RESPONSE - Insead

Findings: Internal factors and cognitive alignment (Objective 3) Factors related to the CSR process
40%
30%
20%
10%
0%
Gap 1 Gap 2 Gap 3 Gap 4
HIGHER SE 25% 31% 29% 8%
LOWER SE 25% 26% 36% 4%
The results of the analysis are not in favour of the hypothesised positive link between stakeholder
engagement and cognitive alignment. Of the four measures, only Gap 3 shows a narrower gap for
companies with more developed stakeholder engagement practices. Gaps 2 and 4 go in the opposite
direction, and Gap 1 is non­conclusive. Overall, the evidence does not support the hypothesis.
Our surprising finding should not be taken to mean that all stakeholder engagement is negative for
cognitive alignment between managers and stakeholders, or for social performance. For example,
one of the high tech companies introduced a project for elderly users of technology in cooperation
with a large number of NGOs and specialised developers. This led to information exchange between
managers and external stakeholders as well as benefits to the wider public. Likewise, one of the food
companies partners with external organisations in areas where their core competencies complement
those of the organisation e.g. partnerships with NGOs on a range of issues from child health and
nutrition education and cooperation national governments on health issues such as obesity. One
bank has developed consulting committees to understand the evolution of local communities’
economies, their specific needs and to share guidelines to foster their development. Interviewees
emphasised that these committees do not engage in philanthropy. Rather, they aim at fostering local
investments and development projects. The members of the consulting committees are local
entrepreneurs, professionals, etc., and the committees are thus able to mediate different requests and
expectations, because they are perceived as "third parties".
On the other hand, one stakeholder in the high tech sector observed that successful engagement
required a “partnership orientation” from companies. This could be hampered by a commercial
orientation (e.g. subtle pressure on the stakeholder to support the company’s products) and by
frequent personnel changes, which inhibited ongoing dialogue between the firm and stakeholder.
Some external stakeholders in the natural resources and pharmaceutical sectors emphasised a
reluctance to engage with companies if this meant having to ‘rubber stamp’ their products.
In sum, the nature of the engagement (with which stakeholder, for which purpose) and the quality of
interaction may be decisive in determining the impact on alignment.
6.3.1 The impact of integration of CSR in business processes
Another consequence of cognitive alignment (and possibly an antecedent as well) is the degree to
which CSR practices are integrated into business processes. Companies can respond to societal
demands in an organisationally integrated or decoupled fashion (Weaver, Trevino and Cochran,
1999). While decoupled practices are disconnected from ongoing activities and operations, integrated
practices imply that principles of CSR inform everyday decisions and their social impact is routinely
taken into consideration. The achievement of this latter type of change in business processes (e.g.
investment criteria, incentive systems, sales practices, etc.) requires and produces an enhanced
understanding of stakeholders' interests and priorities. Furthermore, as daily operations regulate the
attention of managers (Ocasio and Joseph, 2005), the integration of CSR practices may also produce
a deeper understanding of stakeholders’ interests.
Therefore the hypothesis is:
The greater the cognitive alignment between managers and stakeholders (narrower
cognitive gaps), the greater the integration of CSR practices into business
processes.
RESPONSE: understanding and responding to societal demands on corporate responsibility
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