Strategy and management research has increasingly focused on understanding the role organizations play in society, offering valuable guidance for measuring social impact. In this article, we build upon multiple streams of this literature to propose an integrated approach for managing social impact of initiatives. Starting with a general definition of ‘impact’ as the difference between the states of the world with and without the initiative, we propose a two-step approach for managing its social impact. The first is an analysis step, where the consequences of the initiative are evaluated descriptively in terms of: (a) goal realization, i.e., the extent to which it achieves its stated goals for contributing to society; (b) spillovers, i.e., the extent to which it affects other financial or societal outcomes; and (c) alternative initiatives, i.e., its effectiveness relative to alternative means of organizing to achieve the same goals. The second is an assessment step, where the initiative’s full set of benefits and costs from the first step are normatively assessed using (and potentially triangulating across) one or more of three methods: (a) using Pareto improvement as the basis for comparison; (b) calculating net impact using a single metric for aggregation; and (c) evaluating the nature of trade-offs involved (relative magnitude, equity, certainty, and agency). In addition to integrating relevant streams of existing work into a systematic approach for managing social impact, we offer an agenda for further research applying concepts and insights from management research to questions related to social impact.

Rating systems are a common governance tool on two-sided platforms. Research suggests that, via indirect network effects, rating systems benefit participants on both the rating side and the rated side. However, participants on the rated side may not always recognize the benefits of the rating system and may respond negatively to its introduction. The rating side may anticipate the rated side's negative reactions and react negatively as well, especially when the rated side holds more power over the rating side. To empirically examine participants' reactions to a proposed platform rating system in the context of a substantial cross-side power differential, we conducted two field experiments in collaboration with a Singapore-based labor platform that connects foreign domestic workers with employers (families). We found that employers, on average, were indifferent to the proposed rating system, even when the benefits to them were highlighted, with the highest-income employers exhibiting negative responses. We also found that workers reacted negatively, with those informed of the proposed rating system completely disengaging from the platform. Post-hoc interviews and analyses support our interpretation that power differential underlies workers' negative responses to the rating system. This study contributes to the literature on platform rating systems by demonstrating that, in the presence of a substantial cross-side power imbalance, rating systems may not always be perceived positively, even by participants on the rating side, whom the system aims to empower. It also constitutes one of the first efforts in management research to study domestic workers, a highly vulnerable population of workers.

We examine the comparative governance of for-profit provision of public services, distinguishing between two types of for-profit providers: investor-owned firms (IOFs) and cooperatives. We argue that because cooperatives are owned and operated by those who benefit directly from the positive externalities generated by public services they are well suited to serving poor or high cost communities that may be underserved by IOFs, and that this will be especially true when they serve less diverse communities or needs. We test and find support for these predictions in the context of internet service provision in the United States. Our study thus offers a discriminating alignment perspective on the provision of public services, while also shedding light on the role of cooperatives in addressing societal grand challenges.

We examine the returns to specialization versus variety in corporate philanthropy. Acknowledging the theoretical rationale for both a specialist and a generalist approach to philanthropy, we took a question-driven, abductive approach and found a robust positive association between philanthropic variety and firm profitability for donations by large US public corporations from 2003 to 2011. This association held for variety across causes but not within causes, for non-local giving and for giving by diversified firms, and was weaker for firms whose donations faced greater scrutiny. These findings are consistent with a moral hazard explanation whereby firms take advantage of the relatively inelastic support for philanthropy within a cause area by strategically spreading their donations across a wide range of supporter interests, thus maximizing profits.

We explore transposition–bringing ideas from one context to a distant other context–as a mechanism for institutional change, and we study the conditions under which institutional actors successfully undertake it. Prior work on transposition has emphasized the paradox of embedded agency: actors embedded in a context may struggle to effect change because they lack exposure to fresh ideas. We complement this work by arguing that transposition is also subject to a paradox of peripheral influence: actors not embedded in a context, who may be a source of fresh ideas, can struggle to effect change because of their peripheral or outsider status. We suggest that these dual paradoxes can be overcome by actors who simultaneously have exposure to alternative institutional environments and are sufficiently embedded in the focal field to gain trust and buy-in from other decision makers. Such actors can both see the potential of new ideas and navigate their implementation successfully. We identify returnees from abroad, who have studied or worked elsewhere and then emigrated back to their home country, as one such type of actor. Using data on publicly listed Chinese companies from 2000 to 2012, we show that the presence on firms' boards of directors of returnees with relevant exposure abroad significantly raises firms' participation in corporate social responsibility, specifically in the form of making corporate donations. Supporting our theorizing about the two paradoxes, the effect of returnees is stronger when they or their board allies have greater exposure to foreign experience and greater embeddedness in the local context. The effect is also stronger when field conditions, such as insufficient economic development, present greater need for change.

We connect two distinct streams of research on categories to study the role of within-category typicality in the context of legitimacy shocks. We argue that, following a legitimacy shock, member organizations of the tainted, focal category suffer equally, irrespective of their typicality. However, only the typical members of the newly favored, oppositional category benefit. Therefore, the effects of legitimacy shocks are asymmetrically influenced by typicality. We argue this pattern is the result of a two-stage process of categorization by audiences, whereby audiences prioritize distinctions between organizations in a newly favored category, and spend limited efforts considering distinctions in the tainted, focal category. We examine our theory in the context of the U.S. financial services industry, where four different kinds of organizations engage in competition: traditional commercial banks, community banks, single-bond credit unions, and multi-bond credit unions. Consistent with our theory, we show that both traditional commercial banks and community banks suffer in terms of deposit market share following the legitimacy shock of the 2007 financial crisis, but the relative gains to credit unions are strongest for single-bond credit unions.

We develop a theoretical framework to define the comparatively efficient organizational form for dealing with a social issue, based on the market frictions associated with it. Specifically, we argue that for-profits have an advantage in undertaking innovation and coordinating production economies, nonprofits in playing a fiduciary role given ex post information asymmetry, self-governing collectives in dealing with bounded externalities through private ordering, and state bureaucracies in governing general externalities. We build on these arguments to develop a mapping between combinations of these market frictions and the comparatively efficient arrangements to govern them, including a variety of hybrid arrangements such as private-public partnerships, social enterprises, corporate social responsibility, and so on. Our framework thus contributes to research in strategy, organizations, and public policy.

We study the use of corporate philanthropy as a form of reputation insurance, developing a formal model of such insurance to examine how the terms of insurance in equilibrium change under different assumptions about the firm and its stakeholders. We then test the predictions from this model in the U.S. petroleum industry and find that philanthropic donations offer insurance-like benefits, but are also positively associated with subsequent oil spills–firms that give more, spill more–with this association being stronger for spills that are under firms' control and in states with low civic capacity. These results are consistent with an adverse selection/moral hazard equilibrium and suggest that the use of philanthropy as reputation insurance may benefit firms at the cost of society.

We develop a formal model of CSR, with both a for-profit and a non-profit organization providing social goods to needy recipients and competing for resources from consumers. We show that CSR results in financial benefit if it is either related to the firm's core business, or non-overlapping with non-profit efforts, but only leads to social benefit if both conditions apply, with these relationships being moderated by the firm's core business capabilities. Our article thus makes a case for CSR based on the comparative efficiency of for-profits in providing social goods relative to non-profits, while also highlighting the potential divergence between the financial and social impact of CSR. In addition, it offers new insights into the heterogeneity of CSR, and the role of non-profits and hybrids.

This study examines whether companies employ corporate social responsibility (CSR) to improve employee engagement and mitigate adverse behavior at the workplace (e.g., shirking, absenteeism). We exploit plausibly exogenous changes in state unemployment insurance (UI) benefits from 1991 to 2013. Higher UI benefits reduce the cost of being unemployed and hence increase employees' incentives to engage in adverse behavior. We find that higher UI benefits are associated with higher engagement in employee-related CSR. This finding suggests that companies use CSR as a strategic management tool–specifically, an employee governance tool–to increase employee engagement and counter the possibility of adverse behavior. We further examine plausible mechanisms underlying this relationship.

In this paper, we develop an account of the failure of private market-governance institutions to maintain market order by highlighting how control of their distributional function by powerful elites limits their regulatory capacity. We examine the New York Clearing House Association (NYCHA), a private market-governance institution among commercial banks in Manhattan that operated from 1853 to 1913. We find that the NYCHA, founded to achieve coordinating benefits among banks and to limit the effect of financial panics, evolved at the turn of the twentieth century into a device for large, elite market players to promote their own interests to the disadvantage of rival groups that were not members. Elites prevented the rest of the market from having equal opportunities to participate in emergency loan programs during bank panics. The elites' control not only worsened the condition of the rest of the market by allowing non-member banks to fail; it also diminished the influence of the NYCHA and escalated market crises as bank failures spread to member banks. As a result, crises developed to an extent that exceeded the control of the NYCHA and ended up hurting even elites' own interests. This paper suggests that institutional stability rests on a deliberate balance of interests between different market sectors and that, without such a balance, the distributional function of market-governance institutions plants the seeds of institutional destruction.