Value attunement: toward a theory of socially responsible executive decision-making.

Abstract:

In this paper we extend Swanson's (1999) model of attunement and her proposition that executives' receptivity to values is key to aligning corporate behaviour with broad-based expectations of responsible conduct. Our extension of her model is threefold. One, we underscore the importance of identifying values relevant to attunement. Two, we point out that pressure from special interest groups can constrain an executive's inclination to foster those values that serve the collective good. Three, we propose that `trustful dialogue' can help align corporate conduct with the needs of the community at large.

Keywords:

EXECUTIVE DECISION-MAKING; VALUES: ORGANISATIONAL BEHAVIOUR; CORPORATE CULTURE, CORPORATE SOCIAL RESPONSIBILITY.

1. Introduction

Australians increasingly expect corporations, especially multinationals, to respond affirmatively to a wide variety of social concerns (Butler 2001; Grace & Cohen 1998). Yet, it is difficult for corporate leaders to know how to proceed. Their hesitation stems in part from a widely-held fallacy that values--or normative beliefs about right and wrong--are subjective preferences that cannot be identified and analysed (Frederick 1986; Trevino & Weaver 1994). Given this fallacy, it is not surprising that many Australian executives place low priority on integrating policies of social responsibility into organisational cultures and core business practices (Birch & Batten 2001; Milne, Owen, & Tilt 2001). Indeed, the prevailing tendency is for corporate leaders to downplay social issues, unless the values at stake happen to coincide with their own personally held beliefs (Swanson 1999). Even this `value coincidence' is fairly uncommon, according to a recent survey of Australian business by Deakin University's Corporate Citizenship Research Unit (Birch & Batten 2001).

The propensity for executives to downplay social values is not a trivial matter, especially since it risks the loss of competitive advantage (Ansoff 1991; Orlitzky & Benjamin 2001). From this point of view, corporate social responsibility and financial success go hand in hand (MacGregor 2001). Yet the correlation is not exactly straightforward. After three decades of research, most scholars have concluded that the relationship between firms' social and financial performance is highly variable and moderated by several factors (e.g. McWilliams & Siegel 2001; Orlitzky 2001; Wood & Jones 1995). Executives' awareness of their own personally held values might be one.

Notwithstanding financial effects, poor corporate social performance can prompt public criticism and loss of goodwill. Consider, for instance, the longstanding global controversy surrounding Nestle's practice of marketing infant formula to consumers in developing countries. For more than two decades, Nestle's critics alleged that conditions in developing nations, such as unsanitary water and low rates of literacy, rendered sales of infant formula life-threatening in those countries. Eventually the World Health Organisation pressured Nestle to restrict the sales of infant formula in international markets (Sethi 1994). Yet even to this day, Nestle's international reputation remains tarnished by charges that the company once neglected a compelling social issue.

This paper elaborates on an alternative to corporate neglect of social issues. Modelled by Swanson (1999), value attunement represents the possibility that executives who are receptive to values can direct their organisations to respond affirmatively to a variety of stakeholder concerns. Put differently, attunement stands for the potential alignment of organisational behaviour with broad-based social expectations of responsibility. Ben & Jerry's mission statement illustrates such alignment, given the company's pledge of 7.5% of pre-tax earnings to projects that help build community. More collectively, scores of corporate managers have endorsed the sustainable use of natural resources as formulated by the Coalition for Environmentally Responsible Economies (better known as the CERES principles). Clearly, attunement is relevant to theory and practice.

Our research agenda extends Swanson's model of attunement in three ways. One, we underscore the importance of identifying all values relevant to this model. Two, we propose that pressure from special interest groups can constrain an executive's inclination to facilitate those values that serve the collective good. In short, attempts at attunement can be co-opted by vested interests. Three, we propose that processes of `trustful dialogue' can mitigate any undue influence exerted by special interest groups to help align corporate conduct with the needs of the community at large.

In sum, we set forth an agenda for research aimed at understanding the mechanisms that make attunement sound in theory and possible in practice, concluding with implications for those areas.

2. Theoretical Foundations of Value Attunement

Scholars have long investigated principles of corporate social responsibility and corporate social responsiveness as distinctive topics of corporate social performance (Frederick 1987). Specifically, responsibility deals with principles that motivate societal, organisational and individual action, whereas responsiveness involves organisational processes by which corporations interact with their host environments (Wood 1991). Building on this line of inquiry, Swanson brought responsibility and responsiveness closer together by conceptualising normative receptivity as an executive's awareness of the inseparability of values and facts in corporate policy (Swanson 1999, p. 515). (1) As an individual-level construct, receptivity refers to the possibility that executives who display an awareness of values will be able to direct their organisations to exhibit attunement, or an affirmative responsiveness to broad-based social expectations. The contrasting case of normative myopia depicts executives who ignore the role of values at risk of directing their firms to enact value neglect, or poor corporate social responsiveness (Swanson 1999, p. 513).

It is important to keep in mind that attunement and neglect are two distinct `ideal types' or pure systems of logic. Following in this tradition established by Max Weber (1946), Swanson (1999) modelled attunement and neglect as two contrasting relationships between business and society, shaped by the interactions of values across individual, organisational and societal levels of analysis. Her overarching thesis is that organisational behaviour can be enacted as processes of social responsiveness, with attunement and neglect representing the best and worst types possible. Executive receptivity and myopia are portrayed as important determinants of these two organisational processes, which essentially represent opposite ends of the same dimension of corporate social performance.

Our adaptation of Swanson's (1999) model is based on her original portrayal of attunement as four interrelated organisational processes of: (1) normative receptivity in executive decision-making; (2) hierarchical expansion of value information; (3) value-discovery culture; and (4) value-expanded detection of social issues by external affairs. Translating figure 1, executives who display receptivity to values can conceivably convey this attitude to other employees via formal hierarchical channels (box 2) and informal means of culture (box 3). In terms of hierarchy, they do so by communicating their value premises along the chain of command to set the range for employee decision-making discretion (Simon 1976). More informally, executives can employ cultural mechanisms--such as mentoring relationships, company-wide ceremonies and public statements of organisational mission--to signal which values they deem important (Schein 1992).

[FIGURE 1 OMITTED]

Swanson augmented formal and informal organisational dynamics with Weick's (1969) idea that information variety gets introduced in organisations through processes of selection, retention and enactment. According to this perspective, executives select or filter data so that the equivocality of information that subordinates retain for future reference is reduced. This occurs directly through structural means, such as superior-subordinate reporting systems (Perrow 1986), or more indirectly through the cultural mechanisms mentioned previously. As information gets selected and retained over time, organisations ultimately create or enact the environments to which they adapt (Weick 1969). During this process, certain values become more operative than others (England 1967; Kabanoff, Waldersee & Cohen 1995). If myopia prevails at the top, employees will be discouraged from recognising values at all. In contrast, receptive executives can encourage a greater recognition of values throughout the organisation.

Two-way arrows in figure 1 indicate that a hierarchical expansion of values becomes possible if employees select and retain information about values and convey these data to executives and other managers along the chain of command. Concurrently, employees in the informal organisation may exhibit a greater recognition of values in response to cultural mechanisms that celebrate such awareness, a possibility shown as discovery culture (box 3). Finally, when employees in external affairs (box 4) follow suit by detecting information about social values and transmitting pertinent data to executives and other managers, then attunement becomes theoretically possible. In other words, an organisation that assimilates sufficient information about values might be capable of exhibiting a heightened sensitivity to those values held by various external stakeholders. Our extension of Swanson's model is consistent with the idea that effective organisational behaviour is a gestalt of structural and cultural synergies (Meyer, Tsui & Hinings 1993). By implication, executive receptivity is a necessary but not sufficient condition for attunement. That is, if any of the synergistic structural or cultural processes depicted in figure 1 is lacking, attunement is unlikely. Yet, at the same time, the gestalt of impression management or superficial corporate social responsiveness might prevail. We will return to this possibility later, after qualifying Swanson's (1999) position that executive receptivity to values is an important determinant of attunement.

Proposition 1: An executive's receptivity to values is a necessary but not sufficient condition for attunement.

The centrality of Proposition 1 (P1) is shown under the heading of `executive's orientation to social policy' in figure 1. Although two-way arrows indicate that receptivity can strongly influence organisational dynamics, this type of executive decision-making does not directly conflate to corporate behaviour that serves the collective good. Discussed next, organisational decision processes can be constrained by many factors, including pressures applied by special interest groups.

3. Theoretical Extensions: Executive Discretion and Personally Held Values

To reiterate, an executive's receptivity to values does not guarantee attunement. The discretion that managers have at the apex of organisational structure also plays an important role in determining organisational behaviour (Hambrick & Finkelstein 1987). Executives can use this discretion to foster undesirable as well as desirable values. For instance, executives can act on egocentric self-serving beliefs to discourage subordinates from expressing views that contradict the status quo (Swanson 1996). When this occurs, rank-and-file managers tend to fall in line with the prevailing myopia for their survival (Jackall 1988; Milgram 1974). Conversely, less egocentric executives are more likely to encourage and comprehend a variety of views, including community-minded perspectives (Gilbert 1996). The point is that executives can use their discretion to facilitate either neglect or attunement, depending on the nature of their own personally held values.

Proposition 2a: Executives can use their decision-making discretion to facilitate either neglect or attunement.

Proposition 2b: The nature of executives' personally held values influences their inclination to foster attunement.

Proposition 2a is consistent with equifinality, or the notion that outcomes in organisations are not unilaterally preordained by causal factors (Doty & Glick 1994). Put in terms of neglect and attunement, executives can use their discretion to direct employees either to ignore or recognise a variety of social issues. The latter was exemplified when Anita Roddick, founder of The Body Shop, reportedly encouraged her employees to work several hours a week on projects that enhanced community life. Alternatively, executives can just as easily signal a preference to neglect social issues. Given these equally possible outcomes, we have adapted Swanson's model to reflect Proposition 2a (P2a) that executive discretion moderates attunement processes (see oval, figure 1). Moreover, we illustrate the influence of executives' personally held values at critical junctures with reference to Proposition 2b (P2b).

According to Proposition 2b, it is not enough for executives to recognise social issues. Attunement also depends on which values they encourage employees to enact. Obviously, organisations can enact values that do not serve the greater good, such as executives' beliefs in discrimination or environmental degradation. Hence, it is important to account for all personally held values that can shape organisational responses to society (Frederick 1995; Swanson 1999). Indeed, attunement theorising cannot go forward without such accounting, a point we underscore in our concluding remarks. For now, our refinement of Swanson's model indicates that executives who strive for attunement must necessarily display receptivity to values that support community. In the next section, we elaborate on the nature of this receptivity as `communion striving' that fosters `trustful dialogue' between corporations and all stakeholders.

Returning to the role of decision-making discretion, certain forces can alter or circumscribe executive policies toward community, including pressure from internal whistleblowers, labour unions and active boards of directors (Johnson & Greening 1999). External groups, such as regulatory bodies, lending institutions and highly organised consumer activists, can also exert influence over corporate conduct toward society (Rowley 1997). To further complicate matters, dissatisfied stakeholders can invoke highly inflamed rhetoric to claim that executives do not properly represent their specific interests. Such allegations can dissuade executives from pursuing either extreme of neglect or attunement, resulting in less controversial `middle of the road' corporate social performance.

Proposition 3: Pressures from internal and external stakeholders can circumscribe an executive's decision-making discretion.

That executive decisions can be affected by the influence of special interest groups renders the link between an executive's personally held values and corporate social responsibility more tenuous than it would be otherwise (cf. Agle, Mitchell & Sonnenfeld 1999). The addition of Proposition 3 (P3) to Swanson's model allows for the fact that vested interests may drive executive decisions, issue by issue. Yet by definition, executives who strive for attunement must keep the needs of the whole community in mind. This brings us to our last agenda item of `trustful dialogue' and the role it can play in attunement theorising.

4. Bridging Organisational Behaviour and Social Expectations with `Trustful Dialogue'

The propositions we have laid out constitute a research agenda of relational properties that require further investigation. Of these, it is paramount that all the values that can be enacted by organisations be identified. Although space limitations preclude such accounting, we note that trust can enhance the quality of relationships within organisations and between organisations and their social environments (Cohen & Prusak 2001; Ring & Van de Ven 1992). (2) Notably, social complexity is easier to manage when trust is present (Calton & Lad 1995; Luhmann 1979). This is an important consideration, since attunement depends on the accretion of information, which adds complexity to all decision processes. Under such conditions, trust, or confidence in the reciprocity and stability of social bonds, can function like glue, holding collective action together, even in the wake of unanticipated events (Barber 1983; Hosmer 1995).

Yet another reason to highlight trust is that dialogue without it can easily deteriorate into superficial impression management that `bends the truth' to serve narrow interests (cf. also Bozeman & Kacmar 1997). Disentangling superficial rhetoric from trustful dialogue requires distinguishing between narrow self-interest and more other-regarding motives. The `ethics of care' can be a touchstone for this distinction, since it takes the focal point of morality to be a willingness to respond to another's needs and strive for the good of the whole community (Gilligan 1982; Noddings 1984). Given this focus, we propose that caring for others, or `communion striving', is a valid motivation for trustful dialogue and by extension a necessary condition for attunement.

Proposition 4: The communion striving that fosters trustful dialogue is a necessary condition for attunement.

That communion striving and trustful dialogue must begin on the executive level is highlighted by Proposition 4 (P4) as a one-way arrow emanating from executives' personally held values.

5. Some Implications for Theory and Practice

Attunement poses many challenges for theory, especially since it blends individual decision-making and organisational dynamics across several levels of analysis. Perhaps the most difficult task will be accounting for all the values that can be selected, retained and enacted by organisations (cf. Frederick 1995). Another challenge is explaining how certain values get embedded in small groups in the informal organisation, leading to conflicting or recalcitrant subcultures that can thwart attunement.

In terms of practice, our research agenda suggests redesigning organisations to reduce the chain of command, a recommendation consistent with the notion that layers of hierarchy often discourage open discussions and encourage habitual misinterpretations of messages (Jackall 1988). Logically, hierarchy gets in the way of attunement processes, given that flatter organisations transmit information about values better than taller ones (Halal 1994). Another implication for practice is that executives should implement policies aimed at recruiting and retaining employees adept at value analysis, communion striving and trustful dialogue. In particular, public affairs managers need to display such skills, since the ability of organisations to enact attunement depends largely on the information they transmit about the social environment.

Finally, a credible theory of corporate social performance must come to terms with cultural differences across national boundaries (Katz, Swanson & Nelson 2001). Demonstrated by the aforementioned example of Nestle, corporate social responsibility can depend on circumstances of culture and economic development. Consequently, executives who strive for attunement should examine business practices through what amounts to anthropological lenses, using information gleaned from environmental scanning and trustful dialogues to try to align organisational conduct with cultural imperatives. In the case of infant formula, this could mean collaborating with local officials to educate consumers about product specifications, such as the importance of mixing the formula with sanitary water. Concurrently, public affairs officials could appraise the product's social impacts. If the data indicate that the product remains unfit for general consumption in certain cultures, then attunement implies that marketing channels be reconfigured to preclude indiscriminate sales. This brings us back to our introductory comment that executives are increasingly under pressure to respond to various stakeholder expectations in international business environments. We hope our research program can shed some light on this increasingly difficult responsibility.

This paper is part of a larger project on managerial values and compensation practices supported by an Australian Research Council (ARC) grant. A related co-authored empirical study was presented at the Academy of Management 2002 in Denver: `Exploring individual differences in normative myopia: Executives' personality factors, pay preferences, and ethics of care'. Professor Swanson also acknowledges institutional support from the Dean's Office in the College of Business Administration, Kansas State University.

References

Agle, B.R., Mitchell, R.K. & Sonnenfeld, J.A. 1999, `What matters to CEOs? An investigation of stakeholder salience, corporate performance, and CEO values', Academy of Management Journal, vol. 42, pp. 507-25.

Ansoff, H.I. 1991, `Strategic management in a historical perspective', International Review of Strategic Management, vol. 2, no. 1, ed. D.E. Hussey, Wiley, Chichester, UK.

Barber, B. 1983, The Logic and Limits of Trust, Rutgers University Press, New Brunswick, NJ.

Birch, D. & Batten, J. 2001, May 16, Corporate Citizenship in Australia, presentation at Museum of Sydney, Sydney, Australia.

Bozeman, D.P. & Kacmar, K.M. 1997, `A cybernetic model of impression management processes in organizations', Organizational Behavior and Human Decision Processes, vol. 69, pp. 9-30.

Butler, R. 2001, June 12, Communism, Socialism, Capitalism: What Next?, presentation at AGSM (Distinguished Speaker Series), Sydney, Australia.

Calton, J. & Lad, L. 1995, `Social contracting as a trust-building process of network governance', Business Ethics Quarterly, vol. 5, pp. 271-95.

Cohen, D. & Prusak, L. 2001, In Good Company: How Social Capital Makes Organizations Work, Harvard Business School Press, Boston, MA.

Doty, D.H. & Glick, W.H. 1994, `Typologies as a unique form of theory building: Toward improved understanding and modeling', Academy of Management Review, vol. 19, pp. 230-51.

England, G.W. 1967, `Personal value systems of American managers', Academy of Management Journal, vol. 10, pp. 107-17.

Frederick, W.C. 1986, `Toward CSR3: Why ethical analysis is indispensable and unavoidable in corporate affairs', California Management Review, vol. 28, pp. 126-41.

Frederick, W.C. 1987, `Theories of corporate social performance', Business and Society: Dimensions of Conflict and Cooperation, ed. S. P. Sethi & C. Falbe, Lexington Books, New York.

Frederick, W.C. 1995, Values, Nature, and Culture in the American Corporation, Oxford University Press, New York.

Gilbert, D. 1996, Strategy and Ethics, Oxford University Press, New York.

Gilligan, C. 1982, In a Different Voice, Harvard University Press, Cambridge, MA. Grace, D., & Cohen, S. 1998, Business Ethics: Australian Problems and Cases, 2nd ed., Oxford University Press, Melbourne.

Halal, W.H. 1994, `From hierarchy to enterprise: Internal markets are the new foundation of management', Academy of Management Executive, vol. 8, no. 4, pp. 69-83.

Hambrick, D.C. & Finkelstein, S. 1987, `Managerial discretion: A bridge between polar views of organizational outcomes', Research in Organizational Behavior, vol. 9, pp. 369-406.

Hosmer, L.T. 1995, `Trust: The connecting link between organizational theory and philosophical ethics', Academy of Management Review, vol. 20, pp. 379-403.

Jackall, R. 1988, Moral Mazes: The World of Corporate Managers, Oxford University Press, New York.

Johnson, R.A., & Greening, D.W. 1999, `The effects of corporate governance and institutional ownership types on corporate social performance', Academy of Management Journal, vol. 42, pp. 564-76.

Kabanoff, B., Waldersee, R. & Cohen, M. 1995, `Espoused values and organizational change themes', Academy of Management Journal, vol. 38, pp. 1075-104.

Katz, J., Swanson, D. & Nelson, L. 2001, `Culture-based expectations of corporate citizenship: A propositional framework and comparison of four cultures', International Journal of Organisational Analysis, vol. 9, pp. 149-71.

Luhmann, N. 1979, Trust and Power, Wiley, Chichester, UK.

MacGregor, A. 2001, April 27, Corporate Social Responsibility Sells, NSW State Chamber of Commerce Press Release; Internet: <http://www.thechamber.au.com/homezone/lobbyland /pressReleasePdfs/CSR.pdf>.

McWilliams, A. & Siegel, D. 2001, `Corporate social responsibility: A theory of the firm perspective', Academy of Management Review, vol. 26, pp. 117-27.

Meyer, A.D., Tsui, A.S. & Hinings, C.R. 1993, `Guest co-editors' introduction: Configurational approaches to organizational analysis', Academy of Management Journal, vol. 36, pp. 117595.

Milgram, S. 1974, Obedience to Authority, Harper & Row, New York.

Milne, M.J., Owen, D.L. & Tilt, C.A. 2001, June 30, Environmental Reporting in Australia and New Zealand: Corporate and Stakeholder Reactions to Best Practice, presentation at Accountability Symposium, Conference of Accounting Association of Australia and New Zealand, Auckland, New Zealand.

Noddings, N. 1984, Caring: A Feminine Approach to Ethics and Moral Education, University of California Press, Berkeley, CA.

Orlitzky, M. 2001, `Does firm size confound the relationship between corporate social performance and firm financial performance?', Journal of Business Ethics, vol. 33, no. 2, pp. 167-80.

Orlitzky, M. & Benjamin, J. D. 2001, `Corporate social performance and firm risk: A meta-analytic review', Business & Society, vol. 40, no. 4, pp. 369-96.

Perrow, C. 1986, Complex Organizations.' A Critical Essay, McGraw-Hill, New York.

Ring, P.S. & Van de Ven, A.H. 1992, `Structuring cooperative relationships between organizations', Strategic Management Journal, vol. 13, pp. 483-98.

Rowley, T. J. 1997, `Moving beyond dyadic ties: A network theory of stakeholder influences', Academy of Management Review, vol. 22, pp. 887-910.

Schein, E.H. 1992, Organizational Culture and Leadership, Jossey-Bass, San Francisco.

Sethi, S.P. 1994, Multinational Corporations and the Impact of Public Advocacy on Corporate Strategy: Nestle and the Infant Formula Controversy, Kluwer, Norwell, MA.

Simon, H.A. 1976, Administrative Behavior, Free Press, New York.

Swanson, D.L. 1996, `Neoclassical economic theory, executive control, and organizational outcomes', Human Relations, vol. 49, no. 6, pp. 735-56.

Swanson, D.L. 1999, `Toward an integrative strategy of business and society: A research strategy for corporate social performance', Academy of Management Review, vol. 24, pp. 506-21.

Trevino, L. & Weaver, G. 1994, `Business ethics: One field or two?', Business Ethics Quarterly, vol. 4, pp. 111-25.

Weber, M. 1946, The Theory of Social and Economic Organization, translated and edited by A.H. Henderson & T. Parsons, Free Press, Glencoe, IL.

Weick, K.E. 1969, The Social Psychology of Organizing, Addison-Wesley, Reading, MA.

Wood, D.J. 1991, `Corporate social performance revisited', Academy of Management Review, vol. 16, pp. 691-718.

Wood, D.J. & Jones, R.E. 1995, `Stakeholder mismatching: A theoretical problem in empirical research on corporate social performance', International Journal of Organizational Analysis, vol. 3, pp. 229-67.

(1.) Swanson's article won the International Association for Business and Society's Award for the best paper published in 1999, sponsored by the International Association for Business and Society in conjunction with the California Management Review.

(2.) Due to space limitations, we do not incorporate the vast literature on trust.

(Date of receipt of final transcript: April, 2002. Accepted by Sharon Parker and Robert Wood, Special Issue Editors.)

Marc Orlitzky *

Diane L. Swanson ([section])

* Australian Graduate School of Management, UNSW, Sydney, NSW 2052. Email: [e-mail]

([section]) College of Business Administration, Kansas State University, 101 Calvin Hall, Manhattan, KS 66506-0507, USA. Email: [e-mail]

Marc Orlitzky (PhD, Univesity Iowa) is a lecturer at the Australia Graduate School of Management (AGSM). His work focuses on business ethics, human resource management, and small-group communication. Since 1997, his research has been accepted by various publication outlets such as Business and Society, Journal of Business Ethics, Research in Corporate Social Performance and Policy, Academy of Management Review and Journal of Personal and Interpersonal Loss.

Diane Swanson (PhD, University of Pittsburgh) is an Associate Professor and Research Fellow in the College of Business Administration at Kansas Stat University where she teaches courses in Business, Government and Society and Professional ethics and conducts research on corporate social performance, government regulation and ethical leadership. Her research has been published in several outlets including Academy Management of Review, Human Relations, Behavioral Science, International Journal of Organizational Analysis, Journal of Business Ethics, Systems Research and Behavioural Science and Perspectives on Corporate Citizenship.