A governance approach to stakeholder engagement in sustainable enterprises—Evidence from B Corps

Abstract

Sustainable enterprises face a risk for which the pressure over financial sustainability “crowds out” their impact mission. Corporate governance mechanisms can play an important role in managing the tensions between the two objectives, by steering and driving stakeholder engagement processes. At the same time, the rise of social media has provided firms with a platform for undertaking stakeholder engagement on a large scale. Therefore, the aim of this study is to examine how the governance mechanisms of sustainable enterprises affect engagement with stakeholders on social media. Specifically, we identify three distinctive mechanisms for a governance approach to stakeholder engagement in sustainable enterprises: The legal purpose beyond profit maximization, directors' commitment to purpose, and the adoption of purpose‐specific accountability mechanisms. We argue that each of them matters for the extent to which sustainable enterprises engage with stakeholders on social media, as well as the quality of this engagement. By scraping and classifying nonfinancial tweets posted by 1074 U.S. B Corps between 2014 and 2018 and those posted by stakeholders towards the firm, we find that the legal and ethical mechanisms are positively related to the quality of engagement while the accountability mechanism is related to both the extent and quality of engagement. Our study sheds light on the implications of governance mechanisms in steering social media stakeholder engagement in sustainable enterprises.

The transition towards benefit corporations: What are the roles for stakeholders?

“…Furthermore, the authors explained how the motivation behind the transformation into a BC is not generally linked to the improvement of the economic-financial performance, even if an improvement can still be obtained as 'a possible longer term consequence related to membership of networks, attracting employees and improving efficiency' (Marchini et al, 2022, p.17). She and Michelon (2023)…”

“…Among the debate on BCs, only a few studies have considered the role of stakeholders in the BC transformation process (e.g. She & Michelon, 2023). This is somewhat surprising, given that embedding the public interests in BC management presupposes the involvement of stakeholders in the definition of BCs' strategy (Brown & Forster, 2013;Sen & Cowley, 2013).…”

“…Despite the increasing debate among scholars, recent literature reviews (Blasi & Sedita, 2021;Diez-Busto et al, 2021) have asserted that the role of stakeholders in BCs has not been sufficiently studied, especially in the first part of a BC's life, during its transformation or creation (Diez-Busto et al, 2021). Indeed, She and Michelon (2023), investigating BCs' governance mechanisms of stakeholders' management, called for further studies to better understand the stakeholder engagement practices. Starting out from this specific gap in the literature, this paper aims to understand what roles stakeholders have in the process of transforming an enterprise into a BC, observing how the relationship with the different groups of stakeholders is managed and contributes to the definition of the for-benefit purpose.…”

“…Indeed, this last point confirmed the assumption of the study proposed byPoponi et al (2019), whereby stakeholders have different roles and help enterprises activate the path towards sustainable actions. Moreover, the study responds toShe and Michelon's (2023) call, offering a focus on the BC characteristics and stakeholder management and engagement activities. Furthermore, our work can sustainJonsen's (2016) claim regarding the need to investigate in greater depth the role of stakeholders in BCs through stakeholder theory,…”