CSR as Inhibitor or Stimulus for Performance Improvements in Major Organizational Transformations

Abstract

In this study we explore whether the engagement in organizational practices for achieving the enhancement of stakeholders’ well-being allows firms to reap positive outcomes from downsizing. Two conflicting views on corporate goodness are considered. Justice theorists contend that, by engaging in corporate socially responsible practices, stakeholders are more likely of interpreting downsizing as fair, which ensures stakeholder commitment with organizational changes that, in the end, will have a positive impact on performance. In contrast, prospect theorists argue that survivors of downsizing in socially responsible firms may hinder the successful implementation of organizational changes in order to preserve their wealth, position, status, rights, and privileges, which, in the end, will reduce organizational performance. We reconciled both views by means of a contingency-based model that includes environmental, institutional, and organizational factors. Our results for an international sample of 1,888 firms...