Neoclassical economics and several management theories assume that the corporation
s objective is profitmaximization subject to capacity constraints. The central focus is shareholders as the ultimate residualclaimant, providing the necessary financial capital for the
operations (Jensen and Meckling, 1976;Zingales, 2000). However, there is substantial variation in how corporations actually compete and pursueprofit maximization. Different corporations place more or less emphasis on the long-term versus theshort-term (Brochet, Loumioti, and Serafeim, 2011); care more or less about the impact of externalitiesfrom their operations on other stakeholders and the environment (Paine, 2004); focus more or less on theethical grounds of their decisions (Paine, 2004); and place relatively more or less importance onshareholders compared to other stakeholders (Eccles and Krzus, 2010). For example, Southwest Airlineshas identified employees as their primary stakeholder; Novo Nordisk has identified patients (i.e., their endcustomers) as their primary stakeholder; Dow Chemical has been setting 10-year goals for the past 20years and recently ventured into a goal-setting process for the next 100 years; Natura has committed topreserving biodiversity and offering products that have minimal environmental impact.During the last 20 years, a relatively small number of companies have integrated social andenvironmental policies in their business model
and operations, on a voluntarily basis. We posit that thesepolicies reflect the underlying culture of the organization, a culture of sustainability where environmentaland social performances, in addition to financial performance, are important. These policies also forge astronger culture of sustainability by making explicit the values and beliefs that underlie the mission of theorganization. We view culture consistent with Hills and Jones (2001), as
the specific collection of valuesand norms that are shared by people and groups in an organization and that control the way they interactwith each other and withstakeholdersoutside the organization.
During the same period many more companies were active in corporate social responsibility (CSR) as an ancillaryactivity. However, many of these companies did not necessarily implement or were unable to implement CSR as acentral strategic objective of the corporation. Moreover, CSR has diffused broadly in the business world only in thelast five to seven years (Eccles and Krzus, 2010).