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New research on social enterprise and other nonprofit organizations from Harvard Business School faculty on issues including management strategies, demonstrating effectiveness, and employee motivation.
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Research Symposium 2014

by Carmen Nobel

Harvard Business School professors presented their research to colleagues, with topics including speaking up at work, a manager's responsibility to capitalism, and a strategy to fix the health care system. Open for comment; 0 Comment(s) posted.

The Role of the Corporation in Society: An Alternative View and Opportunities for Future Research

by George Serafeim

Neoclassical economics and several management theories assert that the corporation's sole objective is maximizing shareholder wealth. Despite these theoretical approaches, however, actual corporate conduct in some cases is inconsistent with shareholder value maximization as the sole objective of the corporation. In fact, corporations are now engaging in environmental and social causes with multiple stakeholders in mind and this is especially true for the world's largest corporations. Overall, the author presents an alternative view of the role of the corporation in society where the objective of the corporation is a function of its size. Specifically, the largest corporations are forced to balance different stakeholders' interests instead of simply maximizing shareholder wealth. The author attributes this change in the role of the corporation to the increasing concentration of economic activity and power in a few corporations which has resulted in 1) a few companies having a very large impact on society, 2) corporations and influential actors which are easier to locate, and 3) increasing separation of ownership and control. These events have led to what scholars Berle and Means (1932) predicted more than 80 years ago: both owners and "the control" accepting public interest as the objective of the corporation. Further research on the topics outlined in this paper may increase our understanding of corporate behavior and the role of these corporations in society. Key concepts include: The role of the corporation in society can be a function of the broader economic, social, and political context and as a result evolves over time. Corporations are not a homogeneous group as it is assumed by profit maximization theories. Not all corporations have the same role in society. Increasing corporate engagement on environmental and social goals has redefined the relation between business and society. It remains to be seen whether this trend will continue. Closed for comment; 0 Comment(s) posted.

The Surprising Link Between Language and Corporate Responsibility

by Michael Blanding

Research by Christopher Marquis shows that a company's degree of social responsibility is affected by a surprising factor—the language it uses to communicate. Closed for comment; 21 Comment(s) posted.

Speaking of Corporate Social Responsibility

by Hao Liang, Christopher Marquis, Luc Renneboog & Sunny Li Sun

While many scholars have observed that corporate social responsibility (CSR) is a deeply cultural process, there are inconsistent findings on the specific cultural mechanisms by which culture affects CSR. This paper suggests that the way in which corporations use language is a strong predictor of their CSR and sustainability practices. It addresses two questions: 1) Why do CSR practices vary significantly across countries? And 2) How does the future-time orientation of companies' working languages affect their adoption of, compliance to, and engagement in corporate social responsibility programs? Building on the future-time criterion of scholars Dahl (2000) and Chen (2013), which separates languages into two broad categories-those languages that require future events to be grammatically marked when making predictions, and those that do not-the authors examine thousands of global companies across 59 countries from 1999 to 2011. The empirical results support the hypothesis that languages that grammatically separate the current tense from the future tense can significantly affect how corporations perceive future-oriented strategies, and so make corporate behavior less future-oriented. Overall, the authors introduce a new way to think about underlying variation in global CSR practices. As they show in this paper, it is crucial to examine language as an important underlying feature that shapes cultural values and the norms in a society. The study also builds on research into the ways in which perceptual category systems focus the attention, and subsequently, the behaviors, of corporate leaders. Key concepts include: Research in linguistics and economics has shown that one of the most important factors that shapes culture and creates variation across countries is spoken language. This study contributes to understanding international variation of CSR. Differences in cross-national commitment to CSR arise from characteristics of the languages spoken across the globe. Closed for comment; 0 Comment(s) posted.

Private Sector, Public Good

by Dina Gerdeman

What role, if any, does business have in creating social good? A new seminar series at Harvard Business School tackles this complex question. Closed for comment; 12 Comment(s) posted.

How the Zebra Got Its Stripes: Imprinting of Individuals and Hybrid Social Ventures

by Matthew Lee & Julie Battilana

Creating hybrid organizations that combine existing organizational forms is a complex process. Given the legitimacy challenges facing hybrid organizations, why are they created in the first place? The authors focus on the role of "environmental imprinting" on individuals: this means the persistent effects that individuals' environments during sensitive periods have on their subsequent behaviors. After constructing and analyzing a novel dataset of over 700 founders of social ventures, all guided by a social welfare logic, the authors suggest that individual imprinting helps to explain why an entrepreneur founding a social venture might create a hybrid by incorporating a secondary, commercial logic. Overall, the paper contributes to the understanding of hybrid organizations by providing the first large-scale, empirical examination of the antecedents of the widely-discussed type of hybrids that combine social welfare and commercial logics. Key concepts include: Environmental imprinting refers to the effects that characteristics of individuals' environments during sensitive periods have on their subsequent behaviors. Entrepreneurs' direct exposure to various work environments through their own experience influences their likelihood to create a new hybrid venture. The findings contribute to institutional theory more generally by showing how environmental imprints on individuals may enable divergence from current, institutionalized structures, as well as how the contours of such imprints may vary with characteristics such as tenure and type of exposure. Closed for comment; 0 Comment(s) posted.

‘Hybrid’ Organizations a Difficult Bet for Entrepreneurs

by Michael Blanding

Hybrid organizations combine the social logic of a nonprofit with the commercial logic of a for-profit business, but are very difficult to finance. So why would anyone want to form one? Julie Battilana and Matthew Lee investigate. Closed for comment; 14 Comment(s) posted.

Prosocial Bonuses Increase Employee Satisfaction and Team Performance

by Lalin Anik, Lara B. Aknin, Michael I. Norton, Elizabeth W. Dunn & Jordi Quoidbach

Designing effective incentive schemes is a central challenge for a wide range of organizations, from multinational corporations to academic departments. In pursuit of identifying the most effective strategies, organizations have devised an impressive variety of such bonuses, from fixed salaries to pay-per-performance, from commissions to end-of-year bonuses. In this paper, the authors suggest that the wide variety in such schemes masks a shared assumption: That the best way to motivate employees is to reward them with money that they then spend on themselves. The authors—Lalin Anik, Lara B. Aknin, Michael I. Norton, Elizabeth W. Dunn, and Jordi Quoidbach—propose an alternative means of incentivizing employees—what they term "prosocial bonuses"—in which organizations provide employees with bonuses used to engage in positive actions towards charities and coworkers, from donating money to remote countries to taking a coworker to lunch. The authors examine the impact of these prosocial bonuses on employee satisfaction and team performance, by reporting results from field experiments in settings ranging from bank employees in Australia to pharmaceutical sales representatives in Belgium to dodgeball teams in Canada. Overall, results suggest that a minor adjustment to employee bonuses—shifting the focus from the self to others—can produce measurable benefits for employees and organizations. Key concepts include: When organizations give employees the opportunity to spend money on others—whether their coworkers or those in need—both the employees and the company can benefit, with increased happiness and job satisfaction and even improved team performance. Prosocial bonuses can benefit both individuals and teams, on both psychological and "bottom line" indicators, in both the short and long-term. Prosocial bonuses could backfire if companies introduce them as a replacement for more standard bonuses, rather than as an additional incentive. Closed for comment; 0 Comment(s) posted.

Non-Standard Matches and Charitable Giving

by Michael Sanders, Sarah Smith & Michael I. Norton

In this article, Michael Sanders, Sarah Smith, and Michael I. Norton review evidence suggesting that matching schemes—an increasingly common strategy used by nonprofits and firms to increase giving in which organizations match employee donations to charity—may not always prove effective. The authors offer several novel matching schemes designed to improve the effectiveness of matching, some focused on individual donors in isolation and some focused on donors embedded in organizations. The authors' hope is to spur further research assessing the efficacy of these schemes, reducing the tendency for matching schemes to crowd out donations and making them more likely to increase charitable behavior. Key concepts include: A standard match operates in a simple way: For every $1 a person donates from their net consumption (i.e., for each $1 sacrificed from their ability to buy other things), their chosen cause receives more. The form that standard matches take, however, can vary. Matches may not be an optimally cost-effective way to increase giving. Charities benefit from the value of the match payments, but the match payments do not have a large positive effect on individuals' donations. There are novel alternatives to the standard match, such as non-linear matching, social (and team) matching schemes, and lottery matching. For each new type of non-standard match, the authors use existing theory and data to offer support for its potential effectiveness. Closed for comment; 0 Comment(s) posted.

How Local Events Shake Up Corporate Philanthropy

by Carmen Nobel

Large-scale events like the Olympics lead to a dramatic, albeit short-term increase in otherwise steady charitable-giving patterns among corporations headquartered near the event's host city, according to research by András Tilcsik and Christopher Marquis. Closed for comment; 1 Comment(s) posted.

Punctuated Generosity: How Mega-events and Natural Disasters Affect Corporate Philanthropy in US Communities

by András Tilcsik & Christopher Marquis

Even in a global age, local communities offer a critical context for organizational behavior. This paper asks: Since corporate giving is often locally focused, what happens to local firms' philanthropy when a major event disrupts the life of the community? Mega-events might be actively solicited (such as the Olympics, the Super Bowl, political conventions), or natural (floods and hurricanes). In particular, the authors studied how major events within communities affected the philanthropic contributions of locally headquartered corporations in the US between 1980 and 2006. There are three main findings: 1) Actively solicited mega-events had a positive effect in the event year, but also displayed more complex time-dependent dynamics. In some cases, the effects on corporate philanthropy were visible two years before the event and lasted up to six years, before eventually tapering off. 2) The impact of destructive, unexpected events depended on their magnitude. While major natural disasters depressed philanthropic spending by local corporations, smaller-scale disasters stimulated it. 3) Organizational and community factors moderated some of the effects of events. Overall, findings demonstrate the theoretical importance of looking at geography and events in tandem. Mega-events shape institutional processes in significant ways. This paper is forthcoming in Administrative Science Quarterly. Key concepts include: This paper develops an institutional perspective to unpack how and why major events within communities affect or disrupt organizations in the context of corporate philanthropy. It is necessary to look at geography and events together in order to understand the full scope of organizational dynamics. Mega-events and disasters can potentially draw increased attention to local needs and identity and give rise to new expectations in a community, leading to an increase in corporate donations. Closed for comment; 0 Comment(s) posted.

No Margin, No Mission? A Field Experiment on Incentives for Pro-Social Tasks

by Nava Ashraf, Oriana Bandiera & Kelsey Jack

Organizations from large corporations to NGOs use a range of nonfinancial performance rewards to motivate their employees, and these rewards are highly valued. While theory has suggested mechanisms through which nonfinancial incentives can elicit employee effort, evidence on the mechanisms, and on their effectiveness relative to financial incentives, remains scarce. This paper helps to fill this gap by providing evidence from a collaboration with a public health organization based in Lusaka, Zambia, that recruits and trains hairdressers and barbers to sell condoms in their shops. This setting is representative of many health delivery programs in developing countries where embedded community agents are called upon to deliver services and products, but finding an effective way to motivate them remains a significant challenge. Findings show the effectiveness of financial and nonfinancial rewards for increasing sales of condoms. Agents who are offered nonfinancial rewards ("stars" in this setting) exert more effort than either those offered financial margins or those offered volunteer contracts. Key concepts include: Nonfinancial rewards can motivate agents in settings where there are limits to the use of financial incentives. Nonfinancial rewards elicit effort by leveraging the agents' pro-social motivation and by facilitating social comparisons among agents. Closed for comment; 0 Comment(s) posted.

New Agenda for Corporate Accountability Reporting

by Martha Lagace

Professor Karthik Ramanna explains three ways to make corporate accountability reports potentially more useful to constituencies that include shareholders, communities, bondholders, and customers. Open for comment; 2 Comment(s) posted.

Want People to Save More? Send a Text

by Kim Girard

What's the most effective way to encourage people to save their money? The answer lies in a combination of peer pressure and text messages, according to new research by Assistant Professor Dina D. Pomeranz. Open for comment; 6 Comment(s) posted.

A Pragmatic Alternative for Creating a Corporate Social Responsibility Strategy

by Dina Gerdeman

Many companies preach and practice corporate social responsibility, but their efforts often lack an overall strategy that dilutes their effectiveness. Professor "Kash" Rangan and colleagues offer a pragmatic solution. Key concepts include: Many companies preach and practice corporate social responsibility, but their efforts are often disjointed and lack an overall strategy. A CSR strategy should fulfill two goals: create a positive social impact, and enhance the company's brand, reputation, employee morale, and/or its bottom line. Companies should not try to force their disparate CSR programs into their business strategies; sometimes there is a natural fit, other times not. Every company should have a clear idea of why it is involved in CSR and the expected outcomes. Closed for comment; 8 Comment(s) posted.

No News Is Good News: CSR Strategy and Newspaper Coverage of Negative Firm Events

by Jiao Luo, Stephan Meier & Felix Oberholzer-Gee

This study examines the gatekeeping role of the media in determining which negative corporate events reach a broader audience. Jiao Luo, Stephan Meier, and Felix Oberholzer-Gee test the idea that investments in corporate social responsibility (CSR) create public good will, leading the media to treat companies with a superior CSR track record in a favorable manner. They find the opposite. Newspapers are more likely to report negative news about companies if the companies invested heavily in CSR. For example, oil companies that invest in clean energy face a greater risk of media coverage in the event of an oil spill. An analysis of the tone of media coverage shows that news reports are no more positive for CSR leaders than for the average company. Key concepts include: As expectations about a company's performance rise with past investments in CSR, the cost associated with negative corporate events increases. News editors favor two types of stories: surprising incidents and events that conform to widely-held beliefs. Executives who wish to minimize the risk of media attention to negative events need to be careful not to place their organizations at the very top or the very bottom of CSR rankings. Being in the middle of the pack generates the least amount of coverage. Closed for comment; 0 Comment(s) posted.

Why Every Company Needs a CSR Strategy and How to Build It

by Kash Rangan, Lisa A. Chase & Sohel Karim

Despite certain criticisms, more and more companies in the world practice some form of corporate social responsibility. This paper offers a pragmatic alternative framework for CSR with a view towards developing its practice in an evolutionary way. The authors' extensive experience working with CSR practitioners convinces them that exhorting companies to hone their CSR practice under a shared value framework does not reflect the reality for a majority of businesses. CSR executives oversee a variety of social initiatives that may or may not directly contribute to a company's business goals. The role of an executive is to achieve the difficult task of reconciling the various programs, quantifying their benefits, or at least sketching a logical connection to the business, and securing the support of his or her business line counterparts. This role, when performed well, would lead to the development of a CSR strategy for the company. Key concepts include: Ideally, well-managed CSR creates social and environmental value, while supporting a company's business objectives and reducing operating costs, and enhancing relationships with key stakeholders and customers. There is no one-size-fits-all CSR model. Individual companies typically engage in a variety of programs motivated by a wide range of perspectives and corporate protagonists. In current practice, the management of philanthropic initiatives happens in what the authors label as Theatre 1; supply chain and cause marketing initiatives happen in Theatre 2; and transformative ecosystem initiatives occur in Theatre 3. These different initiatives are typically managed at different management levels, and some are staff functions and others line functions, resulting in a messy state of affairs. Gaining a unified vision is a central challenge of coordinating CSR efforts in all three theatres. In addition to empowering CSR executives to practice strategic initiatives, strong leadership and support for CSR initiatives at the top levels of executive management is critical. The strategic role of a Corporate Responsibility Officer needs to be established as an independent full-time position having access to the CEO and having input to the development of the company's business strategy. Closed for comment; 0 Comment(s) posted.

Beyond Heroic Entrepreneurs

by Carmen Nobel

Research in progress by Harvard Business School's Julie Battilana and Matthew Lee reveals that a large number of social entrepreneurs are focused on local rather than global change, and on sustainable funding. Closed for comment; 7 Comment(s) posted.

The New Measures for Improving Nonprofit Performance

by Julia Hanna

In this era of scarce economic resources, the pressure on nonprofit managers to show quantifiable results is greater than ever. Alnoor S. Ebrahim and philanthropist Mario Morino discuss the differences and similarities between performance measurement in the for-profit and nonprofit sectors. Open for comment; 4 Comment(s) posted.

Charitable Giving When Altruism and Similarity Are Linked

Harvard Business School professor Julio J. Rotemberg looks at what makes people decide to contribute to a charity. He focuses on two psychological factors: that people feel better about themselves when other people agree with them, and that people tend to be more charitable to other like-minded people. Key concepts include: The aforementioned psychological factors largely determine when and why people decide to donate to certain charities. The fact that donations are often based on perceived camaraderie helps to explain why people continue to donate to a certain charity even when they know that the charity has been largely subsidized by the government or another organization that makes large donations. This paper suggests that charitable organizations that differentiate themselves from other organizations with similar objectives by seeking funds from distinct donor groups may succeed in their competition with less focused competitors. Closed for comment; 0 Comment(s) posted.