From a shareholder to stakeholder orientation: Evidence from the analyses of CEO dismissal in large U.S. firms

Shoonchul Shin*, Juyoung Lee, Pratima Bansal

*Kontaktforfatter

Publikation: Bidrag til tidsskriftTidsskriftartikelForskningpeer review

28 Citationer (Scopus)
178 Downloads (Pure)

Abstract

Research Summary: The post-Enron era is marked with growing discourse of stakeholders, sustainability, and corporate social responsibility (CSR). Yet, commentators debate whether U.S. corporations have indeed moved toward a stakeholder orientation, given the difficulties in measuring such a shift. We assess this shift by examining corporate governance practices, especially the prevalence of shareholder- and stakeholder-oriented practices in chief executive officer (CEO) dismissals. Using data on large firms in 1980–2015, we found that, before the 2000s, CEOs were less heavily penalized for poor firm performance when they demonstrated a shareholder orientation by downsizing and refocusing the corporation and more heavily penalized for CSR activity. This trend, however, reversed after the early 2000s. This article provides evidence of the evolution of U.S. firms' governance practices from a shareholder toward stakeholder orientation. Managerial Summary: Many people are skeptical of the assertion that U.S. corporations have become more stakeholder-oriented over time. It is no wonder, as scant evidence exists for this claim. We tackle this claim head on by analyzing firm practices in 1980–2015 that contributed to chief executive officer (CEO) dismissal when the firm was performing poorly. Some practices, such as downsizing and firm refocusing, are associated with a shareholder orientation and others, such as CSR, are associated with a stakeholder orientation. We found strong evidence for a growing trend toward a stakeholder orientation. When the firm was performing poorly before the 2000s, CEOs were more likely to be dismissed for CSR activities and less likely to be dismissed for downsizing or refocusing the firm. This trend reversed in the early 2000s.

OriginalsprogEngelsk
TidsskriftStrategic Management Journal
Vol/bind43
Udgave nummer7
Sider (fra-til)1233-1257
Antal sider25
ISSN0143-2095
DOI
StatusUdgivet - 1 jul. 2022

Bibliografisk note

Funding Information:
The authors are grateful to Ioannis Ioannou (the Editor), two anonymous reviewers, Heather Haveman, Neil Fligstein, Jiwook Jung, Roy Suddaby, Kyung‐Pil Kim, and Maoliang Bu for their helpful comments and suggestions in previous drafts of this article. The paper has also benefited from comments from seminar participants at the Annual Meeting of the Academy of Management, the HBS Strategy Science Conference, the Sociology Department of Korea University, and Aalborg University Business School. This research has been supported by the Social Sciences and Humanities Research Council of Canada (Award Number: 435‐2013‐1409).

Publisher Copyright:
© 2021 John Wiley & Sons Ltd.

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