garcia-Castro & Aguilera (2015) emphasize the notion of stakeholders as any group or individuals who create and capture economic value in their interactions with the company.
Interested parties who are well treated tend to reciprocate with positive attitudes and behavior, thus making stakeholder management an efficient way of achieving competitive advantages (Harrison, Freeman, & Abreu, 2015). According to Maloni & Brown (2006), ethical, socially and environmentally responsible behavior can be perceived by many categories of stakeholders, such as customers, employees, governments, communities, investors, suppliers, government agencies, the press, and NGOs --but, for this to occur, companies must internalize CSR principles.
CSR is companies' voluntary involvement in social and environmental matters, whilst maintaining the equilibrium of the organizations' activities and a good relationship with stakeholders (European Comission, 2002). The CSR approach can be understood from several perspectives, such as: a social development tool (Carroll, 1979; Swanson, 1995), a model of corporate ethics (Solomon, 1993), a way of exercising corporate governance (Freeman & Evans, 1990), a model of social contract (Donaldson & Dunfee, 2002), a corporate citizenship device (Waddock, 2000; Zadek, 2006), a model of accountability (Elkington, 1998), and a mechanism for stakeholder management (Donaldson & Preston, 1995; Freeman, 1984; Lozano, 2002).
The instrumental view of the stakeholder theory led to an idea known as stakeholder management, which advocates that CSR practices will only be complete when they are totally absorbed by internal stakeholders, that is, employees (Feitosa, Souza, & Gomez, 2014). Accordingly, socially responsible practices establish a set of ethical principles, such as trust, credibility, and cooperation, which enable competitive advantages to be achieved. Jones (1995) believes that managers who interact with their stakeholders on a mutual trust and cooperation basis will doubtless achieve competitive advantages.
Margolis & Walsh (2003) point out that, when managers get to understand the instrumental aspect of CSR, socially and environmentally responsible practices naturally cease to be an obligation and become a means to achieve a company's strategic goals. Freeman, Harrison, Wicks, Parmar, & De Colle (2010) also highlight the importance of corporate social responsibility to the maintenance of a good relationship with interested parties. Therefore, companies must measure their ability to respond efficiently to the public they interact with. Regarding this, social/ environmental reports may reveal how companies have been responding to certain demands by stakeholders.
Vilanova et al. (2009) point out that few companies adopt altruistic CSR On the contrary, they show an interest in approaching CSR practices as a means to achieve a praiseworthy reputation, attract customers concerned with social and environmental issues, as well as respond plausibly to shareholders, if questioned. Oliveira (2013) emphasizes that CSR involves decisions on the part of managers whose interests surpass economic or technical ambitions referring to the company. Besides, complying with the law is not enough to being socially and economically responsible; one must go beyond the legal minimum.
Commitment to CSR practices may help companies establish partnerships with and gain the trust of different audiences, as well as strengthen their market positions, contributing to the achievement of sustainable competitive advantages (Miron, Pectu, & Sobolevschi, 2011). Following this line of thought, Feitosa et al. (2014) advocate that, by developing socially and environmentally responsible practices, companies manage to meet those demands whilst acquiring considerable financial performance.
To the extent that economic growth and the achievement of competitive advantages align with environmental preservation and social support measures, one can note it is possible to associate financial performance with social welfare, provided that the (formal or informal) agreement celebrated between parties is balanced (European Comission, 2002). However, Vilanova et al. (2009) highlight that financial performance does not necessarily entail competitiveness in the long run, since the relationship between CSR practices and competitiveness is not as yet totally clear due to a lack of studies of the subject.
3.3 Influence of responsible practices geared towards stakeholder employees on financial performance
Companies acquire more value when they manage to raise the price their consumers are willing to pay for their products and services, or when they reduce their production costs. Harrison & Wicks (2013) support that companies that satisfy the interests of a considerable group of stakeholders will be able to allocate more value to the organization in the long run. Bosse, Phillips & Harrison...
Para continuar a ler
PEÇA SUA AVALIAÇÃOCOPYRIGHT GALE, Cengage Learning. All rights reserved.
