Keywords

ratings, corporate social performance, behavioral theory, corporate philanthropy

Abstract

While many rating systems incentivize firms to improve their performance, I investigate how positive recognition from external stakeholders can lead to reductions in performance, rather than improvements. Drawing upon behavioral and performance feedback theory, I argue that positive ratings can lead firms to decrease their subsequent performance by reducing uncertainty regarding standards of acceptable or appropriate conduct. Assuming that firms will seek to avoid uncertainty, I propose that such ratings can lead high-performing firms to redefine their aspirations and thus reduce their subsequent performance. I test this main hypothesis, as well as several moderating effects, by examining how firms responded to a rating that evaluated their prior philanthropic efforts. My findings suggest that firms recognized for their generosity were, under certain conditions, more likely to subsequently reduce their philanthropic contributions. From a practical perspective, these results highlight the unintended consequences of social ratings and provide further insight for policy makers and stakeholders interested in motivating improvements in corporate social performance.

This dissertation was completed and published at Cornell University.

Original Publication Citation

https://ecommons.cornell.edu/handle/1813/36054

Document Type

Other

Publication Date

2014-1

Language

English

College

Marriott School of Management

Department

Management

University Standing at Time of Publication

Assistant Professor

Included in

Business Commons

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