Firms and Grand Challenges: Toward a Polycentric Governance Strategy

Abstract

Firms have now become important actors in efforts to address grand challenges. The growing academic interest in understanding why and how firms help in such efforts offers conflicting insights that are diverging into two siloed research streams—whether firms become involved in resolving grand challenges to gain public legitimacy as responsible members of society or to enhance firm reputation and brand value in order to differentiate themselves from competitors. Inspired by polycentric governance and an actor-centered approach, we focus on the interactive elements and underlying motives of nonmarket and market actors that shape firm strategy in the global governance landscape. We theorize that a polycentric governance strategy constitutes an integrated strategy that enables firms to effectively manage the interests of multiple stakeholders to succeed in addressing grand challenges while remaining competitive in the market. We discuss the implications of these insights for theory development on grand challenges and stakeholder governance.