How Do Companies Respond to Environmental, Social and Governance (ESG) ratings? Evidence from Italy
TLDR
In this paper, the authors examine how firms react to ESG ratings and the factors influencing their response, and show that firms may react very differently to being rated, with their analysis yielding a fourfold typology of corporate responses, capturing conformity and resistance to ratings across two dimensions of firm behaviour.Abstract:
While a growing number of firms are being evaluated on environment, social and governance (ESG) criteria by sustainability rating agencies (SRAs), comparatively little is known about companies’ responses. Drawing on semi-structured interviews with companies operating in Italy, the present paper seeks to narrow this gap in current understanding by examining how firms react to ESG ratings, and the factors influencing their response. Unique to the literature, we show that firms may react very differently to being rated, with our analysis yielding a fourfold typology of corporate responses. The typology captures conformity and resistance to ratings across two dimensions of firm behaviour. We furthermore show that corporate responses depend on managers’ beliefs regarding the material benefits of adjusting to and scoring well on ESG ratings and their alignment with corporate strategy. In doing so, we challenge the idea that organisational ratings homogenise organisations and draw attention to the agency underlying corporate responses. Our findings also contribute to debates about the impact of ESG ratings, calling into question claims about their positive influence on companies’ sustainability performance. We conclude by discussing the wider empirical, theoretical and ethical implications of our paper.read more
Citations
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The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields (Chinese Translation)
Paul DiMaggio,Walter W. Powell +1 more
TL;DR: In this article, the authors argue that rational actors make their organizations increasingly similar as they try to change them, and describe three isomorphic processes-coercive, mimetic, and normative.
Posted Content
Measuring the unmeasured: An institutional entrepreneur strategy in an emerging industry
TL;DR: In this article, the authors analyze how measurement tools influence the legitimacy of an industry and the systemic power within it and discuss the implications of their findings for research into measurement tools in the areas of management or business and society.
Posted Content
Do Ratings of Firms Converge? Implications for Managers, Investors and Strategy Researchers
Rodolphe Durand,Samuel Touboul +1 more
TL;DR: In this paper, the authors find that there is a surprising lack of agreement across social ratings from six well-established raters, even when they adjust for explicit differences in the definition of CSR held by different raters.
Journal ArticleDOI
Fintech and SMEs sustainable business models: reflections and considerations for a circular economy
TL;DR: In this article, case studies linking Fintech application and circular economy (CE) in diverse industries and contexts are analyzed and discussed, and a conceptual framework using the ReSOLVE model is presented with relevant implications for both research and practice.
References
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Using thematic analysis in psychology
Virginia Braun,Victoria Clarke +1 more
TL;DR: Thematic analysis is a poorly demarcated, rarely acknowledged, yet widely used qualitative analytic method within psychology as mentioned in this paper, and it offers an accessible and theoretically flexible approach to analysing qualitative data.
Book ChapterDOI
The iron cage revisited institutional isomorphism and collective rationality in organizational fields
Paul DiMaggio,Walter W. Powell +1 more
TL;DR: In this paper, the authors argue that rational actors make their organizations increasingly similar as they try to change them, and describe three isomorphic processes-coercive, mimetic, and normative.
Journal ArticleDOI
Institutionalized Organizations: Formal Structure as Myth and Ceremony
John W. Meyer,Brian Rowan +1 more
TL;DR: Many formal organizational structures arise as reflections of rationalized institutional rules as discussed by the authors, and the elaboration of such rules in modern states and societies accounts in part for the expansion and i...
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Social Research Methods
TL;DR: In this paper, the authors reviewed the literature on qualitative and quantitative research in social research and discussed the nature and process of social research, the nature of qualitative research, and the role of focus groups in qualitative research.
Journal ArticleDOI
Managing Legitimacy: Strategic and Institutional Approaches
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