1. R. Edward Freeman popularized the stakeholder concept in his 1984 book. See:
R.E. Freeman, Strategic Management: A Stakeholder Approach (New York: Basic Books, 1984).
2. Collins and Porras highlight this theme of “both/and” versus an “either/or” orientation in their book. See:
J.C. Collins and J.I. Porras, Built to Last: Successful Habits of Visionary Companies (New York: HarperCollins, 1997).
3. For some current research, see:
J.B. Guerard Jr., “Is There a Cost to Being Socially Responsible in Investing?” Journal of Investing, volume 6, Summer 1997, pp. 11–18;
J.B. Guerard Jr., “Additional Evidence on the Cost of Being Socially Responsible in Investing,” Journal of Investing, volume 6, Winter 1997, pp. 31–36;
J.J. Angel and P. Rivoli, “Does Ethical Investing Impose a Cost upon the Firm? A Theoretical Examination?” Journal of Investing, volume 6, Winter 1997, pp. 57–61;
S.A. Waddock and S.B. Graves, “The Corporate Social Performance-Financial Performance Link,” Strategic Management Journal, volume 18, number 4, 1997a, pp. 303–319;
S.A. Waddock and S.B. Graves, “Quality of Management and Quality of Stakeholder Relations: Are They Synonymous?” Business and Society, volume 36, September 1997, pp. 250–279; and
L. Kurtz, “No Effect, or No Net Effect? Studies on Socially Responsible Investing,” Journal of Investing, volume 6, Winter 1997, pp. 37–49.
For summaries of research, see:
M.L. Pava and J. Krausz, “The Association Between Corporate Social-Responsibility and Financial Performance: The Paradox of Social Cost,” Journal of Business Ethics, volume 15, 1996, pp. 321–357; and
D.J. Wood and R.E. Jones, “Stakeholder Mismatching: A Theoretical Problem in Empirical Research on Corporate Social Performance,” International Journal of Organizational Analysis, volume 3, July 1995, pp. 229–267; and
J. Frooman, “Socially Irresponsible and Illegal Behavior and Shareholder Wealth: A Meta-Analysis of Event Studies,” Business and Society, volume 3, 1997, pp. 221–249.
4. For some interesting critiques of the modern corporation, see:
C. Derber, Corporation Nation (New York: St. Martin’s Press, 1998);
W. Greider, One World, Ready or Not: The Manic Logic of Global Capitalism (New York: Touchstone Books, 1998); and
David Korten, When Corporations Rule the World (San Francisco: Berrett-Koehler Publishers, 1995).
5. For extensive discussion about the concept of mental models or stereotypes, see:
P. Senge, The Fifth Discipline: The Art and Practice of the Learning Organization (New York: Doubleday, 1991). Also, see:
Collins and Porras (1997).
6. Fisher and Torbert discussed how continuous and continual improvement differ in: D. Fisher and W.R. Torbert, Personal and Organizational Transformations: The True Challenge of Continual Quality Improvement (London: McGraw Hill, 1995).
7. The term used for such positive and proactive community relations is “neighbor of choice.” See: E.M. Burke, Corporate Community Relations: The Principle of the Neighbor of Choice (Westport, Connecticut: Praeger, 1999).
8. Lydenberg and Paul argue that such risks are perceived to be “incalculable” by certain investors, and hence they will avoid investing in companies producing such risks. See:
S. Lydenberg and K. Paul, “Stakeholder Theory and Socially Responsible Investing: Toward a Convergence of Theory and Practice,” in 1997 Proceedings of the International Association for Business and Society, J. Weber and K. Rehbein, eds. (Destin, Florida: International Association of Business and Society, 1997), pp. 208–213.
9. For the history of social auditing, see:
K. Davenport, “Social Auditing: The Quest for Corporate Social Responsibility,” in J. Weber and K. Rehbein, eds., 1997 Proceedings of the International Association of Business and Society (Destin, Florida: International Association of Business and Society, 1997), pp. 197–207; and
T.J. Kreps, Measurement of the Social Performance of Business. Monograph No. 7: An Investigation of the Concentration of Economic Power for the Temporary National Economic Committee (Washington, D.C.: U.S. Government Printing Office, 1940).
10. In the past, people were less aware of how dumping chemical wastes might affect public health and the environment. On thousands of properties where such practices were intensive or continuous, the result was uncontrolled or abandoned hazardous waste sites, such as abandoned warehouses and landfills. Citizen concern about this problem led the U.S. Congress to establish the U.S. Environmental Protection Agency Superfund Program in 1980 to locate, investigate, and clean up the worst sites nationwide.
11. For example, CEP’s database covers 320 companies that produce consumer goods, some large and some small. KLD’s database covers all 500 Standard & Poor’s companies, plus another 150 or so that are included in the Domini Social Fund, which has passed KLD screening.
12. Cited in Davenport (1997), see:
H.R. Bowen, Social Responsibilities of the Businessman (New York: Harper, 1953).
13. Companies whose strategies depend on social responsibility are at significant risk of notoriety if their performance is questioned, as investigative reporter Jon Entine’s continuing commentary on Ben & Jerry’s and The Body Shop highlights. He has critiqued The Body Shop for ethical and environmental practices that appeared to contradict the company’s stated policy and image. More recently, Entine has criticized Ben & Jerry’s in a series of articles about the company’s marketing claim that Rain Forest Crunch and other products benefit indigenous peoples. See:
J. Entine, “The Body Shop: Truth or Consequences,” Drug & Cosmetic Industry, volume 156, February 1995, pp. 54–59.
The New Economics Foundation conducted The Body Shop’s social audit. For an overiew of the audits that NEF conducts, see: www.neweconomics.org/main/tools/social.htm
14. Davenport (1997), p. 199.
15. For current information on reputation management, see:
C. Fombrun, Reputation: Realizing Value from the Corporate Image (Boston: Harvard Business School Press, 1996).
16. Collins and Porras (1997).