The Effects of Corporate Governance and Institutional Ownership Types on Corporate Social...

8/17/2019 The Effects of Corporate Governance and Institutional Ownership Types on Corporate Social Performance

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THE EFFECTS OF CORPORATE GOVERNANCE AND INSTITUTIONAL

OWNERSHIP TYPES ON CORPORATE SOCIAL PERFORMANCE

The efects o instittion!" in#esto$ t%&es !n' (o#e$n!nce 'e#ices on t)o

'i*ensions o co$&o$!te soci!" &e$o$*!nce +CSP, )e$e e-!*ine'. Pension

n' e/it% )!s &ositi#e"% $e"!te' to 0oth ! &eo&"e +)o*en !n' *ino$ities1co**nit%1 !n' e*&"o%ee $e"!tions, !n' ! &$o'ct /!"it% +&$o'ct !n'

en#i$on*ent, 'i*ension o CSP1 0t *t!" !n' in#est*ent 0!n2 n's

e-hi0ite' no 'i$ect $e"!tionshi& )ith CSP. Otsi'e 'i$ecto$ $e&$esent!tion )!s

&ositi#e"% $e"!te' to 0oth CSP 'i*ensions. To& *!n!(e*ent e/it% )!s

&ositi#e"% $e"!te' to the &$o'ct /!"it% 'i*ension 0t n$e"!te' to the

&eo&"e 'i*ension o CSP.

Ee2 '!$i 3enis in#esto$ institsioni!" '!n &e$!n(2!t t!t! 2e"o"! &!'! '!

'i*ensi '!$i co$&o$!te soci!" &e$o$*!nce +CSP, te"!h 'i3i. E2it!s '!n!

&ensin 0e$h0n(!n &ositi &!'! 'i*ensi *!s%!$!2!t +&e$e*&!n '!n*ino$it!s1 2o*nit!s1 '!n h0n(!n 2!$%!)!n, '!n 'i*ensi 2!"it!s &$o'2

+&$o'2 '!n "in(2n(!n, '!$i CSP1 t!&i '!n! 0!n2 0e$s!*! '!n in#est!si

ti'!2 *enn322!n h0n(!n "!n(sn( 'en(!n CSP. Di "!$ $e&$esent!si

'i$e2t$ 0e$h0n(!n &ositi 'en(!n 2e'! 'i*ensi CSP. E2it!s *!n!3e*en

&nc!2 0e$h0n(!n &ositi te$2!it 'en(!n 'i*ensi 2!"it!s &$o'21 tet!&i

ti'!2 te$2!it 'en(!n 'i*ensi *!s%!$!2!t '!$i CSP.

St$!te(ic 'ecision *!2e$s in the 4556s h!#e seen 0oth the e*e$(ence o !

h%&e$co*&etiti#e ("o0!" *!$2et&"!ce !n' inc$e!se' cont!ct !n' &$ess$e o$

!ccont!0i"it% $o* ! *"tit'e o e-te$n!" !n' inte$n!" st!2eho"'e$s. These

t)o 'e#e"o&*ents h!#e &"!ce' to& *!n!(e$s in ! #e$% 'i7c"t sit!tion !s

the% !tte*&t to 'e#ise st$!te(ies th!t )i"" en!0"e thei$ 8$*s to s$#i#e !n'

&$os&e$ in ! t$0"ent en#i$on*ent th!t 'e*!n's 0oth 8n!nci!" &e$o$*!nce

!n' efecti#e st!2eho"'e$ $es&onsi#eness.

Pen(!*0i" 2e&ts!n st$!te(is &!'! t!hn 45569!n te"!h *e"ih!t *nc"n%!

&!s!$ ("o0!" hi&e$2o*&etiti '!n *enin(2!t2!n 2ont!21 '!n te2!n!n nt2

!2nt!0i"it!s '!$i 0!n%!2 st!2eho"'e$ e2ste$n!" '!n inte$n!". D!

&e$2e*0!n(!n ini te"!h *ene*&!t2!n *!n!3e$ &nc!2 '!"!* sit!si %!n(

s!n(!t s"it 2!$en! *e$e2! 0e$s!h! nt2 *e$!nc!n( st$!te(i %!n( !2!n

*e*n(2in2!n &e$s!h!!n *e$e2! nt2 0e$t!h!n hi'& '!n 0e$2e*0!n(

'i "in(2n(!n %!n( &enh (e3o"!2 %!n( *enntt 2ine$3! 2e!n(!n '!n

2e$es&onsi!n st!2eho"'e$ %!n( ee2ti.

In this ch!n(in( en#i$on*ent1 st$!te(ic 'ecision *!2e$s h!#e )itnesse' the

e*e$(ence o ! ne) st!2eho"'e$ ($o&1 instittion!" in#esto$s1 )hich inc"'e


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&0"ic !n' nion &ension n's1 *t!" n's1 in#est*ent 0!n2e$s1

ins$!nce co*&!nies1 !n' &$i#!te 8$*s +Ch!(!nti : D!*!n&o$1 4554;

Pon'1 455


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o instittion!" in#esto$s1 0o!$' co*&osition1 to& *!n!(e*ent te!* e/it%1

!n' s&eci8c CSP 'i*ensions. To e-!*ine these $e"!tionshi&s1 )e 'e#e"o&e' !

s%ste*ic inte($!te' *o'e" th!t )e teste' sin( ! "!((e' st$ct$!" e/!tion

*o'e"in( &$oce'$e. Use o sch ! &$oce'$e !""o)s si*"t!neos testin( o

!"" $e"!tionshi&s in one *o'e" !n' ths ! 0ette$ n'e$st!n'in( o

$e"!tionshi&s 0et)een co*&onents.

Pene"iti!n ini *e*&e$"!s !$e! !2ti#it!s co$&o$!te soci!" &e$o$*!nce +CSP,

'!$i &e$s&e2ti t!t! 2e"o"! &e$s!h!!n 'en(!n *en(3i h0n(!n !nt!$!

3enis in#esto$ institsion!"1 2o*&osisi 'e)!n1 e2it!s ti* *!n!3e*en

&nc!21 '!n 'i*ensi CSP te$tent. Unt2 *en(3i h0n(!n ini1 &ene"iti

*en(e*0!n(2!n se0!h *o'e" te$inte($!si siste*i2 %!n( 2!*i 3i 'en(!n

*en((n!2!n &$ose'$ st$ct$!" e/!tion *o'e"in( +SEM,. Pen((n!!n

&$ose'$ te$se0t *e*n(2in2!n &en(3i!n sec!$! si*"t!n '!$i se*!

h0n(!n '!"!* s!t *o'e" '!n 'en(!n 'e*i2i!n &e*!h!*!n %!n( "e0ih

0!i2 '!$i h0n(!n !nt!$ 2o*&onen.

THEORETICAL MODEL DEVELOPMENT

The theo$etic!" *o'e" &$esente' he$e is 0!se' on the &$e*ise th!t 'ife$ent

!ntece'ent !cto$s1 sch !s instittion!" o)ne$shi& c!te(o$ies !n' 8$*

(o#e$n!nce 'e#ices1 *!% h!#e 'ife$ent efects on 'ife$ent 'i*ensions o

CSP. Most &$e#ios st'ies h!#e se' ! ni'i*ension!" +!(($e(!te',

*e!s$e o CSP !n' h!#e $este' on the !ss*&tion th!t !"" instittion!"

in#esto$s h!#e the s!*e in#est*ent (o!"s !n' )i"" the$eo$e 0eh!#e in the

s!*e )!% )ith $e(!$' to co$&o$!te otco*es. Ho)e#e$1 $ecent $ese!$ch h!s

c!st 'o0t on 0oth o these !ss*&tions +=$ic2"e%1 Le!se1 : S*ith1 45>>;

G$i7n : M!hon1 455; Hos2isson1 Hitt1 ohnson1 : G$oss9*!n1 455; @ochh!$

: D!#i'1 455,.

Mo'e" teo$itis %!n( 'is!3i2!n 'i sini 'i'!s!$2!n &!'! &$e*is 0!h)! !2to$ %(

0e$0e'!1 se&e$ti 2!te(o$i 2e&e*i"i2!n institsion!" '!n &e$!n(2!t t!t! 2e"o"!

&e$s!h!!n1 *n(2in *e*i"i2i ee2 %!n( 0e$0e'! &!'! 'i*ensi %!n(

0e$0e'! '!$i CSP. @e0!n%!2!n &ene"iti!n se0e"*n%! te"!h *en((n!2!n

2$!n ni'i*ension!" +!($e(!t, '!$i CSP '!n 0e$!s*si 0!h)! se*!

in#esto$ institsion!" *e*i"i2i t3!n in#est!si %!n( s!*! '!n 2!$en! it

!2!n 0e$&e$i"!2 'en(!n c!$! %!n( s!*! seh0n(!n 'en(!n h!si"

&e$s!h!!n. N!*n1 &ene"iti!n te$0!$ te"!h *e$!(2!n 2e'! !s*si ini

+=$ic2"e%1 Le!se1 : S*ith1 45>>; G$i7n : M!hon1 455; Hos2isson1 Hitt1

ohnson1 : G$oss9*!n1 455; @ochh!$ : D!#i'1 455,.

Co$&o$!te Soci!" Pe$o$*!nce


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Se#e$!" CSP9$e"!te' $ese!$ch /estions h!#e 0een in#esti(!te'1 )ith *i-e'

$es"ts +G$i7n : M!hon1 455,. These *i-e' $es"ts *!% 0e !tt$i0te' to the

#!$ios )!%s the CSP const$ct h!s 0een o&e$!tion!""% 'e8ne' +C!$$o""1

4554,1 to the "!c2 o !&&$o&$i!te st!tistic!" cont$o"s1 !n' to the &ossi0"%

in!&&$o&$i!te co*0inin( o CSP s0'i*ensions +G$i7n : M!hon1 455,. Use

o the '!t!90!se 'e#e"o&e' 0% @in'e$1 L%'en0e$(1 Do*ini1 !n' Co*&!n%

+@LD,1 )hich o03ecti#e"% $!tes 8$*s on nine 'i*ensions o CSP1 *!% $ecti%

these &$o0"e*s. Fi#e o the @LD 'i*ensions h!#e 0een $e/ent"% se' o$

$ese!$ch &$&oses +G$!#es : W!'9'oc21 455; T$0!n : G$eenin(1 455, !

8$*Bs soci!" &e$o$*!nce )ith $e(!$' to "oc!" co**nities1 )o*en !n'

*ino$ities1 e*&"o%ee $e"!tions1 the n!t$!" en#i$on*ent1 !n' the /!"it% o

&$o'cts o$ se$#ices.

=e0e$!&! &e$t!n%!!n te$2!it &ene"iti!n CSP te"!h 'ite"iti1 'en(!n h!si" %!n(

0e$!(!* +G$i7n : M!hon1 455,. H!si" 0e$!(!* ini '!&!t 'i2!it2!n 'en(!n

0e$0!(!i c!$! 2onst$2 CSP %!n( te"!h 'i3e"!s2!n sec!$! o&e$!sion!" +C!$$o""1

4554,1 2$!n(n%! 2ont$o" st!tisti2 %!n( ses!i1 '!n 2e*n(2in!n

&en((!0n(!n %!n( ti'!2 te&!t '!$i s0 'i*ensi CSP +G$i7n : M!hon1

455,. Pen((n!!n '!t!0!se %!n( 'i2e*0!n(2!n o"eh @in'e$1 L%'en0e$(1

Do*ini1 !n' Co*&!n% +@LD,1 %!n( *!n! sec!$! o0%e2ti *eni"!i &e$s!h!!n

&!'! se*0i"!n 'i*ensi CSP1 *n(2in *e*&e$0!i2i *!s!"!h ini. Li*! '!$i

'i*ensi @LD te"!h se$in( 'i(n!2!n nt2 t3!n &ene"iti!n +G$!#es : W!'9

'oc21 455; T$0!n : G$eenin(1 455, 2ine$3! sosi!" &e$s!h!!n %!n(

0e$2en!!n 'en(!n *!s%!$!2!t sete*&!t1 &e$e*&!n '!n 2!* *ino$it!s1

h0n(!n 2!$%!)!n1 "in(2n(!n !"!*1 '!n 2!"it!s &$o'2 !t! 3!s!.

Rese!$che$s h!#e (ene$!""% !cce&te' the notion th!t CSP is *"ti'i*ension!"

+C!$$o""1 4554; G$i7n : M!hon1 455, 0t h!#e co*0ine' the #!$ios

'i*ensions se' to *e!s$e the const$ct into one !(($e(!te *e!s$e

+G$i7n : M!hon1 455,. Ho)e#e$1 !s G$i7n !n' M!hon note'1 Co""!&sin(

the @LDBs *"ti&"e 'i*ensions into ! ni'i*ension!" in'e- *!% *!s2 the

in'i#i'!" 'i*ensions th!t !$e e/!""% i*&o$t!nt !n' $e"e#!nt +455 4,.

We echo these ee"in(s !n' s((est th!t co*0inin( !"" o the CSP 'i*ensions

into one const$ct is in!&&$o&$i!te !s the$e !&&e!$ to 0e !t "e!st t)o1

conce&t!""% 'istinct1 'i*ensions +4, ! co**nit%1 )o*en1 *ino$ities1 !n'e*&"o%ee $e"!tions 'i*ension !n' +


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&$o'ct !n' se$#ice /!"it% !n' to ! 8$*Bs st!nce to)!$' the n!t$!"

en#i$on*ent. P$o'ct /!"it% !n' en#i$on*ent!""% son' *!n!ct$in( !$e1

in efect1 t)o !tt$i0tes o &$o'cin( ! &$o'ct. The est!0"ish*ent o the ISO

51666 c$ite$i! 0% the Inte$n!tion!" O$(!ni!tion o$ St!n'!$'i!tion $e/i$es

8$*s to est!0"ish ! se$ies o *!n!(e*ent s0s%ste*s1 st!n'!$'s1 !n' (i'e9

"ines to ens$e &$o'ct /!"it% !s )e"" !s s!e !n' en#i$on*ent!""%

$es&onsi0"e &$!ctices +U*e$i1 455,. The "!te$ ISO 41666 c$ite$i! e-&"icit"%

e*&h!sie st!n'!$'s o$ &$o'ction th!t $e/i$e 8$*s to 0e en#i$on*ent!""%

conscios !n' co*&"i!nt +C!scio1 455; P$i1 455,. In 455 the$e )e$e o#e$

51666 ISO9ce$ti8e' o$(!ni!tions +U*e$i1 455,. This e*&h!sis on

en#i$on*ent!""% conscios *!n!ct$in( efecti#e"% "in2s these t)o t%&es o

co$&o$!te soci!" &e$o$*!nce.

P!$! &ene"iti &!'! **n%! te"!h *ene$i*! (!(!s!n 0!h)! CSP !'!"!h

*"ti'i*ension!" +C!$$o""1 4554; G$i7n : M!hon1 455, tet!&i

*en((!0n(2!n 0e$0!(!i 'i*ensi %!n( 'i(n!2!n nt2 *en(2$

2onst$2 *en3!'i s!t 2$!n !($e(!t +G$i7n : M!hon1 455,. N!*n1

se0!(!i c!t!t!n G$i7n '!n M!hon1 Rnthn%! 0e0e$!&! 'i*ensi @LD 2e

'!"!* in'e2s ni'i*ension!" '!&!t *ent&i 'i*ensi in'i#i' %!n( s!*!9

s!*! &entin( '!n $e"e#!n +455 4,. @!*i *en%!$!2!n 2e*0!"i h!" ini

'!n *en%!$!n2!n 0!h)! *en((!0n(2!n se*! 'i*ensi CSP '!"!* s!t

2onst$2 !'!"!h ti'!2 te&!t 2!$en! t!*&!2n%! !'! seti'!2n%! '!

2onse&t!" %!n( 0e$0e'!1 'i*ensi +4, 'i*ensi *!s%!$!2!t1 &e$e*&!n1

*ino$it!s1 '!n h0n(!n 2!$%!)!n '!n +


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in the "e#e" o instittion!" ho"'in(s h!s 0een !ssoci!te' )ith ! 'ec"ine in the

co*&etiti#eness !n' 8n!nci!" &e$o$*!nce o U.S. 8$*s +G$!#es : W!''oc21

455,. Acco$'in( to this !$(*ent1 this 'ec"ine is 'e in &!$t to instittion!"

n' *!n!(e$sB nee' to sho) i*&$o#e' $es"ts $e/ent"% !n' $e("!$"%.

=ec!se thei$ o)n $e)!$'s !$e 0!se' on /!$te$"% $es"ts +Fo$tne1 455?;

G$!#es : W!''oc21 455,1 the% &$se sho$t9te$* (!ins. To 0e $es&onsi#e1

the to& *!n!(e*ents o 8$*s 'o not *!n!(e o$ the "on( te$* o$

!'e/!te"% $es&on' to 'i#e$se st!2eho"'e$s sch !s co**nities1

e*&"o%ees1 the en#i$on*ent1 !n' )o*en !n' *ino$ities.

Instittion!" o)ne$s te"!h *enin(2!t2!n 2e&e*i"i2!n *e$e2! sec!$!

'$!*!tis '!"!* 0e0e$!&! t!hn te$!2hi$1 '!n &!'! t!hn 455< *e$e2!

*en(!s!i se2it!$ 6 &e$sen '!$i se*! e2it!s %!n( 0e$e'!$ +S*ith1 455,.

P!$! &ene"iti 0e$&en'!&!t 0!h)! &enin(2!t!n tin(2!t 2e&e*i"i2!n

institsion!" te"!h 'i2!it2!n 'en(!n &en$n!n '!%! s!in( '!n 2ine$3!

2e!n(!n &e$s!h!!n AS +G$!#es '!n W!''oc21 455,. Men$t !$(*en

ini1 &en$n!n ini 'ise0!02!n se0!(i!n *!n!3e$ '!n! institsion!"

*e*0th2!n nt2 *enn322!n h!si" %!n( "e0ih 0!i2 sec!$!

0e$2esin!*0n(!n. @!$en! i*0!"!n *e$e2! sen'i$i 'i'!s!$2!n &!'! h!si"

2!$t!"!n +Fo$tne1 455?; G$!#es '!n W!''oc21 455,1 *e$e2! *en(e3!$

2entn(!n 3!n(2! &en'e2. Unt2 *en3!'i $es&onsi1 *!n!3e*en &nc!2

&e$s!h!!n ti'!2 *en(e"o"! nt2 3!n(2! &!n3!n( !t! sec!$! *e*!'!i

*en!n((!&i 0e$!(!* st!2eho"'e$ se&e$ti *!s%!$!2!t1 2!$%!)!n1

"in(2n(!n1 '!n &e$e*&!n '!n 2!* *ino$it!s.

Ho)e#e$1 the "!$(e inc$e!se in the !*ont o e/it% o)ne' 0% instittion!"

in#esto$s h!s !"so "e' to the 'e#e"o&*ent o conte$!$(*ents. Instittion!"

sh!$eho"'e$s ho"'in( "!$(e !*onts o 8$* e/it% c!nnot e!si"% 'i#est thei$

ho"'in(s )ithot se#e$e"% !fectin( sh!$e &$ice +Pon'1 455> ?4,.

N!*n1 &enin(2!t!n 0es!$ '!"!* 3*"!h e2it!s %!n( 'i*i"i2i o"eh in#esto$

institsion!" 3(! te"!h *en%e0!02!n &e$2e*0!n(!n !$(*ent %!n( 2ont$!.

Pe*e(!n( s!h!* institsion!" %!n( *e*e(!n( se3*"!h 0es!$ e2it!s

&e$s!h!!n ti'!2 '!&!t 'en(!n *'!h *e"!22!n 'i#est!si 2e&e*i"i2!n

*e$e2! t!n&! *e*&en(!$hi h!$(! s!h!* +Pon'1 455


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*enco0! nt2 *e*&en(!$hi *!n!3e*en &nc!2 nt2 *en(e"o"!

2e&entin(!n 3!n(2! &!n3!n( '!$i &e*e(!n( s!h!* se0!(!i h!si"n%!

+Ho"'e$ness : Sheeh!n1 45>>; Hos2isson1 ohnson1 : Moese"1 455,.

Ho"'e$ness '!n Sheeh!n *en%!t!2!n se0!(!i 0e$i2t Pe*e(!n( s!h!*

te$0es!$ 0i!s!n%! te$"i0!t "!n(sn( '!"!* &en(e"o"!!n &e$s!h!!n A$tin%!1

&e*e(!n( s!h!* te$0es!$ ti'!2 h!n%! *e*!nt! ti* *!n!3e*en1 tet!&i

*e$e2! *e*i*&in *e$e2! +45>> ?4,.

In $ese!$ch sin( ! s!*&"e o , *en(e*2!2!n 0!h)! &osisi 2e&e*i"i2!n 61&e$sen c2& nt2 *e*&en(!$hi h!si" &e$s!h!!n.

These t)o o&&osite !$(*ents h!#e "e!' $ese!$che$s to h%&othesie

o&&osite $e"!tionshi&s 0et)een instittion!" sh!$eho"'e$s !n' 8$*sB 8n!nci!"

!n' co$&o$!te soci!" &e$o$*!nce. We !$(e th!t so*e c!te(o$ies o

instittion!" in#esto$s !ct *o$e !s t$!'e$s conce$ne' &$e'o*in!nt"% )ith

/!$te$"% e!$nin(s !n' th!t othe$s !ct !s "on(9te$* in#esto$s !n' *!% 0e

*o$e conce$ne' )ith ! 8$*Bs soci!" &e$o$*!nce 0ec!se it *!% i*&!ct

8n!nci!" &e$o$*!nce o#e$ ti*e.

@e'! !$(*en %!n( 0e$"!)!n!n te"!h *enntn &ene"iti nt2 0e$hi&otesis

h0n(!n %!n( 0e$"!)!n!n !nt!$! &e*e(!n( s!h!* institsion!" '!n

2ine$3! 2e!n(!n '!n CSP. @!*i 0e$&en'!&!t 0!h)! 0e0e$!&! 2!te(o$i

in#esto$ institsion!" "e0ih 0e$&e$!n se0!(!i t$!'e$ te$t!*! 0e$s!n(2t!n

'en(!n "!0! 2!$t!"!n '!n 0!h)! o$!n( "!in 0e$tin'!2 se0!(!i in#esto$


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3!n(2! &!n3!n( '!n *n(2in "e0ih &e'"i 'en(!n 2ine$3! sosi!" &e$s!h!!n

2!$en! '!&!t *e*&en(!$hi 2ine$3! 2e!n(!n '!$i )!2t 2e )!2t.

HYPOTHESES

In#est*ent M!n!(e*ent Fn's

Mt!" n's !n' in#est*ent 0!n2 *!n!(e$sB &$i*!$% o03ecti#e is ! hi(h

c$$ent $et$n 0ec!se o thei$ o)n $e)!$' s%ste*s1 )hich e*&h!sie

/!$te$"% &e$o$*!nce +Fo$tne1 455?; St!$2s1 45>,. Fo$ e-!*&"e1 St!$2s

+45>, $e&o$te' th!t *t!" n' *!n!(e$s $ecei#e ! &e$cent!(e o the

#!"e o !ssets !n' ! 0ons o$ &en!"t% 0!se' on ho) thei$ n's &e$o$*

$e"!ti#e to !n in'e- c!"c"!te' /!$te$"%. This &$ess$e on in#est*ent

*!n!(e*ent n's +*t!" n's !n' in#est*ent 0!n2s, o$ sho$t9te$*

&$o8t!0i"it%1 co&"e' )ith the &otenti!" 'i7c"t% o se""in( "!$(e 0"oc2s o

stoc2 )ithot ! "oss1 *!% $es"t in ! &$ee$ence o$ st$!te(ies !n' &$o3ects)ith ! hi(h &$o0!0i"it% o ! sho$t9te$* &!%of. Ths1 )e )o"' e-&ect

in#est*ent *!n!(e$s to e*&h!sie the 0otto* "ine +sho$t9te$*

&e$o$*!nce, in *ost 'ecisions !n' to &$ess 8$* *!n!(e*ent to !'o&t this

o$ient!tion.

t3!n t!*! *!n!3e$ Re2s! '!n! '!n in#est!si 0!n2 !'!"!h $et$n %!n(

tin((i 2!$en! siste* $e)!$' *e$e2! sen'i$i1 %!n( *ene2!n2!n 2ine$3!

2!$t!"!n +Fo$tne1 455?; St!$2s1 45>,. Mis!"n%!1 St!$2s +45>, *e"!&o$2!n

0!h)! *!n!3e$ $e2s! '!n! *ene$i*! &e$sent!se '!$i ni"!i !set '!n 0ons

!t! h2*!n 0e$'!s!$2!n 0!(!i*!n! '!n! *e$e2! *enn322!n $e"!ti te$h!'!& in'e2s %!n( 'ihitn( 2!$t!"!n. Te2!n!n &!'! $e2s! '!n! '!n

in#est!si 0!n2 ini nt2 2entn(!n 3!n(2! &en'e21 'it!*0!h 'en(!n

2es"it!n !2!n &otensi *en3!" 0"o2 0es!$ s!h!* t!n&! 2e$(i!n1 '!&!t

*en(!2i0!t2!n &$ee$ensi nt2 st$!te(i '!n &$o%e2 'en(!n &$o0!0i"it!s

tin((i '!$i h!si" 3!n(2! &en'e2. Den(!n 'e*i2i!n1 2it! !2!n *en(h!$!&2!n

*!n!3e$ in#est!si nt2 *ene2!n2!n (!$is 0!)!h +2ine$3! 3!n(2! &en'e2, 'i

se0!(i!n 0es!$ 2e&ts!n '!n *ene2!n *!n!3e*en &e$s!h!!n nt2

*en(!'o&si o$ient!si ini.

In#est*ent *!n!(e$s *!% !"so en(!(e in &o$to"io shKin( +*o#e*ent in!n' ot o 8$* stoc2s, )hi"e se!$chin( o$ the hi(hest sho$t9te$* &!%of.

Recent st'ies in'ic!te th!t *t!" n' *!n!(e$s ten' to ho"' ! (i#en

8$*Bs stoc2 o$ "ess ti*e th!n &ension n' *!n!(e$s +Gi"son : @$!!2*!n1

4554, !n' th!t the% *!% !'o&t ! t$!'e$ o$ient!tion !n' inc$e!se o$ 'ec$e!se

the $is2iness o thei$ &o$to"ios +*o#e in !n' ot o stoc2s, in !n !tte*&t to

*!-i*ie thei$ e-&ecte' co*&ens!tion +=$o)n1 H!$"o)1 : St!$2s1 455,.


9/21

M!n!3e$ in#est!si 3(! '!&!t te$"i0!t '!"!* &o$too"io shKin( +(e$!2!n

*!s2 '!n 2e"!$ '!$i s!h!* &e$s!h!!n, 2eti2! *enc!$i h!si" 3!n(2!

&en'e2 te$tin((i. St'i te$0!$ *enn322!n 0!h)! &en(e"o"! $e2s! '!n!

cen'e$n( *e*e(!n( s!h!* &e$s!h!!n %!n( 'i0e$i2!n nt2 )!2t %!n(

"e0ih se'i2it '!$i&!'! &en(e"o"! '!n! &ensin +Gi"son '!n @$!!2*!n1 4554,

'!n 0!h)! *e$e2! *n(2in '!&!t *en(!'o&si o$ient!si t$!'e$ '!n

*enin(2!t2!n !t! *en($!n(i $isi2o &o$too"io *e$e2! +0e$(e$!2 *!s2

'!n 2e"!$ s!h!*, '!"!* &!%! nt2 *e*!2si*!"2!n 2o*&ens!si %!n(

*e$e2! h!$!&2!n +=$o)n1 H!$"o)1 : St!$2s1 455,.

Gi#en the !o$e*entione' &$ess$e o$ $et$ns1 in#est*ent *!n!(e$s *!%

not 0e &ositi#e"% &$e'is&ose' to in#estin( *!n!(e$i!" ti*e o$ 8$* $e9so$ces

in co$&o$!te soci!" &e$o$*!nce. P$e#ios $ese!$ch h!s s&&o$te' this

&osition in th!t in#est*ent *!n!(e$s ten' to &$ee$ in#est*ent st$!te(ies

o$ co$&o$!te ($o)th +sch !s inte$n!tion!" 'i#e$si8c!tion o$ !c/isition o

ne) techno"o(ies, o#e$ the inte$n!" 'e#e"o&*ent o ne) &$o'cts !n' R:D

e-&en'it$es +)hich *!% "ti*!te"% !fect &$o'ct /!"it%, 0ec!se o the

"on(e$ ti*e nee'e' to $e!"ie (!ins )ith the "!tte$ +Hos2isson et !".1 455;

@ochh!$ : D!#i'1 455,. In#est*ent *!n!(e$sB o&inion $e(!$'in( the &eo&"e

'i*ension o CSP *!% 0e *o$e &$ononce'. An inte$#ie) con'cte' in

Fo$tne )ith #!$ios instittion!" n' *!n!(e$s s((este' th!t in#est*ent

*!n!(e$s *!% not 0e !#o$!0"% &$e'is&ose' to in#est*ents in the &eo&"e

'i*ension o CSP. Ch!$"es =$nie1 ch!i$*!n o O&&enhei*e$ C!&it!"1 ! "!$(e

*t!" n'1 s**e' & the o&inions o in#est*ent *!n!(e$s in this

st!te*ent

I $e*e*0e$ (oin( to ! *eetin( o one o o$ "!$(e stoc2s9it )!s AVON. Th$ee

o the ho"'e$s )e$e st!te !n' "oc!" &ension n's1 !"" the% t!"2e' !0ot )!s1

ho) *!n% *ino$ities !$e %o (oin( to h!#e Ho) *!n% )o*en !$e (oin( to

0e on the 0o!$' P$e"% &o"itic!" /estions. ... A e) o s 8n!""% s!i'1 LetBs

(et so*e /estions he$e th!t !$e $e"e#!nt. +Fo$tne1 455? ?I $e*e*0e$

(oin( to ! *eetin( o one o o$ "!$(e stoc2s9it )!s AVON. Th$ee o the

ho"'e$s )e$e st!te !n' "oc!" &ension n's1 !"" the% t!"2e' !0ot )!s1 ho)

*!n% *ino$ities !$e %o (oin( to h!#e Ho) *!n% )o*en !$e (oin( to 0e

on the 0o!$' P$e"% &o"itic!" /estions. ... A e) o s 8n!""% s!i'1 LetBs (etso*e /estions he$e th!t !$e $e"e#!nt. +Fo$tne1 455? ?

We s((est th!t the &$esence o instittion!" ho"'in(s cont$o""e' 0%

in#est*ent *!n!(e$s )i"" 0e ne(!ti#e"% $e"!te' to 0oth the &eo&"e !n'

&$o'ct /!"it% 'i*ensions o CSP. Gi#en thei$ sho$t9te$* o$ient!tion1 these


10/21

in#esto$s )i"" 0e *o$e "i2e"% to #ie) sch e-&en'it$es !s ! cost o$ t!- on

thei$ &$o8ts. These !$(*ents "e!' to the o""o)in( h%&otheses

H%&othesis "!. Instittion!" ho"'in(s 0% *t!" n's !n' in#est*ent 0!n2e$s

)i"" 0e ne(!ti#e"% !ssoci!te' )ith the &eo&"e 'i*ension o CSP.

H%&othesis "0. Instittion!" ho"'in(s 0% *9t!" n's !n' in#est*ent

0!n2e$s )i"" 0e ne(!ti#e"% !ssoci!te' )ith the &$o'ct /!"it% 'i*ension o

CSP.

P0"ic Pension Fn's

In cont$!st to in#est*ent *!n!(e$s1 &ension n' *!n!(e$s *!% *onito$

*!n!(e*ent c"ose"% !n' &$ess o$ nee'e' ch!n(es +e-e$cise #oice,

0ec!se the% c!nnot e-it 0% se""in( "!$(e 0"oc2s o stoc2 +=siness Wee21

45>; Pon'1 455,1 !n' 'i$ect co**nic!tion )ith *!n!(e*ent +Si"#e$stein1

455; S*ith1 455; Usee*1 455,. Res"ts &$o#i'e' 0% Usee* +455, !s )e""

!s inte$#ie)s )ith &ension n' *!n!(e$s +=siness Wee21 455, s((est

th!t &ension n' *!n!(e$s &$ee$ 'i$ect co**nic!tion )ith 8$*s $!the$

th!n *o$e ti*e cons*in( !n' contentios &$o-% contests !n' sh!$eho"'e$

!*en'*ents. In !ct1 the Conci" o Instittion!" In#esto$s $e&o$te' th!t <

&e$cent o the 8$*s t!$(ete' 0% !cti#ist n's sett"e 0eo$e the isse is

&"!ce' on ! &$o-% !s ! sh!$eho"'e$ !*en'*ent o$ contest. In !''ition1 n'*!n!(e$s c!n co**nic!te )ith e!ch othe$ $e(!$'in( co*&!n%

*!n!(e*ent1 st$!te(%1 !n' &e$o$*!nce !n' to coo$'in!te !ctions. Pension

n' *!n!(e$s !$e !"so e#!"!te' n'e$ 'ife$ent c$ite$i! th!n in#est*ent

*!n!(e$s. Pension n' *!n!(e$ co*&ens!tion is (ene$!""% not tie' to the

&e$o$*!nce o ! n'; inste!'1 the% !$e s!"!$ie' e*&"o%ees +McGinn1 455,.

Ths1 &ension n' *!n!(e$s !$e not s03ect to the s!*e sho$t9te$*

&$ess$es !s in#est*ent *!n!(e$s !n' the% the$eo$e h!#e "on(e$ ti*e

ho$ions.

In#est*ent in CSP ten's to 0e ! "on(9te$* co**it*ent +M!h!&!t$!1 45>,.As G$!#es !n' W!'9'oc2 +455, note'1 the$e nee's to 0e co*&!ti0i"it%

0et)een !n instittion!" o)ne$Bs ti*e ho$ion !n' the ti*e nee'e' to $e!"ie

the 0ene8ts o in#est*ent in CSP. =ec!se &ension n' *!n!(e$s h!#e

0$o!' &o$to"ios1 the% *!% se !n in'e-in( st$!te(% in )hich the% 0% sh!$es

in ! s&eci8c c"!ss o 8$*s +Gi"son : @$!!2*!n1 4554,. In'e-in( st$!te(ies

necess!$i"% *!2e instittions "on(9te$* in#esto$s !n' $e'ce &o$to"io


11/21

t$no#e$. In !ct1 Gi"son !n' @$!!2*!n +4554, &$o#i'e' e#i'ence s((estin(

th!t1 n"i2e *t!" n's1 )hich *o#e in !n' ot o stoc2s $e/ent"%1 &0"ic

&ension n's *!% ho"' stoc2 in s&eci8c 8$*s o$ & to ! 'ec!'e. These

8n'in(s !$e consistent )ith Hi"" !n' Sne""Bs +45>>, !$(*ent th!t ! "on(9te$*

o$ient!tion *!% 0e &ositi#e"% !ssoci!te' )ith hi(he$ co$&o$!te !c9contin(

!n' soci!" &e$o$*!nce.

In#esto$s conce$ne' )ith consistent $et$ns o#e$ ti*e *!% 0e "i2e"% to

e*&h!sie the /!"it% o &$o'cts ofe$e' !n' the !#oi'!nce o cost"%

en#i$on*ent!" 8nes +Si"#e$stein1 455,. In !ct1 the C!"io$ni! P0"ic

E*&"o%eesB Reti$e*ent S%ste* +C!"PERS, 3oine' )ith t)o othe$ *!3o$ &0"ic

&ension n's to 'e*!n' st$on(e$ !ction $o* E--on ch!i$*!n L!)$ence G.

R!)" !te$ the E--on V!"'e oi" s&i"". The n' *!n!(e$s )!nte' R!)" to

co$$ect the co*&!n%Bs &oo$ !n' &otenti!""% cost"% en#i$on9*ent!" $eco$' +Los

An(e"es Ti*es1 4554,. Rese!$ch h!s !"so s((este' th!t &ension n's

&$ee$ inte$n!" 'e#e"o&*ent o ne) &$o'cts th$o(h in9c$e!se' R:D

e-&en'it$es +Hos2isson et !".1 455; @ochh!$ : D!#i'1 455,.

In !''ition to 0ein( conce$ne' )ith 8n!nci!" &e$o$*!nce1 &$o'ct /!"it%1

!n' the en#i$on*ent1 &ension n's *!% !"so 0e conce$ne' )ith co*&!niesB

'on!tions to "oc!" co**nities !n' )ith thei$ $e"!tions )ith )o*en1

*ino$ities1 !n' e*&"o%ees +=siness Wee21 455; Sch)!0 : Tho*!s1 455>,.

Fo$ e-!*&"e1 Sch)!0 !n' Tho*!s $e&o$te' th!t nion &ension n's h!#e

0eco*e the *ost !(($essi#e o !"" instittion!" sh!$eho"'e$s in thei$

!tte*&ts to !"i(n *!n!(e$1 sh!$eho"'e$1 !n' )o$2e$ inte$ests. Gi#en the'i7c"t% o se""in( thei$ sh!$es1 &ension n' *!n!(e$s *!% &e$cei#e the

"on(9te$* 0ene8t o 0ein( $es&onsi#e to these st!2eho"'e$s1 es&eci!""% (i#en

the $ecent #o"*e o 0!' &$ess co*&!nies sch !s Te-!co !n' Denn%Bs h!#e

h!' $e(!$'in( thei$ 0eh!#io$ to)!$' *ino$ities. A''ition!""%1 &ension n'

*!n!(e$s *!% inte$&$et the costs o 0ein( &$o!cti#e o$ hi$in( )o*en !n'

*ino$ities !n' o 'on!tions to the co**nit% !s *ini*!" )hen cont$!ste'

)ith the &otenti!" 0ene8ts o sch !ctions o#e$ ti*e +M!h!&!t$!1 45>,. =oth

instittion!" theo$% +Po)e"" : DiM!((io1 4554, !n' si(n!"in( theo$% +T$0!n :

G$eenin(1 455; Wi""i!*s : G!e$1 455, )o"' &$e'ict th!t en"i(htene'

&ension n' *!n!(e$s )i"" see co*&"i!nce )ith instittion!" no$*s o hi$in(n'e$9$e&$esente' ($o&s !s si(n!"in( the &o&"!tion !t "!$(e $e(!$'in(

8$*sB $e&t!tion !n' "e(iti*!c%. Ths1 the o""o)in( !$e &$o&ose'

H%&othesis


12/21

H%&othesis


13/21


14/21

H%&othesis !. Otsi'e 'i$ecto$ $e&$esent!tion is &ositi#e"% $e"!te' to the

&eo&"e 'i*ension o CSP.

H%&othesis 0. Otsi'e 'i$ecto$ $e&$esent!tion is &ositi#e"% $e"!te' to the

&$o'ct /!"it% 'i*ension o CSP.

DISCUSSION

I*&o$t!nt *oti#!tions o$ this st'% )e$e to inte($!te se#e$!" theo$etic!"

&e$s&ecti#es $e(!$'in( instittion!" in#est*ent1 0o!$' co*&osition1 !n' to&

*!n!(e*ent te!* e/it% !n' to e-!*ine thei$ &ossi0"e $e"!tionshi&s )ith !

8$*Bs co$&o$!te soci!" &e$o$*!nce. The st'% h!' se#e$!" i*&o$t!nt

8n'in(s. Fi$st1 !"tho(h &$e#ios st'ies h!#e ten'e' to co*0ine !""

instittion!" in#esto$s into one c!te(o$%1 the $es"ts o this st'% s&&o$t o$

contention th!t it is necess!$% to consi'e$ 'ife$ent t%&es o instittion!"

in#esto$s to *o$e &$ecise"% e-!*ine thei$ 'ife$in( i*&!cts. Secon'1 *ost

&$e#ios $ese!$ch in#esti(!tin( co$&o$!te soci!" &e$o$*!nce h!s "i2e)ise

ten'e' to co*0ine !"" the 'i*ensions o CSP to c$e!te o#e$!"" *e!s$es

+G$i7n : M!hon1 455,. A"tho(h )e on' ! &ositi#e !n' si(ni8c!nt

co$$e"!tion 0et)een the &eo&"e !n' &$o'ct /!"it% 'i*ensions +$ Q .


15/21

cost"%. R!the$1 these *!n!(e$s *!% ee" th!t 0ein( $es&onsi#e to )o*en1

*ino$ities1 !n' co**nities )i"" enh!nce "e(iti*!c% !n' $e&t!tion.

Se0!(!i*!n! 'in%!t!2!n 'i !t!s1 h!si" 2!*i *enn322!n 0!h)! 0e$0!(!i

3enis in#esto$ institsion!" *e*i"i2i t3!n %!n( 0e$0e'! nt2 &e$s!h!!n

'i *!n! *e$e2! 0e$in#est!si. =!$90!$ ini1 S*ith +455, *en%!3i2!n 02ti0!h)! inisi!ti '!$i !2ti#is &e*e(!n( s!h!* te"!h 0!n%!2 0e$h!si"

*en(0!h st$2t$ t!t! 2e"o"! '!n 2e0i3!2!n &e$s!h!!n '!n te"!h

*en(!2i0!t2!n h!si" %!n( &ositi 2e&!'! &!$! &e*e(!n( s!h!*.

=e$tent!n(!n 'en(!n h!$!&!n 2!*i1 2eh!'i$!n '!n! 'i 0!)!h 2en'!"i

*!n!3e$ in#est!si ti'!2 *e*i"i2i ee2 "!n(sn( &!'! s!"!h s!t 'i*ensi CSP.

Se0!"i2n%!1 '!n! &ensin te$"ih!t !2ti '!"!* *en(e3!$ &osisi %!n(

0e$t!n((n( 3!)!0 te$h!'!& "in(2n(!n '!n 2!"it!s &$o'21 '!n te"!h

*en(!2i 0!h)! &osisi 3!n(2! &!n3!n( *e$e2! *e*0th2!n in#est!si 'i

CSP. De*i2i!n &"!1 *!n!3e$ '!n! &ensin te"!h *en%!$!2!n &en'!&!t

*e$e2! 0e$2en!!n 'en(!n 'i*ensi *!s%!$!2!t '!$i CSP. Se&e$ti 'i0!h!s 'i

!t!s1 *!n!3e$ ini *n(2in ti'!2 *e"ih!t $es&on &e$s!h!!n B2e 2onstiten ini

se0!(!i 0i!%! %!n( *!h!". Se0!"i2n%!1 *!n!3e$ ini *n(2in *e$!s! 0!h)!

*en3!'i $es&onsi te$h!'!& 'i*ensi *!s%!$!2!t !2!n *enin(2!t2!n

"e(iti*!si '!n $e&t!si.

O$ $es"ts in'ic!te th!t o#e$ 54 &e$cent + ot o > sh!$eho"'e$

!*en'*ents, o instittion!" in#esto$ !cti#is* in#o"#in( soci!" isses )!s

initi!te' 0% &ension n's. In#est*ent *!n!(e$ n's 'o initi!te &$o-%

contests !n' sh!$eho"'e$ !*en'*ents1 0t thei$ ocs !&&e!$s to 0e(o#e$n!nce !n' &e$o$*!nce isses !s o&&ose' to soci!" !n' en#i$on*ent!"

ones. P!$t o the $e!son o$ the !&&!$ent "!c2 o ! 'i$ect efect *!% 0e the

$e/enc% )ith )hich in#est*ent *!n!(e$s *!2e &o$to"io ch!n(es. These

ch!n(es s((est th!t ! 8$*Bs CSP is not ! consi'e$!tion !n' is not &e$cei#e'

!s eithe$ ! sho$t9te$* cost o$ ! "on(9te$* 0ene8t 0% in#est*ent *!n!(e$s.

H!si" 2!*i *enn322!n 0!h)! "e0ih '!$i 54 &e$sen + '!$i > &e*e(!n(

s!h!* !*!n'e*en, '!$i in#esto$ institsion!" !2ti#is*e %!n( *e"i0!t2!n

is9is sosi!" %!n( 'i(!(!s o"eh '!n! &ensin. M!n!3e$ '!n! in#est!si

*e"!22!n *e*"!i &e$!'!n &$o-% '!n !*!n'e*en &e*e(!n( s!h!*1t!&i o2s *e$e2! t!*&!2n%! *en3!'i *!s!"!h t!t! 2e"o"! '!n 2ine$3!

se0!(!i "!)!n %!n( sosi!" '!n "in(2n(!n. =!(i!n '!$i !"!s!n nt2 2$!n(

3e"!sn%! ee2 "!n(sn( *n(2in !'!"!h $e2ensi *!n!3e$ in#est!si

*e"!22!n &e$0!h!n &o$too"io. Pe$0!h!n ini *enn322!n 0!h)! CSP

se0!h &e$s!h!!n ti'!2 *en3!'i &e$ti*0!n(!n '!n ti'!2 'i!n((!& 0!i2


16/21

se0!(!i 0i!%! 3!n(2! &en'e2 !t! *!n!!t 3!n(2! &!n3!n( o"eh *!n!3e$

in#est!si.

Seth1 455, h!s s((este' th!t (o#e$n!nce *ech!nis*s !$e s0stitt!0"e

o$ e!ch othe$ !n' th!t instittion!" in#esto$s c!n !fect 0o!$' co*&osition

!s )e"" !s *!n!(e$i!" incenti#es +ensen : M$&h%1 4556,. The$eo$e1!nothe$ &ossi0"e e-&"!n!tion o$ o$ $es"ts co"' 0e th!t in#est*ent

*!n!(e$ n's +!n' &ension n's, *!% h!#e !n in'i$ect efect on CSP

th$o(h !nothe$ (o#e$n!nce #!$i!0"e. We teste' this *e'i!te' *o'e" +*o'e"

?, '$in( the *o'e"in( &$ocess. E#en tho(h the theo$etic!" *o'e" +*o'e"


17/21

*ino$ities1 !n' e*&"o%ees. Cont$i0tin( to co**nit% &$o($!*s co"' !i' in

the 'e#e"o&*ent o (oo')i""1 )hich *!% se$#e !s !n in'ce*ent to "oc!"

csto*e$s. Ho)e#e$1 *ost co*&!nies in the Fo$tne 66 !n' the @LD

'!t!0!se !$e *"tin!tion!" co$&o$!tions !n'1 !s sch1 thei$ ocs *!% 0e

*o$e inte$n!tion!".

Te*!n 2!*i 3(! *enn322!n 0!h)! 2e&e*i"i2!n e2it!s *!n!3e$i!"

*enin(2!t2!n &e$h!ti!n *!n!3e$i!" nt2 2e&entin(!n st!2eho"'e$. Se0!h

2o*it*en nt2 *en(h!si"2!n &$o'2 0e$2!"it!s '!n "!%!n!n '!n

*en(hin'!$i 2e0i3!2!n "in(2n(!n %!n( 0$2 '!n 'en'! &otensi!" '!&!t

'i"ih!t se0!(!i 2o*it*en 3!n(2! &!n3!n( nt2 2e0e$"!n3t!n '!n

&$o8t!0i"it!s %!n( 0e$2esin!*0n(!n &!'! 0!(i!n '!$i *!n!3e$ 'en(!n

2e&entin(!n e2it!s. H0n(!n non si(ni82!n !nt!$! e2it!s *!n!3e*en

&nc!2 '!n 'i*ensi *!s%!$!2!t CSP *enn322!n 0!h)! e2it!s *!n!3e$

&nc!2 Bti'!2 *e*0e$i2!n 2ont$i0si &ene2!n!n *!n!3e$i!" &!'!

*!s%!$!2!t1 &e$e*&!n1 2!* *ino$it!s1 '!n 2!$%!)!n. =e$2ont$i0si nt2

&$o($!* *!s%!$!2!t 0is! *e*0!nt '!"!* &en(e*0!n(!n (oo')i""1 %!n(

'!&!t 0e$n(si se0!(!i 032!n nt2 &e"!n((!n "o2!". N!*n1 se0!(i!n

0es!$ &e$s!h!!n 'i Fo$tne 66 '!n '!t!0!se @LD !'!"!h &e$s!h!!n

*"tin!sion!" '!n1 'en(!n 'e*i2i!n1 o2s *e$e2! *n(2in "e0ih

inte$n!sion!".

S&&o$t o$ the h%&othesie' $e"!tionshi&s 0et)een otsi'e 'i$ecto$

$e&$esent!tion !n' 0oth 'i*ensions o CSP s((ests otsi'e 'i$ecto$s *!%

h!#e 0oth &$o8t (o!"s +!s !(enc% theo$% )o"' s((est, !n' non&$o8t (o!"s+!s st!2eho"'e$ theo$% )o"' s((est,. Otsi'e 'i$ecto$s *!% ee" the% !$e

!ctin( in the 0est "on(9te$* inte$ests o sh!$eho"'e$s 0% enco$!(in( the

'e#e"o&*ent o /!"it% &$o'cts !n' se$#ices !n' ! &ositi#e en#i$on*ent!"

$e&t!tion. I inc$e!sin( the n*0e$ o otsi'e$s on ! 0o!$' inc$e!ses the

$!ci!"1 ethnic1 !n' (en'e$ 'i#e$sit% o ! co*&!n%1 !s !h$! !n' co""e!(es

+455?, s((este'1 then ! 'i#e$se 0o!$' )o"' 0e *o$e sensiti#e to soci!""%

!cce&t!0"e hi$in( &$!ctices.

D2n(!n nt2 h0n(!n hi&otesis !nt!$ $e&$esent!si 2o*is!$is

in'e&en'en '!n 2e'! 'i*ensi CSP *enn322!n 2o*is!$is in'e&en'en*n(2in *e*i"i2i 2e'! t3!n 2entn(!n +se0!(!i teo$i 2e!(en!n !2!n

*en%!$!n2!n, '!n t3!n ni$"!0! +se&e$ti teo$i st!2eho"'e$ !2!n

*en%!$!n2!n,. 2o*is!$is in'e&en'en *n(2in *e$!s! *e$e2! 0e$tin'!2

'!"!* 2e&entin(!n 3!n(2! &!n3!n( te$0!i2 '!$i &e*e(!n( s!h!* 'en(!n

*en'o$on( &en(e*0!n(!n 2!"it!s &$o'2 '!n "!%!n!n '!n $e&t!si

"in(2n(!n %!n( &ositi. i2! &enin(2!t!n 3*"!h 2o*is!$is in'e&en'en


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*enin(2!t2!n 2e$!(!*!n $!s1 etnis1 '!n 3enis 2e"!*in '!$i &e$s!h!!n1

se&e$ti !h$! '!n $e2!n +455?, *en%!$!n2!n1 2e*'i!n 2e0e$!(!*!n

2o*is!$is !2!n "e0ih sensiti te$h!'!& &$!2ti2 &e$e2$t!n %!n( 'ite$i*!

sec!$! sosi!".

In !''ition to the h%&othesie' $e"!tionshi&s1 8$* sie e*e$(e' !s !si(ni8c!nt &$e'icto$ o 0oth CSP 'i*ensions1 !"tho(h it h!' o&&osite efects

on e!ch. Fi$* sie )!s si(ni8c!nt"% !n' &ositi#e"% $e"!te' to the &eo&"e

'i*ension o CSP !n' si(ni8c!nt"% !n' ne(!ti#e"% !ssoci!te' )ith the

&$o'ct /!"it% 'i*ension. These $es"ts s((est th!t "!$(e co*&!nies *!%

0e 0ette$ !0"e th!n s*!""e$ ones to 'on!te to co**nities !n' to in#est in

$ec$it*ent !n' h*!n $eso$ce !cti#ities to !tt$!ct )o*en !n' *ino$ities

0ec!se the "!$(e co*&!nies h!#e s"!c2 $eso$ces th!t thei$ s*!""e$

conte$&!$ts "!c2. The si(ni8c!nt1 ne(!ti#e $e"!tionshi& 0et)een 8$* sie

!n' the &$o'ct /!"it% 'i*ension is consistent )ith &$e#ios $ese!$ch

in'ic!tin( th!t 8$* sie is ne(!ti#e"% $e"!te' to inno#!tion +Hitt1 Hos2isson1

ohnson1 : Moese"1 455,. Fi$* sie h!s !"so 0een sho)n to inc$e!se the

"i2e"ihoo' o cit!tions 0% the U.S. En#i$on*ent!" P$otection A(enc% +Hi""1

@e""e%1 A("e1 Hitt1 : Hos2isson1 455


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&$o'ct /!"it% *!% 0e ! necessit% th!t is not s03ect to &e$o$*!nce

const$!ints. Fo$ e-!*&"e1 e-&en'it$es on R:D o$ ne) &$o'cts !n'

&$ocesses !$e ! st$!te(ic $e/i$e*ent in *!n% in'st$ies +=!%sin(e$ :

Hos2isson1 45>5,. E#en &oo$"% &e$o$*in( 8$*s *st !""oc!te so*e

$eso$ces to this !$e!. +


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co"' 0e th!t instittion!" in#esto$s 0% into 8$*s )ith $e&t!tions o$

&e$o$*!nce consistent )ith thei$ o)n &$ee$ences o$ 0oth 8n!nci!" !n'

soci!" &e$o$*!nce. Fo$ e-!*&"e1 G$!#es !n' W!''oc2 +455, on' th!t

hi(he$ "e#e"s o CSP )e$e !ssoci!te' )ith 0oth the n*0e$ o instittion!"

in#esto$s !n' the "e#e" o thei$ ho"'in(s in ! 8$*. One &$o0"e* )ith this

e-&"!n!tion is th!t instittion!" in#esto$s sch !s &ension n's !$e n!0"e to

se"" thei$ ho"'in(s !n' ths *!% !t9te*&t to inJence 8$*sB &$e'is&osition

to)!$' CSP. To test this &ossi0i"it%1 )e esti*!te' ! $e($ession *o'e" in )hich

)e cont$o""e' o$ &$io$ CSP +4556 "e#e"s, )hen $e($essin( CSP in 455? on

instittion!" sh!$eho"'in(s in 4554. Ate$ co$$ectin( o$ se$i!" !toco$$e"!tion

!n' testin( o$ 'ife$ences in the #!$i!nce o CSP o#e$ ti*e1 )e o0t!ine'

$es"ts in'ic!tin( th!t &$io$ CSP )!s ! si(ni8c!nt &$e'icto$ o t$e CSP;

)ith &$io$ CSP cont$o""e'1 &ension n' ho"'in(s )e$e sti"" si(ni8c!nt"%

$e"!te' to CSP !s h%&othesie'. Ths1 it )o"' !&9&e!$ th!t 0oth

e-&"!n!tions !$e $e!son!0"e.

Ft$e $ese!$ch co"' e-!*ine se#e$!" isses. Fi$st1 $ese!$ch e-!*inin(

&ossi0"e in'i$ect $e"!tionshi&s 0et)een instittion!" in#esto$s !n' soci!"

&e$o$*!nce *!% she' "i(ht on the co*&"ic!te' inte$!ction 0et)een

(o#e$n!nce *ech!nis*s !n' CSP. Anothe$ t$e $ese!$ch 'i$ection *i(ht 0e

to $the$ c!te(o$ie &ension n's into t%&es to 'ete$*ine i one t%&e o$

!nothe$ *onito$s the &$o'ct /!"it% 'i*ension *o$e th!n the &eo&"e

'i*ension o$ #ice #e$s!. Fo$ e-!*&"e1 Sch)!0 !n' Tho*!s +455>, $e&o$te'

th!t nion &ension n's )e$e the *ost !cti#e o !"" instittion!" in#esto$s in

&$essin( o$ ch!n(es. Do these n's ocs e-c"si#e"% on the &eo&"e'i*ension o CSP1 o$ is thei$ !cti#it% *o$e )i'es&$e!'

CONCLUSION

A &$i*!$% *oti#e o$ this st'% )!s to enco$!(e t$e $ese!$che$s to *o$e

'ee&"% in#esti(!te the t%&es !n' *oti#!tions o 'ife$ent instittion!"

in#esto$s !n' thei$ 'ife$ent efects on the s&eci8c 'i*ensions o co$&o$!te

soci!" &e$o$*!nce1 the $e"e#!nce o (o#e$n!nce 'e#ices to these CSP

'i*ensions1 !n' the !&&$o&$i!te se o in'st$%1 sie1 !n' &e$o$*!nce

cont$o"s. Ft$e $ese!$che$s !tte*&tin( to i'enti% &$e'icto$s o ! 8$*Bs&$o&ensit% o$ soci!""% $es&onsi0"e !ctions *!% )ish to !#oi' consi'e$in( CSP

! nit!$% const$ct. Ho&e""%1 0% in#esti(!tin( 'ife$ent 'i*ensions o the

co$&o$!te soci!" &e$o$*!nce o 8$*s1 $ese!$che$s )i"" 0e !0"e to !'#!nce

2no)"e'(e !n' n'e$st!n'in( in this !$e!


21/21

Se0!h *oti t!*! nt2 &ene"iti!n ini !'!"!h nt2 *en'o$on( &!$!

&ene"iti se"!n3tn%! nt2 "e0ih '!"!* *en%e"i'i2i 3enis '!n *oti#!si '!$i

in#esto$ institsion!" %!n( 0e$0e'! '!n ee2 %!n( 0e$0e'! &!'! 'i*ensi

te$tent '!$i 2ine$3! sosi!" &e$s!h!!n1 $e"e#!nsi &e$!n(2!t t!t! 2e"o"! nt2

'i*ensi CSP ini1 '!n &en((n!!n %!n( te&!t '!$i in'st$i1 2$!n1 '!n

2ont$o" 2ine$3!. &ene"iti se"!n3tn%! *enco0! nt2 *en(i'enti82!si

&$e'i2to$ 2ecen'e$n(!n &e$s!h!!n nt2 tin'!2!n %!n( 0e$t!n((n(

3!)!0 sec!$! sosi!" *n(2in in(in *en(hin'!$i *e*&e$ti*0!n(2!n CSP

se0!(!i se0!h 2onst$2si 2es!t!n. M'!h9*'!h!n1 'en(!n *en%e"i'i2i

'i*ensi %!n( 0e$0e'! '!$i 2ine$3! sosi!" &e$s!h!!n '!$i &e$s!h!!n1

&ene"iti !2!n '!&!t *e*!32!n &en(et!h!n '!n &e*!h!*!n 'i !$e! ini

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