Shared Value Creation in Equivocal CSR Environments: A Configuration Approach

Abstract

Organizations are increasingly expected by their stakeholders to tackle the “wicked” problems of society. These new pressures have created a highly equivocal corporate social responsibility (CSR) environment whereby firms face competing stakeholder perspectives regarding their CSR strategy. To reduce CSR environmental equivocality and determine a CSR strategy, organizations need to effectively and efficiently identify, evaluate, and exploit CSR initiatives to create financial and social value (i.e., shared value). In this paper, we explain how organizations can optimize their shared value creation and promote the construction of intersubjective agreement, which can reduce CSR environmental equivocality. Theory is put forth that explains how the proper alignment of an organization’s level of CSR environmental equivocality, which is comprised of varying amounts of “unknowingness,” corporate entrepreneurship strategy, which promotes experimentation, and stakeholder engagement process, which facilitates information gathering and dissemination, supports the construction of intersubjective agreement. A typology of organizational shared value creation in equivocal CSR environments with four “ideal types” of organizations—Container, Explorer, Embracer, and Manager—is presented and an organization’s choice among and movement between types discussed.

Appendix

Technology Organization (TO): A Hypothetical Example of a Complementary CE Strategy and SE Process.

The following is a hypothetical exemplar of a technology organization (TO) intended to illustrate how a complementary corporate entrepreneurship (CE) strategy and stakeholder engagement (SE) process can result in the more effective and efficient identification, evaluation, and exploitation of a CSR opportunity and the creation of relatively more shared value.

TO is facing disparate pressures from their multitude of stakeholders for various CSR strategies; some stakeholders believe the organization should ignore or minimally address pressures for social value creation and instead focus on financial value creation, while others think the organization should utilize their resources to prioritize the creation of relatively more social value. TO has several existing social justice- and poverty-related CSR strategies, but they acknowledge that their institutional environment is changing and they will need to create more social value while still preserving their financial value creation. TO engages with stakeholders to ascertain which problem(s) stakeholders think the organization should tackle, and TO determines they should focus their efforts on further addressing social justice—a “wicked” problem with highly equivocality regarding an organization’s CSR strategy. TO brainstorms various types of CSR strategies and hypothesizes they could address social injustice with a rather knowable CSR strategy like donating to a group like Black Lives Matter (BLM) or the National Association for the Advancement of Colored People (NAACP) or a less knowable CSR strategy such as starting a not-for-profit where they provide technology skills training and certificate programs to underrepresented groups or possibly even partnering with a local free health clinic to share their technology and capabilities to improve patient care. None of these new CSR strategies are redundant with their existing CSR strategies. TO is not sure how much shared value each potential CSR strategy will create—the four strategies will vary in their costs and benefits, much of which are difficult to ascertain without experimenting and engaging with stakeholders. TO employs multiple modes of direct and indirect communication to present the four ideas to stakeholders and gain their feedback on how the ideas could be improved (i.e., increase their effectiveness or efficiency). The organization collects the information, generates insights, and possibly institutes changes to the ideas. TO then creates rough prototypes of each CSR strategy and presents them to stakeholders. This process occurs continuously and iteratively as TO creates and presents further refined prototypes to stakeholders to collect additional data and generate further insights. Eventually, the organization collects enough quantity and quality of data and generates enough insight about each of the CSR strategies’ shared value creation potential that they determine they should only formally pilot the three most promising CSR strategies: BLM, skills training, and clinic partnership. The pilot programs generate additional data regarding the potential costs and benefits of the CSR strategies and lend insight into the various ways in which TO could implement the CSR strategies. It is determined the skills training strategy will cost slightly less to implement than the clinic strategy but more than the BLM strategy. Early results indicate the skills training strategy will result in greater employee morale but that the BLM strategy will generate higher reputational gains. Data also reveals that the BLM strategy is likely to create the least amount of social value and the skills training CSR strategy the most. TO weighs the costs and benefits of the three potential CSR strategies and decides to implement the skills training CSR strategy, as it is likely to create the most shared value. TO justifies their decision, in part, using the plethora of data and insights generated through multiple iterations of experimentation and dialogue with stakeholders.

Employing a complementary CE strategy and SE process afforded TO a high quantity and quality of data and related insights that advanced organizational and stakeholder understanding of disparate perspectives as well as the negotiation of a set of facts around each CSR strategy and a shared understanding of the environment. Resultantly, TO was able to more effectively and efficiently identify, evaluate, and exploit the skills training CSR strategy to create relatively more shared value. Though not every stakeholder was satisfied by the skills training CSR strategy’s level of shared value creation, the organization was able to justify the decision and counter resistance. Through a complementary CE strategy and SE process, TO was able to create relatively more shared value, construct intersubjective agreement around the skills training CSR strategy, and reduce CSR environmental equivocality.