A Behavioral Theory of Social Performance: Social Identity and Stakeholder Expectations

Robert S. Nason, Sophie Bacq, David Gras
2018 Academy of Management Review  
Firms use reference points to evaluate financial performance, frame gain or loss positions, and guide strategic behavior. However, there is little theoretical underpinning to explain how social performance is evaluated and integrated into strategic decision making. We fill this void with new theory built on the premise that inherently ambiguous social performance is evaluated and interpreted differently than largely clear financial performance. We propose that firms seek to negotiate a shared
more » ... cial performance reference point with stakeholders who identify with the organization and care about social performance. While incentivized to align with the firm, firm-identified stakeholders provide intense feedback when there are major discrepancies between their expectations and the firm's actual social performance. Firms frame and respond to feedback differently depending on the feedback valence: negative feedback will be framed as a legitimacy threat, and firm responses are likely to be substantive; positive feedback will be framed as an efficiency threat, and firm responses are likely to be symbolic. However, social enterprises face a double standard in evaluations and calibrate responses to social performance feedback differently than do nonsocial enterprises. Our behavioral theory of social performance advances knowledge of organizational evaluations and responses to stakeholder feedback. We are completely indebted to former associate editor Mike Pfarrer for his thoughtful and careful guidance and three anonymous reviewers for developmental comments that brought out the best in our ideas. Big thanks to Ruth Aguilera and all of those who graciously provided precious advice and feedback on previous versions of the manuscript, including Marya Besharov, Michael Carney, Greg Fisher, Young-Chul Jeong, and Gideon Markman, as well as participants in the JMSB Research Conversations Brownbag. We are also incredibly grateful to those who inspired and supported us along the way, including Elizabeth Eley, Tara Pandya, Gary Weckx, and Hadrien, who arrived during the publication process. Special thanks to Lili and Oli for contributions that fueled the writing process for one author. Usual disclaimers apply.
doi:10.5465/amr.2015.0081 fatcat:rfq3aqjs4rfitk5zw6oj42cubq