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Article

Learning from Stakeholder Pressure and Embeddedness: The Roles of Absorptive Capacity in the Corporate Social Responsibility of Dutch Agribusinesses

by
Paul T. M. Ingenbleek
1 and
Domenico Dentoni
2,*
1
Marketing and Consumer Behaviour Group, Wageningen University, Hollandsweg 1, 6707KN Wageningen, The Netherlands
2
Management Studies Group, Wageningen University, Hollandsweg 1, 6707KN Wageningen, The Netherlands
*
Author to whom correspondence should be addressed.
Sustainability 2016, 8(10), 1026; https://0-doi-org.brum.beds.ac.uk/10.3390/su8101026
Submission received: 2 September 2016 / Revised: 2 October 2016 / Accepted: 10 October 2016 / Published: 13 October 2016
(This article belongs to the Special Issue How does Market Demand for Sustainability Shape Business Strategies? Exploring Innovation Paths in Agribusiness)
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Versions Notes

Abstract

:
In spite of much research on corporate social responsibility (CSR) responses to secondary stakeholders (i.e., social movements, activists, media, civil society and non-governmental organizations), the debate on how companies learn from pressure and collaboration with these societal groups is still open. Building upon stakeholder and knowledge management theories, this paper analyzes how secondary stakeholder pressure and embeddedness influence agribusiness companies’ absorptive capacity and their CSR strategies. Data are obtained from 152 Dutch agribusiness company managers. The results highlight that, first, absorptive capacity influences companies’ new product innovation, product positioning and organizational innovation to be more oriented towards CSR. Second, stakeholder embeddedness of agribusiness companies triggers absorptive capacity more than pressure from them. Third, stakeholder pressure and embeddedness also have direct (i.e., not mediated by companies’ absorptive capacity) yet weaker effects on CSR organizational innovation and product positioning. Findings corroborate the idea that firms develop innovative CSR strategies when they combine internal reflection processes and partnerships with secondary stakeholders.

1. Introduction

As agribusiness is closely connected to natural resources, sustainability ranks relatively high on the management agenda in this industry. This is particularly true for countries such as The Netherlands that for a long time focused the greater part of agricultural innovations on increasing efficiency, thereby neglecting the sustainability consequences for the natural environment. The negative consequences have increased the social pressure to develop innovations that improve the sustainability of the industry [1]. Remarkably, these innovation processes are not only responding to the pressure of secondary stakeholders, such as social movements, activists, media, civil society and non-governmental organizations, but also by direct collaboration between companies and such stakeholders. As such, agribusiness may also provide valuable lessons for effective stakeholder engagement to strengthen sustainable development.
In that respect, the literature on management for sustainable development has put particular emphasis on whether or not companies respond to the claims of secondary stakeholders—broadly defined as groups that, unlike primary stakeholders, have no formal bond with the company [2]—in their Corporate Social Responsibility (CSR) agenda [3,4,5]. Researchers have also examined the consequences of adherence to stakeholder claims including among others reputation and business performance [6,7]. While the whether and why of responsiveness to secondary stakeholder actions have therefore extensively been addressed in the literature, the how of such responsiveness has received less attention. Previous studies suggested that as a response to (or prevention of) stakeholder pressure, companies develop informal or formal interactions with secondary stakeholders for consultation or to take joint action [8,9]. Managers realize that the challenges underlying the pressure—like climate change, food insecurity and violation of human rights—are often too complex and big to adhere to on their own [10,11]. This requires their organizations to collaborate with stakeholders and to learn from them [12].
The academic literature therefore increasingly hints on the interconnections between stakeholder pressure, knowledge, and innovation in organizations [13,14]. These processes are also explored in case studies [14,15], indicating the need for organizational learning perspectives in stakeholder management and CSR. This study extends this literature strand by (1) bringing the concept of absorptive capacity into the discussion on CSR strategies and stakeholder management; and (2) empirically tests the relative importance of both stakeholder pressure and embeddedness in triggering absorptive capacity en route to CSR strategies. Absorptive capacity has been defined as “the ability of the firm to recognize the value of new, external information, assimilate it and apply it to commercial ends” ([16], p. 1). As such, it represents a critical factor to connect firms’ external environment with their internal organizational processes that foster innovation [16,17]. Yet, absorptive capacity needs to be stimulated through activation triggers [18], for example by engaging in a network of secondary stakeholders that facilitate the acquisition, integration and use information on issues raised by them [19]. Firms like Nestlé, Coca Cola and Unilever, for example, all actively engage in dialogue with secondary stakeholders and often such processes are formally organized in multi-stakeholder platforms such as the Sustainability Consortium, the Sustainability Trade Initiative, and the Sustainable Food Laboratory [20]. Therefore, firms may find this study results helpful in assessing the importance of managing knowledge from secondary stakeholders in their CSR strategy development.
We test our hypotheses in the context of the agribusiness industry in The Netherlands. This context is characterized by both stakeholder pressure and stakeholder involvement in an industry that faces complex and uncertain problems [1]. Stakeholder embeddedness has become relatively common in the Dutch business environment, with stakeholder dialogue deeply engrained in the relatively egalitarian Dutch culture and many multi-actor platforms and standard-setting institutions originating from this country or having established there [21]. As in the densely populated area of North Western Europe, claims on the natural environment are often diverse (like economic use of farmland versus recreation space and new construction locations for other industries and inhabitants), thus creating a setting in which many secondary stakeholders exercise pressure on the resources utilized by companies.

2. Conceptal Background

2.1. CSR Strategies

CSR has been broadly defined as the ‘actions that appear to further some social good, beyond the interests of the firm and that which is required by law’ ([22], p. 117) that a company undertakes. Accordingly, CSR strategies refer to how corporations combine their resources and expertise to choose and address the effects that they have on society [7]. Nevertheless, the CSR concept has been subject to multiple controversies. First of all, critics contest the self-assessed nature of CSR, that is, the fact that companies often self-proclaim themselves as socially responsible on the basis of their own data [23,24]. These self-claims on CSR, which have found to be sometimes decoupled from action, have been even referred to as forms of corporate hypocrisy [25]. More recently, scholars have criticized the instrumental nature of CSR which, while it has proven to support company reputation, public relations and even performance [26,27], has failed to provide necessary public goods to society [8,28]. Finally, the complex nature of social problems, which are characterized by knowledge uncertainty, conflict of values among stakeholders and non-linear changes over time [29,30], questions whether company CSR strategies indeed support transitions for the social good, or instead jeopardize them. Because of these controversies, an important point to further deepen in CSR is the role of learning and adaptation to stakeholders’ demands and even criticisms [31], hence the need to connect firms’ CSR strategies to their absorptive capacity.
Aware of these relevant points of controversy, this study focuses on three different stage processes of CSR strategies as possible outcomes of stakeholder pressure and embeddedness: implementation, innovation and positioning [22]. First, the CSR implementation stage involves investments made by the company to undertake innovation towards CSR [22,32]. Second, the CSR innovation stage entails both changes in organizational processes, for example, to make production more environmental-friendly, and the development of new products [33]. Third, the CSR positioning stage is the strategic attempt to differentiate products from competitors based on CSR [34,35,36]. Well-known products that differentiate on the basis of CSR are for example fair trade coffee, solar energy, and green banking services.

2.2. Secondary Stakeholder Pressure

CSR researchers have drawn in past research predominantly on resource-dependency and legitimacy arguments [37] to explain why certain firms are more active in CSR or adhere more secondary stakeholders’ claims than others. According to resource-dependence theory, firms often depend on resources that are controlled by primary stakeholders [38]. These stakeholders are likely to continue to make resources available to the firm if they consider the firm legitimate. Legitimacy is “a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions” ([37], p. 574). The role of secondary stakeholders is to question and/or provide legitimacy to a firm’s activities [37].
The existing literature has in particular looked at how secondary stakeholders raise public attention for their claims to question companies’ legitimacy [39,40]. The effect of secondary stakeholders on CSR strategies may depend on stakeholder characteristics, the company’s characteristics and on the institutional context. Eesley and Lenox [41] find, in a study on 600 actions of stakeholder pressure in the US, that companies are more likely to respond to these claims if the secondary stakeholder is more powerful (in that it owns more resources) and if their request is perceived as more legitimate. On a study of 144 boycott campaigns on US companies between 1990 and 2005, King [5] found that companies with declining reputation are more likely to adhere to secondary stakeholder pressure. By comparing the US with the EU on three cases of businesses involved in global social issues, Doh and Guay [3] found that companies react differently to secondary stakeholder pressures depending on overarching institutional structures and political legacies. Seeking to add a different perspective on why companies respond to secondary stakeholder pressure, this study analyzes the influence on CSR strategies through processes of learning from stakeholders (i.e., with the mediation of absorptive capacity).

2.3. Secondary Stakeholder Embeddedness

The role of secondary stakeholders may, however, not be restricted to actions that immediately question the company’s legitimacy and that intend to harm its reputation. They may also take a more constructive approach to engage in dialogue and collaboration with companies in order to fulfill their mission. Examples of such organizations are special interest groups, civil society organizations, certification bodies and standard-setting NGOs [42,43,44]. We refer to this phenomenon as secondary stakeholder embeddedness and define it as the extent to which the company has close relationships with its secondary stakeholders’ partners. Company embeddedness in networks is seen as a force that facilitates and shapes the creation of formal partnerships [45]. The concept of secondary stakeholder embeddedness extends this phenomenon to networks of secondary stakeholders that reside in the institutional environment of the company [46]. Companies may benefit from embeddedness in secondary stakeholder networks because such stakeholders may offer legitimacy by giving their explicit approval and recommendation about the company to primary stakeholders [4], and/or by offering their knowledge on how the company can accommodate their interests. Because social issues are often ambiguous and complex for companies to understand what the right actions are, such knowledge can help them to decide how they should respond [10]. This in turn calls for a knowledge-based view on CSR by introducing the concept of absorptive capacity in this domain.

2.4. CSR-Directed Absorptive Capacity

Until the introduction of the absorptive capacity concept, the innovation literature was dominated by approaches that describe events and developments in the external environment of the company like technological turbulence, uncertainty, the emergence of dominant designs and technology shake outs [47]. Introduced by Cohen and Levinthal [16], the concept of absorptive capacity contributed to put emphasis on the internal elements of innovation by drawing attention to the degree to which companies can “absorb” external influences, like new technologies that are developed by universities, suppliers or competitors in their external environment.
The concept of absorptive capacity has received substantial attention in the literature on, among others, strategic management [48,49], technology management and economics [50]. To overcome inconsistencies in conceptualizations and measures, the conceptualization of absorptive capacity was therefore further developed by Zahra and George [17] and Todorova and Durisin [18]. Zahra and George [17] conceptualized absorptive capacity as four dimensions: knowledge acquisition, assimilation, transformation, and exploitation. Acquisition constitutes processes that identify and acquire externally generated knowledge that is critical for an organization’s operations. Assimilation processes allow the organization to analyze, interpret and understand the information from external sources. Transformation refers to the processes that combine the existing knowledge with the newly acquired and assimilated knowledge. Finally, exploitation pertains to the incorporation of the knowledge into operations. It enables organizations to refine, extend, or leverage existing competencies or create new ones [17]. Together, the dimensions of absorptive capacity form a coherent dynamic capability that fosters organizational change and evolution [51].
As a key dimension of absorptive capacity, acquisition of knowledge varies not only in intensity and speed but also in direction. One of these directions may be the secondary stakeholder groups that represent interests on societal issues that are in conflict with company practices. Thus, because this paper deals specifically with firms’ absorption of such CSR-related knowledge acquired from secondary stakeholders, we will distinguish in the following CSR-directed absorptive capacity from absorptive capacity in general. Consistently with the definition of CSR, we define CSR-directed absorptive capacity as the ability of the firm to recognize the value, assimilate and apply knowledge on its obligations towards society and its stakeholders beyond legal compliance. Firms with higher CSR-directed absorptive capacity have, for instance, top managers that realize the role that their firm plays in the society [52], training programs designed to embed sustainability within the organization [15] and more proactive CSR strategies [53].

3. Hypotheses

Since absorptive capacity is an important driver for companies’ investments in R&D and innovation processes [16], we hypothesize that CSR-directed absorptive capacity is a driver of CSR new product innovation. Likewise CSR-directed absorptive capacity may have an influence on firms’ CSR innovation in its organizational processes [54], as sourcing, processing, stock-keeping, and quality assurance. For example, to introduce a new environmentally-friendly product, the firm may change its procurement and manufacturing systems to source and finalize environmentally-friendly input materials. Thus, we hypothesize that firms with a high CSR-directed absorptive capacity will be more capable of incorporating and implementing such organizational innovations.
The CSR features that companies include in their new product and organizational innovations may be defensive in that including these features protect the product from critique from secondary stakeholders, or they may proactively address issues to appeal to customers and other primary stakeholders [5]. In the latter case, the company uses CSR as a competitive issue and it positions the product more explicitly on CSR. To do so, the company needs a specific insight in how pressures from the institutional environment influence their market environment [55]. Companies with a high CSR-directed absorptive capacity are likely to better understand these influences and recognize and respond to the market opportunities that emerge from the institutional environment. We thus hypothesize:
H1a.
The higher the CSR-directed absorptive capacity of a company, the more its new product innovation is oriented towards CSR.
H1b.
The higher the CSR-directed absorptive capacity of a company, the more its organizational innovation is oriented towards CSR.
H1c.
The higher the CSR-directed absorptive capacity of a company, the more its product positioning is oriented towards CSR.
Absorptive capacity requires triggers from the external environment in order to be activated [56]. For CSR-directed absorptive capacity the pressure that secondary stakeholders put on companies can be such an activation trigger. The typical resource-dependency arguments suggest that companies adhere to secondary stakeholder claims because the continued access to vital resources controlled by primary stakeholders is at stake [4,57]. From an organizational learning point of view, though, organizational action emerges from the memory of the organization through a learning process in which new information is acquired, shared and stored [58]. From that perspective, secondary stakeholder pressure is likely to activate a learning process and, depending on the capacity of the organization to absorb such information, it may respond. The case of the world fifty largest food manufacturing corporations [44], for example, illustrates that—beyond specific issues under discussion with stakeholders—companies develop intra- or inter-organizational systems to better acquire and ultimately use knowledge from secondary stakeholders on future issues. Therefore, we hypothesize:
H2:
The higher the secondary stakeholder pressure, the higher the CSR-directed absorptive capacity of a company.
Social network theory holds that information disseminates through social network ties [59]. Likewise, the embeddedness in a secondary stakeholder network enables companies to absorb CSR-directed knowledge. The acquisition and processing of new knowledge is higher when the company is embedded in a dense network of stakeholders [17] and when its network position is central [60]. As such, embeddedness in a secondary stakeholder network is an activation trigger of CSR-directed absorptive capacity. Recent studies on social issues management have in that respect found learning effects in the alliances between secondary stakeholders and companies [9,61]. For example, food and beverage corporations participating in multi-stakeholder partnerships with international NGOs and civil society organizations since the early 2000s have developed systems to acquire and integrate CSR-based knowledge over time [12]. We hypothesize that:
H3:
The higher secondary stakeholder embeddedness, the higher the CSR-directed absorptive capacity of a company.
Whereas the foregoing hypotheses focus on the knowledge effects of stakeholder management, pressure from the embeddedness with secondary stakeholders may also effect the legitimacy of companies beyond their control [57]. We specify these effects below. Regardless of how much companies learn from secondary stakeholder pressure, their actions may depend on the extent to which their reputation with primary stakeholders is harmed [4,5]. In order to stop the reputation-harming actions of secondary stakeholders, companies may adhere to the minimum extent possible. They will therefore not develop new products based on the social issue or position products based on the issue, but only make internal changes to their processes that will stop the external pressure.
In addition, when embedded in a network of secondary stakeholders, companies may deploy their contacts with these stakeholders explicitly to position their products on the basis of a social issue. Fair trade products, for example, are approved by a group of secondary stakeholders that therefore provide a high level of legitimacy to the products that it approved. The provision of a such legitimacy may go beyond the knowledge elements of CSR strategies because it leverages the reputation-building competences of secondary stakeholders rather than their knowledge. With this in mind, we hypothesize that:
H4:
The higher the secondary stakeholder pressure, the more organizational innovation is oriented towards CSR.
H5:
The higher secondary stakeholder embeddedness, the more product positioning is oriented towards CSR.
The conceptual framework, which synthesizes the hypotheses hereby developed, is shown in Figure 1. Central to the framework is the concept of CSR-directed absorptive capacity, which is driven by secondary stakeholder pressure and embeddedness as activation triggers. The CSR-directed absorptive capacity partially mediates the relationship between these external influences and CSR strategies.

4. Method

4.1. Sample and Procedure

The agro-food industry is particularly suitable to examine environmental issues because it has a direct impact on natural resources, and at the same time is influenced by their availability. This study focuses on a single CSR issue, i.e., environmental sustainability, in the Dutch agro-food industry. The issue is applicable to all companies in the sample because they all make use of plant-based input materials from agricultural primary producers (while social sustainability is in the Dutch context usually only an issue if they use materials from developing countries where farmer incomes and working conditions may not be well-protected). The companies influence environmental sustainability through standards in their purchasing processes. The companies in the sample re-sell and/or process the input materials. To design a sampling frame we therefore selected the industry codes on the production, processing, trade, and wholesaling of plant-based products. We excluded traders and processors of animal-based products, like dairy companies, slaughter houses and meat processors because their link to environmental impact may vary strongly between the animal species with which they work. For the sampling frame we used a commercial database containing Chamber of Commerce data. A random sample of 700 was contacted by a phone call to check eligibility and to identify the manager responsible for CSR or environmental issues.
We tried to ensure that informants were knowledgeable about the issues by targeting senior managers in these firms who are responsible for strategic investments. Respondents typically held positions like director, general manager, plant manager, or owner-director. On average they had 12 years of experience in their current position (sd = 11 years) and 14 years in their company (sd = 11 years). Respondents received a personalized letter highlighting the academic and nonprofit sponsors of the study, announcing the survey and indicating the period in which managers would receive a personal call to ask them for cooperation. Seven hundred managers were called, and 473 agreed to cooperate. Informants were offered a summary report of the study and were given two options to participate, i.e., in a phone interview at a time suitable for the respondent, or by a paper version of the questionnaire with a return envelope [62]. Informants who chose the paper questionnaire received three reminder phone calls to return the questionnaire. Informants who chose a phone interview were told that they could read the questions from a website during the interview, to facilitate the interview process and to enable them to start preparing their answers. Finally, 97 informants were interviewed by telephone (52 of them were able to look at the questionnaire on the Web) and 55 paper questionnaires were received, leading to 152 cases, with a response rate of 32%. The final sample includes a variety of companies, including food processors (among others manufacturers of chocolate and confectionary, breakfast cereals, bakery products, coffee, and soft drinks), wholesalers/traders of fresh products (such as fruits, vegetables, flowers), and animal nutrition companies.
We did several tests to check the systematic biases in our data collection procedure. First, we checked for systematic differences between respondents who choose the telephone option and those who filled out paper questionnaires. We found no significant differences between the two groups on all variables included in the model. We also checked whether telephone respondents who looked at the questionnaire on the website reported different answers than those who relied on the operator’s voice only, but we found no significant differences. We used three different methods to check the response bias. First, we compared early, middle and late respondents on the variables included in our model. We assigned informants to the three groups on the basis of the number of days before the informant responded. We found no significant differences between the groups. A second test of nonresponse bias was conducted, by examining equity and number of employees between the firms that participated in our study and 1442 firms in the same industrial categories registered at the Chamber of Commerce. Results indicate no differences between the two groups. We also asked 45 non-respondents who were contacted by telephone whether they were willing to finish a short questionnaire of 10 statements of different constructs. No significant differences were found between the respondents in the sample and the non-respondent sample. Together these results suggest that systematic biases are unlikely to be the major problem in our survey.

4.2. Measurement and Validation

All organizational variables are measured at the strategic business unit level (a profit center with distinct products and markets). Measures were developed using a combination of literature search and in-depth face-to-face interviews with 10 managers at companies within the selected industries and 10 industry experts. If they were applicable in our research context, we used existing scale items, or slightly adapted items. Subsequently, the questionnaires were checked in 5 face-to-face interviews with experienced food industry researchers to verify the appropriateness of the terminology used, clarity and feasibility of the interview protocol and the response formats. Based on their suggestions, several small changes were made to the questionnaire. All constructs included in our study are measured on 7-point scales.
Conventional methods such as coefficient alpha, item-to-total correlations, and exploratory factor analysis were used to select items that were used in confirmatory factor analyses [63]. The unidimensionality of each measure was assessed in a series of two-factor models (using LISREL 8.72). After eliminating items that either had very low loadings or loaded on more than one factor, the fit indices suggest a proper fit of the model (Chi-square (df = 499) = 857.23, p < 0.001; RMSEA = 0.0643, NFI = 0.920; CFI = 0.965) and all loadings were significant (factor loadings are shown in Table 1). Next, the procedure advised by Bagozzi and Philips (1982) [64] was used to assess the discriminant validity of the measures. Pairs of constructs were assessed in a series of two-factor confirmatory factor models. Each model was run twice: once constraining the correlation between the two latent variables to 1, and once releasing this parameter. A chi-square difference test was performed. For all models investigated, the chi-square values were significantly lower for the released models. These results suggest that the measures exhibit discriminant validity.
Dependent variables. In terms of the different stage processes of CSR strategy, and following Frambach, Prabhu and Verhallen [65], new product innovation is measured by two indicators that respectively measure the share of products with environmental-friendly attributes that was launched and developed over the past year. Organizational innovation is operationalized by one item that measures the extent to which environmental friendliness was improved in the organization’s processes [54]. New product positioning measures on two items how important the natural environment is in the market positioning of products that are being developed or that were launched over the past year.
CSR-directed absorptive capacity. Absorptive capacity is conceptualized in different ways in the literature [17]. Our operationalization of absorptive capacity is based on the scales developed by Jansen, van den Bosch and Volberda [66], which derive from the four components of absorptive capacity identified by Zahra and George [17]: knowledge acquisition, assimilation, transformation and exploitation. Todorova and Durisin [18] see recognizing value of new knowledge as an additional component of absorptive capacity. Because recognizing the value of new knowledge is likely to be captured in each of the other constructs (e.g., new knowledge is not acquired, transformed or exploited unless it is recognized, interpretation in assimilation processes involves an assessment of the value of information), we remain with the original four components. Based on the interview results, we focused the items on knowledge that pertains to the natural environment and where necessary we added new items to the subscales. We checked the discriminant validity and the measurement model of the four subscales before inputting all items in the data purification procedure as it is described above. Scores for the four components of absorptive capacity are computed as the average of the items that remain after data purification. Absorptive capacity has a complex internal structure in which all four components play an important role and are related to one another in different ways [18]. The scores of the CSR-directed absorptive capacity construct as they are used in the regression analyses are computed as the means of the four different subscales, following the rationale that all four components should weight equally in the absorptive capacity scores.
Knowledge acquisition is measured by five items that measure the processes through which organizations acquire new knowledge on the natural environment through contacts with external parties. Knowledge assimilation measures in four items (including one new item), the processes by which organizations analyze, interpret and understand and recognize relevance of new environmental information. Knowledge transformation measures the processes in which information is stored and contributed to the existing knowledge on the environment. The scale consists of four items, while knowledge exploitation consists of five items. One item that measures the application of knowledge in organizational processes in general is adapted from the scale developed by Jansen et al. [66]. The other, newly developed items focus on the application of knowledge in specific processes (purchasing/sourcing, processing and logistics, marketing and sales, and strategy development.
Activation triggers. Secondary stakeholder pressure is measured by three items derived from Stevens et al.’s [68] non-market stakeholder pressure scale. To ensure sufficient variability in the questionnaire, the items of this scale were rephrased as interrogative questions [70]. The scale of secondary stakeholder embeddedness consists of six items that measure the extent to which the organization is embedded in networks of environmental organizations in the institutional environment, based on Wuyts and Geyskens’ supplier embeddedness scale [69].
Control variables. Because companies in markets that are more dynamic may innovate more, we control two types of competition. Competitive intensity measures the dynamics of competitors in the industry in three items, adapted from Maltz and Kohli [67]. CSR competition is a newly developed measure that indicates the extent to which environmental friendliness has become a competitive dimension in the industry. While competitive intensity therefore controls for the level of competition between firms in general, CSR competition measures to what extent such dynamism pertains to CSR specifically. To rule out size as an alternative explanation for innovation we control for the number of employees and the turnover of the companies in our sample. Both are measured in seven categories (for turnover in million euro: <0.25/0.25–0.5/0.5–1/1–5/5–10/10–100; for employees: 1 denoting <25/25–50/50–100/100–250/250–1000/1000–5000/5000). Finally, customer power is included because powerful chain members like supermarkets and multinationals can strongly influence the innovation agenda in agribusiness. Customer power is measured with one item on a 7-point scale measuring the extent to which buyers can enforce lower prices. Properties of measures are shown in Table 2, correlations in Table 3, and scale items in Table 1.

5. Results

To test the hypotheses, we use ordinary least-squares (OLS) linear regression models that include the simple effects of independent variables (activation triggers when absorptive capacity is the dependent variable and absorptive capacity and the activation triggers when the CSR strategy variables are dependent). Following Aiken and West [71], we computed deviations from the means to create measures of the independent and proposed moderator variables. With the highest Variance Inflation Factor being 2.06 (pertaining to CSR-directed absorptive capacity), multicollinearity is unlikely to be a problem in our analysis. The results are reported in Table 4.
Hypotheses 1 predicted positive effects of CSR-directed absorptive capacity on the three CSR outcomes. The positive effects of absorptive capacity on (a) new product innovation (0.38, p < 0.001); (b) organizational innovation (0.39, p < 0.001) and (c) new product positioning (0.21, p < 0.01) are all significant and in the predicted direction. The results therefore provide support for hypotheses 1a–c. These findings suggest that the capacity of absorbing knowledge from stakeholders indeed relates to Dutch agribusiness companies’ CSR strategy. In other words, companies that develop organizational mechanisms to acquire, assimilate, transform and exploit knowledge from stakeholders are more likely to develop product and organizational innovations oriented towards CSR, and to position their products accordingly.
Hypotheses 2 and 3 predict that the two activation triggers have a positive effect on CSR-directed absorptive capacity. Hypothesis 2 is supported because the parameter for secondary stakeholder pressure is positive and significant (0.14, p < 0.05). Also, Hypothesis 3 is supported because the effects of secondary stakeholder embeddedness on absorptive capacity of positive and significant (0.55, p < 0.001). These results first suggest that the sampled companies indeed activate knowledge management mechanisms in relation to stakeholder pressure and embeddedness. Moreover, stakeholder embeddedness has a stronger positive effect than stakeholder pressure on absorptive capacity, suggesting that companies learn more from stakeholder embeddedness than from the stakeholder pressure.
Hypothesis 4 predicts that secondary stakeholder pressure has a positive effect on organizational innovation, also after considering the mediation effect of absorptive capacity. Because the effect of secondary stakeholder pressure is indeed positive and significant, we find support for Hypothesis 4. The results show in that respect that secondary stakeholder pressure has a significant effect beyond the knowledge effect that is captured by absorptive capacity (0.17, p < 0.05). In other words, companies adapt their strategies and orient them towards CSR to stakeholder pressures also independently from what they are actually learning from them.
Hypothesis 5 predicted that secondary stakeholder embeddedness has a positive effect on new product positioning. Because this effect occurs beyond the learning effect that stakeholder embeddedness has on absorptive capacity, it should occur when controlling for absorptive capacity. Because the effect of secondary stakeholder pressure is indeed positive and significant (0.22, p < 0.05), the results support Hypothesis 5. In other words, companies adapt their strategies to their embeddedness with secondary stakeholders also independently from what they are actually learning from them.
In addition to the hypothesized findings, and somehow surprisingly, we find a negative effect of secondary stakeholder pressure on product innovation (−0.16, p < 0.05). This effect may occur because firms that are under pressure of stakeholders will first need to strengthen their CSR reputation before they can put a credible product offering on the market based on CSR. Finally, the control variables show two significant results. First, CSR competition has a positive effect on CSR-directed absorptive capacity. This effect is logically explained by the fact that if CSR starts to develop into a competitive dimension, it affects more business functions (like sales and marketing). Also top-managers are more likely to support knowledge development on the subject when (a lack of) CSR starts to affect market share and becomes a source of competitive advantage. Second, customer power appears to have a significant negative influence on CSR-based new product innovation. This effect may be explained from the relatively high level of power of food retailers in the chain. The companies in our sample may be confronted with price pressure which reduces their incentives to innovate with (CSR-based) differentiated products.

6. Discussion

Results from this analysis in a Dutch agribusiness context corroborate and extend several theoretical viewpoints around the role of organizational learning from stakeholders in CSR. First of all, results support the recent findings on knowledge management for CSR and its link to firm performance [72,73]. Based on the study of Taiwanese service and manufacturing companies, Weng et al. [72] found that firms’ innovation orientation enhances the role of employees’ conduct on CSR product innovation practices. Moreover, in the context of Polish firms, Ryszko [73] found that technological eco-innovation improves business performance. In relation to these studies, the first result of this analysis adds that absorptive capacity is a critical factor to understand how companies learn from stakeholders and develop their CSR innovation practices and positioning strategies accordingly. This makes it relevant to understand how a company could trigger its absorptive capacity.
The second result from this study reveals that, according to the respondents, stakeholder embeddedness plays a stronger role than stakeholder pressure on absorptive capacity. One explanation of this result could be related to respondents’ self-perceptions of learning, that is, company managers may have discounted the effect of stakeholder pressure on their own learning and emphasized the effect of stakeholder embeddedness for social desirability bias reasons. Nevertheless, this result also finds large support in recent findings from the literature [9,12,61], which found that learning is one of the most relevant forms of value from stakeholder collaboration. Relative to this literature, this study contributes by focusing on absorptive capacity as a critical factor to retain and use the knowledge from stakeholders.
Nevertheless, the third and fourth findings from this study also confirms that stakeholders have an influencing role on company CSR strategies that goes beyond organizational learning. The finding that stakeholder pressure positively influence CSR organizational innovation suggests that company need for legitimacy [37] and reputation [4,5] push Dutch agribusiness companies towards organizational change without the mediation of learning. Proclaiming changes on CSR based on stakeholder pressures without necessarily learning from them confirms the notion that CSR strategies also play an instrumental role [8] in impression management [74]. Finally, the role of stakeholder embeddedness on CSR product positioning corroborates the theory that companies also use strategic conversations or relationships with stakeholders to influence their CSR strategies without necessarily seeking to learn from their knowledge [75,76]. For example, based a sample of US consumers of branded food products, Dentoni et al. [76] found that endorsements from stakeholders perceived as credible indeed support product positioning. In relation to Dentoni et al. [76], this study adds that engaging with these stakeholders is instrumental in building a CSR product position in the marketplace.

7. Conclusions

This paper has empirically examined the role and drivers of absorptive capacity in CSR strategies in the context of Dutch agribusiness. It has found strong evidence that, in addition to or sometimes in combination with factors from the external environment, absorptive capacity is a strong driver of CSR strategies. In particular, the study found positive effects of CSR-directed absorptive capacity on new product innovation, organizational innovation and product positioning. In addition to external factors that received wide attention in the CSR literature, such as stakeholder pressure, the study found also various effects pertaining to stakeholder embeddedness, the role of CSR in market competition, and other competitive forces including customer power and competitive intensity.
These findings call for more emphasis on knowledge management for companies that aim to further strengthen their CSR policies, with an attention both to the organizational processes [77] and the human resources [78] underlying these knowledge management processes. Moreover, these findings call for governments that aim to achieve public goals like environmental sustainability through private investments. In particular, results expand recent findings on the relation between absorptive capacity and the alignment of rates of change internal and external to companies [79]. To this respect, our study also provided insight in the drivers of CSR-directed absorptive capacity. The strongest effect was obtained by far from company embeddedness with secondary stakeholders. This finding suggests that NGOs and other secondary stakeholders, including social movements [80] and universities [81], depending on their positioning vis-à-vis the industry [82], consider their role not only as a critic of companies with regard to their environmental impact, but also as a collaborator and provider of knowledge. Other factors that stimulate absorptive capacity are the pressure of secondary and primary stakeholders, as well as CSR competition.

Limitations and Directions for Future Research

Conclusions of this study should be interpreted in the light of its limitations. First of all, hypothesis have been tested with data based on self-assessments, perceptions and representations of company senior management. As such, responses are subject to social desirability issues and, as a consequence, generalizations and recommendations from this study should be cautiously considered. To address this social desirability bias limitation, future research seeking to generalize from these results should test these hypotheses independently from the company level, for example gauging stakeholders’ or employees’ perceptions respectively external or internal to the examined organizations. Furthermore, our study has focused on a single issue, environmentalism, and to agro- and food production and trade industries. Future research may expand the evidence on absorptive capacity and CSR by including other industries and other issues. This study made use of single respondents. Because in our target industries the average firm size is relatively small, we decided to deal with common method biases in ways other than multi-respondent. Future studies that focus on industries with a larger average firm size may use multi-respondent techniques. Future research may also focus on different institutional environments, for example by repeating the study in countries from Asia, North America or different European contexts.
Finally, we indicate three avenues for future research that would further increase the understanding of CSR in the context of agribusiness. First, it would be interesting to take the CSR theme further upstream by studying it at the level of primary producers. Primary producers may provide an interesting context because they deal more directly with natural resources than companies in other stages of the channel. Second, the occurrence of effects from the institutional environment, the market environment and combinations of both (like competitors that compete on the basis of social responsibility) is remarkable, and calls for more research on the interactions between market and institutional environments. A third interesting direction for future research is to examine the absorptive capacity processes in more detail, for example in a survey study that examines the effects of the individual components of absorptive capacity, or through in-depth case study analysis.

Author Contributions

Paul T. M. Ingenbleek organized the data collection and analyzed the data; Paul T. M. Ingenbleek and Domenico Dentoni developed the theory and wrote the paper.

Conflicts of Interest

The authors declare no conflict of interest.

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Sustainability 08 01026 g001 550
Figure 1. Conceptual framework.
Figure 1. Conceptual framework.
Sustainability 08 01026 g001
Table
Table 1. Multi-item measures.
Table 1. Multi-item measures.
Scale ItemsFactor Loadings
New product innovation(adapted from [65])1Number of products that were launched by your organization in the past year that had environmentally-friendly attributes/total number of products launched by your organization in the past year
2Number of products that were in development by your organization in the past year that had environmental-friendly attributes/total number of products that was in development by your organization in the past year
Positioning(new scale)1How important is the environment in the market positioning of your most environmentally-friendly product that was launched in the past year?
2How important is the environment in the market positioning of your most environmentally-friendly product that was in development in the past year?
Organizational innovation(adapted from [54])1How much has changed in your organization’s processes to make existing products more environmentally-friendly? (1 = nothing or nearly nothing, 7 = many, significant changes)
CSR-directed absorptive capacity(adapted from [66]) Our organization…
Knowledge acquisition 1Has frequent interactions with buyers about how to make the supply chain more environmentally-friendly0.770
2Has regular contacts with suppliers to obtain new knowledge on the environment0.761
3Collects environmental information through informal means (like informal conversations with people working in your industry)0.697
4Has hardly any contacts with universities and research institutes (and doesn’t consult websites, reports or other sources of information from these institutes)0.682
5Regularly approaches third parties like external consultants and environmental advisors0.600
Knowledge assimilation 1Is slow to recognize shifts in its market that pertain to the natural environment0.559
2Is quick to understand new opportunities that emerge from environmentally-friendly technologies0.860
3Quickly analyzes and interprets changing environmental conditions0.825
(new item)4Immediately recognizes the relevance of environment information for our company0.899
Knowledge transformation 1Regularly considers the consequences of changing environmental demands0.798
2Records and stores newly acquired environmnetal knowledge0.842
3Quickly recognizes the usefulnes of new environmental knowledge to strengthen existing knowledge0.922
4Periodically meets to discuss consequences of environmental developments0.679
Knowledge exploitation 1Doesn’t respond; attempts to improve environmental friendliness fall on deaf ears0.454
(new items) Our organization successfully applies information on the environment in the following processes:
2Purchasing/sourcing0.680
3Processing and logistics0.779
4Marketing and sales0.838
5Strategy developments0.849
Competitive intensity(Adapted from [67]) To what extent is your market characterized by:
1Changes in sales strategies of your competitors0.807
2Changes in promotion/advertising strategies of your competitors0.839
3Changes in the competive structure (like new entrants)0.524
CSR competition 1Environmentalism as a competitive dimension0.822
2Environmentalism as a means to achieve competitive advantage0.871
3Environmentalism as a critical success factor0.921
4Competition that is set apart from environmental developments (R)0.535
Secondary stakeholder pressure(Adapted from [68]) Please, give us your opinion on the extent to which your company experiences pressure from the following stakeholders to adopt environmental-friendly practices
1Media0.893
2Special interst groups, like environmental interest groups0.860
3Local residents0.474
Secondary stakeholder embeddedness(Based on [69]) (supplier embeddedness)1Our organization works intensively with environmental advisors0.515
2Our organization has a close relationship with one or more environmental organizations0.655
3Our organization has a collaborative relationship on the environment with third parties, like a real team0.819
4Our supply chains collaborate with societal groups in the field of environment0.562
5Our organization is involved in environmental projects in which several groups from society participate0.742
6Our organization maintains many contacts with society when it comes to the environment0.834
Table
Table 2. Properties of Purified Measures.
Table 2. Properties of Purified Measures.
Number of ItemsMeanStandard DeviationAlpha
1.CSR-directed absorptive capacity184.321.230.94
Knowledge acquisition53.911.460.82
Knowledge assimilation44.621.370.86
Knowledge transformation44.111.420.88
Knowledge exploitation54.671.360.83
2.New product innovativeness20.630.440.96
3.New product positioning25.121.720.87
4.Organizational innovation14.231.76
5.Resource allocation14.113.19
6.Competitive intensity34.071.310.77
7.CSR competition44.041.400.86
8.Secondary stakeholder pressure33.041.540.78
9.Secondary stakeholder embeddedness63.461.480.85
10.Number of employees11.971.57
11.Turnover14.641.66
12.Customer power13.921.97
Table
Table 3. Correlations of Purified Measures 1.
Table 3. Correlations of Purified Measures 1.
(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)(11)(12)
1.New product innovativeness1.00
2.New product positioning0.511.00
3.Organizational innovation0.180.261.00
4.Resource allocation0.270.460.421.00
5.CSR-directed absorptive capacity0.450.540.490.591.00
6.Competitive intensity−0.16−0.22−0.09−0.19−0.111.00
7.CSR competition0.290.310.280.240.380.281.00
8.Customer power−0.32−0.26−0.07−0.03−0.11−0.20−0.201.00
9.Secondary stakeholder pressure−0.070.120.340.230.360.010.21−0.011.00
10.Secondary stakeholder embeddedness0.220.530.370.610.66−0.190.31−0.180.311.00
11.Number of employees−0.01−0.14−0.010.360.14−0.13−0.070.270.03−0.021.00
12.Turnover−0.06−0.060.090.460.24−0.130.080.070.170.210.491.00
1 Correlations above 0.17 are significant at p < 0.05.
Table
Table 4. Results of ordinary least-squares (OLS) Regression Analyses (Standardized Coefficients).
Table 4. Results of ordinary least-squares (OLS) Regression Analyses (Standardized Coefficients).
CSR-Directed Absorptive CapacityOrganizational InnovationNew Product InnovativenessNew Product Positioning
CSR-directed absorptive capacity 0.39 ***0.38 ***0.21 *
Activation triggers:
Secondary stakeholder pressure0.14 *0.17 *−0.16 *−0.06
Secondary stakeholder embeddedness0.55 ***0.01−0.120.22 *
Control variables:
Competitive intensity−0.04−0.09−0.14−0.14
CSR competition0.20 **0.120.160.12
Customer power0.000.02−0.18 *−0.09
Turnover0.13−0.060.03−0.03
Number of employees0.03−0.02−0.12−0.14
Df151, 7151, 8151, 8151, 8
F21.42 ***7.03 ***4.69 ***5.47 ***
R20.510.280.210.23
Note: *** p < 0.001 (hypothesized effects are based on one-tailed significance), ** p < 0.01, * p < 0.05.

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Ingenbleek, P.T.M.; Dentoni, D. Learning from Stakeholder Pressure and Embeddedness: The Roles of Absorptive Capacity in the Corporate Social Responsibility of Dutch Agribusinesses. Sustainability 2016, 8, 1026. https://0-doi-org.brum.beds.ac.uk/10.3390/su8101026

AMA Style

Ingenbleek PTM, Dentoni D. Learning from Stakeholder Pressure and Embeddedness: The Roles of Absorptive Capacity in the Corporate Social Responsibility of Dutch Agribusinesses. Sustainability. 2016; 8(10):1026. https://0-doi-org.brum.beds.ac.uk/10.3390/su8101026

Chicago/Turabian Style

Ingenbleek, Paul T. M., and Domenico Dentoni. 2016. "Learning from Stakeholder Pressure and Embeddedness: The Roles of Absorptive Capacity in the Corporate Social Responsibility of Dutch Agribusinesses" Sustainability 8, no. 10: 1026. https://0-doi-org.brum.beds.ac.uk/10.3390/su8101026

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