RESPONSE - Insead

A model of cognitive alignment and social performance The RESPONSE model
RESPONSE team’s own assessment from interviews
SRAs provide an important benchmark indicator of a company’s performance. However, RESPONSE
has found these ratings to be an insufficient summary on their own, reflecting the concern recently
voiced about their predictive validity (Chatterji, Aaron, Levin and Toffel, 2007). Differences between
SRA assessments appear influenced by the founding conditions of the ratings agency itself. An SRA
that traces its roots to environmental concerns, for example, will tend to reflect these origins in the
prioritising of its evaluation criteria. Assessments of the same firm across SRAs are thus inconsistent.
A second problem is that SRA methodologies depend for their data on the firm’s self­promotion in the
form of published reports. We believe that one of strengths of this study lies in the fact that we have
obtained direct assessments from a plurality of stakeholders, in addition to relying on SRAs and our
own judgments.
An overview of the CSP of the 19 companies is provided in Table 3, which contains information on
agency ratings, stakeholder evaluations and our own RESPONSE evaluation. Not all social rating
agencies cover all 19 companies. Although some agencies provide triple letter ratings, most agencies
do not provide a single measure of a company’s social performance. Instead, they publish a score for
individual areas of performance (environment, stakeholder relations, governance, etc.). In such cases,
individual scores cannot be easily aggregated because different weightings should apply across
different sectors. For example, while the environment is a potentially important domain in all
industries, mining firms are likely to have a much larger impact on the environment than IT firms. For
that reason, we have chosen to give a brief qualitative description of the published ratings.
The degree of variation in CSP differs markedly across sectors. In most cases, the three sources of
measures (rating agencies, stakeholders and our own CSP evaluation) are broadly consistent in their
ranking of the companies’ social performance. In cases where the differences in social performance
are more nuanced, rating agencies and stakeholders may disagree about the best performers in a
sector. In making our own assessments we have paid particular attention to the comments we
received from well­informed stakeholders who have roughly equal amounts of interaction with all
companies in the pair or triad.
RESPONSE: understanding and responding to societal demands on corporate responsibility
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