Too good to say goodbye? Effect of stakeholder orientation on the survival of large firms

Abstract

This study examines the impact of stakeholder orientation, defined as the extent to which a firm adopts policies and management processes to identify, understand and integrate the interests of its stakeholders, on the survival of large firms. We suggest that stakeholder orientation facilitates external support and organizational adaptation. Stakeholder-oriented firms are better positioned to understand and adapt to changes in a competitive landscape. Additionally, stakeholder orientation might buffer firms against external jolts, thereby increasing survival rates. We validate our arguments using a dataset of 733 US firms included in S&P 500 index from 2003 to 2018. We find that stakeholder orientation improves firm survival. Furthermore, we test the moderating effect of firm age and environmental munificence on the survival consequences of stakeholder orientation. We show that being stakeholder-oriented turns into higher chances of survival as firms age and operate in less munificent industries.