Making the business case for corporate social responsibility and perceived trustworthiness: A cross‐stakeholder analysis

• Author: Jared L. Peifer,David T. Newman
• Published date: 01 June 2020
• Date: 01 June 2020
• DOI: http://doi.org/10.1111/basr.12210

Bus Soc Rev. 2020;125:161–181.

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161

wileyonlinelibrary.com/journal/basr

Received: 3 February 2020

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Accepted: 4 February 2020

DOI: 10.1111/basr.12210

ORIGINAL ARTICLE

Making the business case for corporate social

responsibility and perceived trustworthiness:

A cross-stakeholder analysis

Jared L.Peifer1

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David T.Newman2

© 2020 W. Michael Hoffman Center for Business Ethics at Bentley University. Published by Wiley Periodicals, Inc., 350 Main Street, Malden,

MA 02148, USA, and 9600 Garsington Road, Oxford OX4 2DQ, UK.

1Narendra Paul Loomba Department of

Management, Baruch College, New York,

NY, USA

2Department of Management and

Organization, Marshall School of Business,

University of Southern California, Los

Angeles, CA, USA

Correspondence

Jared L. Peifer, Narendra Paul Loomba

Department of Management, Baruch

College, One Bernard Baruch Way, New

York, NY, USA.

Email: jpeifer@baruch.cuny.edu

Funding information

PSC CUNY Research Award, Grant/Award

Number: #68409-00 46

Abstract

The business case for corporate social responsibility (CSR)

suggests that by doing good (i.e., engaging in CSR) a firm

will do well (i.e., be profitable), and this notion has per-

meated the linguistic sensemaking of firm actors. But how

are firms that articulate business-case justifications evalu-

ated by various stakeholders? We hypothesize that the way

firms communicate their CSR engagement (i.e., accompa-

nied by business-case justifications or not) differentially

impacts stakeholders’ perceived integrity, benevolence and

ability trustworthiness of the firm. Conducting the same on-

line experiment with two separate samples from the United

States, we replicate three results; business-case justifica-

tion for CSR reduces benevolence trustworthiness among

employees, increases ability trustworthiness among inves-

tors, and has no effect on perceived trustworthiness among

consumers. We discuss the implications of our findings for

the CSR literature and encourage future researchers to more

carefully scrutinize the implications of justifying CSR with

the business case.

KEYWORDS

corporate social responsibility (CSR), moral intensity, organizational

theory

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PEIFER and nEWMan

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INTRODUCTION

Making the business case for corporate social responsibility (CSR) has risen in prominence in recent

years (Blodgett, Hoitash, & Markelevich,2014; Gond, Palazzo, & Basu,2009; Lee,2008; Salzmann,

Ionescu-somers, & Steger,2005). The business case for CSR refers to “the establishment of the ‘busi-

ness’ justification and rationale, that is, the specific benefits to businesses in an economic and fi-

nancial sense that would flow from Corporate Social Responsibility (CSR) activities and initiatives”

(Carroll & Shabana,2010:92). More colloquially, making the business case for CSR sounds some-

thing like, “we do well by doing good” or “it's a win-win” or “there is no tradeoff.” The pervasiveness

of the business case for CSR is exemplified by a flurry of theoretical and empirical studies among

business scholars seeking to identify the link between corporate social performance (CSP) and cor-

porate financial performance (CFP) (e.g., Orlitzky, Schmidt, & Rynes,2003). But we address this

phenomenon from a different angle. Assuming the pervasiveness of the business case for CSR has

also trickled down from the ivory towers and into the linguistic sensemaking of firm actors (Basu &

Palazzo,2008; Palazzo & Scherer,2006; Peters, Waples, & Golden,2014), we scrutinize the effect it

has on stakeholders’ evaluations of the firm (Bitektine,2011), in particular, the perceived trustwor-

thiness of the firm.

In this article, we make three contributions to existing literature. First, we extend scholarly in-

terest in the role that trust plays in attracting financial rewards to CSR firms (Barnett,2007, 2019;

Burbano, 2016; Greening & Turban,2000; Harrison, Bosse, & Phillips, 2010; Pivato, Misani, &

Tencatin,2008; Turban & Greening,1997) by theorizing and empirically measuring three kinds of

perceived trustworthiness: integrity, benevolence, and ability (Mayer, Davis, & Schoorman,1995).

Second, while many stakeholder evaluation scholars focus on a single (e.g., Chernev & Blair,2015;

Du, Bhattacharya, & Sen,2010) or nonspecified (Jahn, Eichhorn, & Brühl,2017) stakeholder's eval-

uation of a firm, we conduct a cross-stakeholder analysis (Pirson & Malhotra,2011; Pirson, Martin,

& Parmar,2017; Sen, Bhattacharya, & Korschun,2006) enabling comparison between consumers,

employees, and investors. Third, we take a novel approach to business-case scholarship and scrutinize

how stakeholders respond to firms’ linguistic sensemaking that articulates a business-case justifica-

tion for their CSR. This creates the following research questions we address in this article: How does

the business-case justification for a firm's CSR affect its perceived trustworthiness? Does this effect

vary by stakeholder?

This article is arranged as follows. First we review literature on the business case for CSR

and then point out that trustworthiness is as a key mechanism used to explain why CSR firms are

frequently hypothesized to be more profitable. We then theorize business-case justifications for

CSR as a specific type of linguistic sensemaking that firm actors frequently engage in and argue

such sensemaking shapes stakeholders’ evaluations of the firm. Borrowing Mayer etal.(1995), we

generate hypotheses that predict different business-case treatment effects for various combinations

of stakeholder category and type of perceived trustworthiness. By conducting the same online

survey experiment on a sample of Amazon Mechanical Turk (MTurk) workers and a US under-

graduate sample, we replicate three key results: (1) business-case justifications reduce benevolence

trustworthiness of the firm as perceived by employees, (2) they increase ability trustworthiness

perceived by investors, and (3) business-case justifications have no effect on any type of trustwor-

thiness perceived by consumers. We end with a discussion of our findings and its implications for

the CSR literature.