RESPONSE - Insead

Findings: Internal factors and cognitive alignment (Objective 3) Other internal factors
alignment. Many companies are motivated in their commitment to CSR by the business case. In
some firms, managers explain the rationale of engaging in CSR practices with a specific emphasis on
the opportunity to direct innovation and new product development. In others, the rationale is the
avoidance of risk. Dutton and Jackson (1987) argue that the categorisation of an issue as an
opportunity leads to organisational responses that are constructed around the external environment.
This implies extensive interaction with external stakeholders. Consequently, an approach to CSR
centred on innovation may involve higher degrees of openness to, and understanding of, external
interests and priorities. Thus, it should be associated with higher levels of cognitive alignment. On
the other hand, where issues are labelled as threats, organisational attention is focused on the
adaptation of internal processes (Dutton and Jackson ibid.) and leads to a rigid definition of the
problem (Gilbert, 2005). We expect that a lower emphasis on new market opportunity (for example, a
risk motivation) is associated with less cognitive alignment.
The hypothesis is:
Firms that emphasise new market opportunities will exhibit positive cognitive
alignment with their stakeholders.
Table 26 below shows the magnitude of average cognitive gaps for firms whose CSR activities are
motivated to a significant degree by the opportunity to identify new markets (split around the
approximate median).
Table 26. Relation of cognitive alignment with market opportunity motivation (NMO)
40%
30%
20%
10%
0%
Gap 1 Gap 2 Gap 3 Gap 4
HIGHER NMO 25% 28% 25% 1%
LOWER NMO 26% 30% 34% 6%
The data shows strong evidence in support of the theoretical proposition. Companies motivated by
new market opportunities seem to have a greater average cognitive alignment across gaps 3 and 4.
Again, this causality could be reversed in that positive cognitive alignment encourages the firm to
explore new market opportunities.
One of the high tech companies has recently stressed the linkage between innovation and its social
responsibility. From a narrow perspective, innovation affords opportunities for the company (e.g.
creating value for clients), but the company’s managers understand that their innovation can also help
to solve societal problems. This awareness that innovation creates value for the world has led the
company to share its intellectual capital, serving as an example of how the framing of an opportunity
seems to encourage responses that are centred around the external environment rather than on
narrow internal processes. That opportunity is closely allied with the identification of needs is
illustrated by the case of a firm in the industrials sector. It has combined its drive to meet the urgent
needs of people in developing countries with the development and launch of water purification
solutions, a woodstove that uses much less wood than conventional stoves, and digital connectivity
and sustainable lighting for areas with unreliable power supply. This same company has managed to
achieve almost 10% of its worldwide turnover through the sales of advanced ecological products.
6.4 Other internal factors
In the appendix, we also show the results of analysis of organisational structure, corporate leadership,
the internal influence of the CSR department and the impact of organisational values on cognitive
alignment (Exhibit 5).
RESPONSE: understanding and responding to societal demands on corporate responsibility
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