Social Aspiration Feedback And Corporate Response Strategies

The complex and changing development environment has led more and more companies to consider social performance as one of their strategic objectives.Stakeholders use the difference between their social aspirations and the actual social performance of focal firms as a reference to judge the "success" or "failure" of firms in social performance.However,relevant studies have focused on the strategic responses of firms to financial performance feedback.There is a lack of in-depth theoretical discussion and empirical testing on how enterprises respond to social performance feedback.Research on social performance has focused more on antecedent perspectives,such as institutional pressures,competitive opportunities,organizational governance,and executive characteristics,while less on the subsequent response strategies triggered by them.The Behavioral Theory of Firm(BTOF)provides a decision-making logic for problematic search and strategy adjustment when actual performance differs from aspirations.Existing studies have recently begun to touch on strategic responses arising from social aspiration feedback,but both the complexity of social aspirations and the variability of response strategies need to be further explored.Based on the foregoing,this study is divided into the following five parts to explore:(1)constructing the theoretical framework of social aspiration feedback and strategic responses;(2)implementing empirical studies of the relationship between complex dimensions of social aspiration feedback and firm’s response strategies;(3)moderating mechanism of the relationship between different dimensions of social aspiration feedback and responses based on situational factors of environment,organization,and managers;(4)exploring of the heterogeneity of corporate nature and expectation dimensions;and(5)conducting summary and discussion of the theoretical and practical implications of the study.First,theoretical construction is based on the behavior theory of the firm.This paper holds the assumption that when the actual social performance of the focal firm is higher than the performance level expected by stakeholders,it generates positive feedback,which may trigger the threat of efficiency;when the actual social performance is lower than the performance level expected by stakeholders,it generates negative feedback,which may trigger the threat of legitimacy.As the legitimacy threat due to the negative feedback is more likely to trigger the corporate survival crisis,this paper focuses on the underperformance situation of firms.In the theoretical framework,this paper discusses the definitions of reference point,intensity,duration,and breadth of social performance-aspiration gap;the meaning and characteristics of symbolic,substantial additional,and substantial technical responses of firms;and the direction and distance of problematic search between social performance-aspiration gap and strategic responses.In addition,based on relevant research,this paper classifies response strategies into symbolic strategies which are based on institutional construction and conceptual initiatives,substantive-additional strategies which are based on an existing foundation for improvement,and substantive-technical strategies which are innovation and transformation from the root cause.The three types of response strategies are divided mainly around whether the company improves social performance and whether it improves social performance in terms of root causes,integrating concepts such as impression management and dual innovation.The overall theoretical framework deconstructs the trajectory characteristics of the strategic response strategies under the social expectation gap and provides a decision basis for the consistency and differentiation of socially responsible behaviors between what companies say and do under legitimacy pressure.Second,this paper conducts the empirical test of corporate responsiveness strategy under the intensity,duration,and breadth of the social performance-aspiration gap.This study uses A-share listed enterprises in China from 2009-2020 as examples.It takes Hexun Social Responsibility Scores as the source of social aspirations and the social responsibility reports as the source of response strategies.The main results are obtained as follows.(1)The intensity of negative social performance feedback significantly affects a firm’s strategic responses.As the intensity of social aspiration shortfall increases,firms’ symbolic,substantive-additional,and substantive-technical actions are characterized by first decreasing and then increasing.The results show that,firstly,stakeholders’ social aspiration feedback is located far below the reference point rather than near the reference point;secondly,firms reduce the search magnitude of symbolic,substantiveadditional,and substantive-technical strategies under a slight drop,indicating that firms are more inclined to search for problems from existing experiences;finally,firms increase symbolic and substantive responses when their performance far below aspiration.However,due to the cost differences between symbolic and substantive strategies,the symbolic responses are stronger on the right side than on the left side,while the substantive-additional strategies and the substantive-technical strategies are less strong on the right side than on the left side.(2)The duration of negative social performance feedback significantly affects firms’ response strategies.With the increase in the duration of negative social performance feedback,the response strategies of the firms show the characteristics of first decreasing and then increasing.Firstly,unlike the response decline generated by the reduced search scope and the reduced repairability under the performanceaspiration gap,the underperformance duration provides a clear feedback signal for the poor social performance after 3-4 periods,which makes firms abandon the conservative strategy of reducing the response scope in the early stage and increase the symbolic and substantive actions in the later stage.secondly,at the turning point,firms’ substantive additional behavior response period is the shortest,followed by substantive technical behavior and symbolic behavior.It shows that the companies give priority to the improvement-oriented strategy,followed by the breakthrough-oriented strategy,and finally the impression-oriented strategy under the continuous shortfall;Besides,in terms of response degree,when the underperformance duration increases,three types of responses changes are more dramatic than earlier.(3)The breadth of negative social performance feedback significantly affects the response strategies of firms.With the increase of the breadth,firms’ responses show a gradual downward trend.First,it indicates that as the ambiguity of performance information increases and the difficulties of improvement and then it hinders the social responsibility inputs.Second,in terms of the rate of decline,the substantive-technical strategies of enterprises are higher than the substantive-additional and symbolic strategies.It indicates that cost and complexity are important factors for firms to consider when making decisions.Third,by examining the moderating mechanisms of situational factors on social aspiration feedback and response strategies,the differences in firms’ strategic responses under different conditions are investigated from external characteristics to internal governance.(1)Institutional efficiency and media coverage are inconsistent in their moderating effects on the intensity of social performance shortfall and firm response strategies.Among them,institutional efficiency,as a formal institutional environment,has a significant positive moderating effect on firms’ substantive additional strategic responses,but not on symbolic and substantive technologies.In an informal institutional environment,media attention has a significant positive moderating effect on firms’ symbolic and substantive technology strategies.It indicates that firms in regions with well-developed institutions are more inclined to generate good associations with local stakeholders from improvement-oriented strategies.Firms with high media coverage are more motivated to engage in impression management and breakthrough innovations to convince and attract stakeholders.(2)This paper explores the moderating effect of environmental uncertainty on the relationship between underperformance duration and response strategies.It is found that market uncertainty has a significant positive moderating effect on the relationship between underperformance duration and substantive-additive actions,and policy uncertainty has a significant positive moderating effect on the relationship between duration and both symbolic and substantive actions.It indicates that the uncertainty of economic policies makes firms more inclined to adjust their response strategies under legitimacy crises than the volatility of the industry environment in which they develop.(3)The executive shareholding of firms reinforces the negative relationship between the breadth of social expectation fallout and response strategy.In contrast,heterogeneity of executives’ overseas backgrounds only has a reinforcing effect on the response of substantive technical strategies.It indicates that cultural and background conflicts among corporate executives lead to more negative response strategies on root cause improvement when faced with a wider shortfall.Fourth,the association between the characteristics of firms’ social aspiration shortfall and their response strategies is investigated in terms of the firm’s nature and performance source.The results show that due to their competitive disadvantages and greater autonomy in the context of China’s transition economy,non-state firms are more responsive to the increased intensity,duration,and scope of social expectation fallout;the moderating mechanisms of the institutional environment,environmental uncertainty,executive shareholding ratio,and executive overseas background heterogeneity produce effects that are mainly focused on non-state firms.From the comparison of studies of environmental and philanthropic expectation fallout of firms,firms prefer to respond by increasing their substantive strategies because the legitimacy crisis of environmental expectation fallout is a stronger threat to their survival compared to philanthropic expectations.Finally,the academic issues explored in this study have the following implications.firstly,a theoretical framework for social aspiration feedback and response strategies is constructed,and the differences in strategic response between social and financial performance feedback are explored.Secondly,it improves the study of the relationship between the complex dimension of social aspiration shortfall and firms’ response strategies.This paper expands the features of social aspiration feedback from three dimensions,intensity,duration,and breadth of social aspiration feedback,and divides the response characteristics of different solution ideas of enterprises into symbolic,substantive-additive,and substantive-technical,which confirms the existence of costconsideration mechanisms of enterprises’ response strategies under legitimacy threats.Thirdly,it constructs a scenario-dependent model of CSR response strategies.External and internal factors such as institutional environment,environmental uncertainty,and managerial characteristics are taken as decision scenarios to study the differences in firms’ decision responses under static and dynamic,clear and fuzzy signals.The study of signaling,problem search,and attention sequential characteristics under the feedback of social expectation of enterprises has theoretical significance.Fourth,from the perspective of heterogeneity in the dimensions of firm nature and performance sources,this work explores the differences in firms’ response strategies under natural legitimacy differences and legal and moral legitimacy crises.In general,this paper provides strategic responses to legitimacy crises based on the Chinese context and the traditional Chinese culture of "Doctrine of the Mean" and "Knowledge and Action are One".This work investigates the selection mechanism of CSR response from the perspective of symbolic,progressive,and breakthrough behavioral adjustments,and inspires understanding CSR behavioral choices in the context of economic transition.