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Recommendations: Recommendations for policy and standards 106
Exhibit 4. Other results from the analysis of the factors explaining
cognitive alignment
1. Firm leadership and cognitive alignment
A corporate leader with a credible reputation of personal commitment to CSR can be expected to
have a positive influence on cognitive alignment. The effect will be apparent throughout the
organization as managers will tend to adopt similar beliefs and behaviors and so respond to
stakeholder interests and priorities. The hypothesis is:
The greater the commitment of leadership to CSR, the greater will be the cognitive
alignment between managers and stakeholders (narrower cognitive gaps).
Table A: Impact of leadership on cognitive alignment
Gap 1:
sequential
order of
stakeholders
Gap 2:
stakeholders
impact on
company
Gap 3:
company
impact on
stakeholder
s
Strong CSR
leadership 28% 32% 34% 2%
Weak CSR
leadership 23% 37% 32% 9%
Gap 4: firm
social
performance
Table A shows that results of the analysis. Cognitive gaps 2 and 4 supports the proposition, since
managers in firms with strong CSR leadership tend to have a more aligned “risk” ranking of
stakeholders and a more careful assessment of their company’s social performance. However,
difference in averages for gaps 1 and 3 go in the opposite direction.
In summary, the corporate leader’s personal commitment to CSR might be an important factor to
explain inter­firm differences in the magnitude of cognitive alignment, but the evidence in support of
this hypothesis is mixed. More work is needed on this factor to ascertain its impact on cognitive
alignment.
2. Organisational structure and cognitive alignment
A centralised organisational structure allows for easier diffusion of homogeneous principles and
beliefs supporting social responsible behaviour throughout the organization. However, a decentralised
structure affords more flexibility and openness in engaging with the interests and priorities of local
constituencies. Decentralisation also suggests the ability to tailor corporate behaviour for these local
interests. A dual hypothesis can therefore be proposed for empirical inquiry:
H1. A centralized organizational structure is associated with higher cognitive alignment
(lower gaps).
H2. A decentralized organizational structure is associated with higher cognitive
alignment (lower gaps).
RESPONSE: understanding and responding to societal demands on corporate responsibility