Frederick D.
Sturdivant
Corporate
Social Responsiveness
Management Attitudes
and Economic Performance
Professor Neil Chamberlain of Columbia Univer-
sity has thoughtfully argued that corporate
social responsiveness is severely limited by two
principal factors: "The power of any single cor-
poration, however great in its own economic
sphere, is limited indeed when it comes to taking
effective action on any of our major social
fronts"!; and corporations are "captained by in-
dividuals who still believe deeply in the values of
which their organizations are the chief carriers.
• . . "2 The principal purpose of this article is to
report on an empirical investigation of the
second argument.
The primary research issue was to explore the
relationship between corporate social perfor-
mance as perceived by an external evaluator and
values and attitudes of top management. Under-
lying the rationale for this study are the follow-
ing assumptions: corporate policies and practices
tend to have social consequences. While those
consequences may range from minor to highly
significant, their observation over time by the
corporation's various constituents leads to the
shaping of an image related to social responsive-
ness. Finally, it is assumed that corporate
policies and practices reflect the values and atti-
tudes of the top management group. Thus, if a
given management group believes the role of
business in society to be narrowly defined, one
30
James L. Ginter
would expect its policies and practices to reflect
that belief. Taking that argument one step fur-
ther, it could be hypothesized that such a com-
pany would be perceived externally as not being
socially responsive. As Votaw and Sethi have
argued, "corporations have personalities which
reflect the conscious and unconscious values of
the corporate hierarchy...." 3
A second research question investigated was the
relationship between perceived corporate social
responsiveness and long-run economic perform-
ance. As Bauer has explained, the conventional
rationale for social responsiveness is that "the
serving of the wider needs of society will contri-
bute to the firm's long-run profitability.l'"
Therefore, an effort was made in this study to
examine this relationship.
The study was based on the sixty-seven corpora-
tions that had been cited by business journalist
Milton Moskowitz as exhibiting exceptional
social responsiveness or lack thereof. While no
claim can be made about the accuracy of these
ratings, they had the advantage of consistency in
that they came from a single source. Further-
more, the ratings were objective in the sense that
they were not generated by the research team.
The companies cited by Moskowitz were classi-
fied as "best" (eighteen firms) or "worst" (twenty
firms) in terms of social performance. (The terms
California Management Review
 Table 1. Evaluation of
"best" and "worst," used hereafter without Corporate Social Performance
quotation marks, refer in all instances tv firms
Honorable
identified by Moskowitz and listed in Table 1. Best* Worst
Mention
These classifications do not represent any other
source of editorial judgment.) Another classifi- Aetna Life & American Metal American Brands
Casualty Climax American Can
cation, "honorable mention," was created to
CNA Financial American American Home
allow for another twenty-nine companies that Cummins Engine Telephone & Products
Moskowitz had rated as good performers. The Dow Chemical Telegraph Bethlehem Steel
three sets of companies are shown in Table 1. First Pennsyl- Atlantic Colgate-Palmolive
vania Corp. Richfield E. 1. DuPont
Management Attitude Survey Jewel Companies Bank America Farah
Johnson Campbell Soup Federal Mogul
Walton has suggested that "when a business or- Products Chase Manhattan Florida Power and
ganization 'buys' a man's talents it also pur- Levi Strauss Citicorp Light Company
chases in a real sense the individual's values, Lowe's Citizens and Great Atlantic
which shape the direction through which these Companies Southern and Pacific
McGraw-Hill National Goodyear Tire
talents will be expressed." 5 An effort was made,
Owens-Illinois Bank and Rubber
therefore, to develop an instrument which Quaker Oats Consolidated Gulf and
would determine the profile of a top manage- Rouse Co. Edison Western
ment group's attitudes on socially sensitive is- Standard Oil Dayton Hudson International
sues. Certain of the items on the instrument (Indiana) Eastern Gas Telephone &
dealt specifically with business, while other Syntex and Fuel Telegraph
Weyerhaeuser General Electric Kraftco
items probed attitudes about issues ranging from Whirlpool Giant Food S. S. Kresge Co.
education to social order. Xerox Hallmark Cards Standard Oil
Through a lengthy pretest process involving Hoffman-La Roche (California)
more than 300 undergraduate and graduate busi- International Nabisco, Inc.
Business Northrop
ness students, as well as participants in several Machines Corp.
executive development programs, a set of state- Kimberly Clark Texaco
ments was developed to elicit attitudes and opin- Koppers U.S. Steel
ions on socially relevant issues. The initial pre- Marcor
tests led to the elimination of a number of state- Masco
Mobil Oil
ments and. a reduction in ambiguity of the re- Mutual Real
maining sixty-five statements. Reaction to the Estate
statements was recorded in a six-point agree- Investment
disagree format. Trust
Peoples Gas
During the final pretest phase of the study it was Phillips-
hypothesized that the response groups could VanHeusen
be positioned with respect to each other a priori Polaroid
Ralston Purina
Frederick D. Sturdivant is the M. Riklis Professor of RCA
Business and Its Environment in the College of Admini-
Sperry &
strative Science at The Ohio State University. He has Hutchinson
written widely on the relationship between business and Wells Fargo
the broader society, including an earlier article in Cali-
* All of these companies (with the exception of CNA
fornia Management Review, "Business and the Mexican-
Financial) were also included on the original honorable
American Community."
mention list.
Sources: Milton Moskowitz, "Social Responsibility Port-
James L. Ginter is Assistant Professor of Marketing at The folio 1973," Business and Society (IS January 1~74), p.
Ohio State University. His principal research interests 1; Milton Moskowitz, "Profiles in Corporate Responsi-
are development and application of research methodology bility," Business and Society Review (Spring 19~5), pp.
for management decisions. 28-42; and Milton Moskowitz, "46 Socially Responsible
Corporations," Business and Society (2 July 1974), p. 8.

SPRING / 1977 / VOL. XIX / NO. 3 31

 on a dimension of "broad" to "narrow" view of
business and social issues and that responses to
the questionnaire items would correspond to
this ranking. The Spearman Test Statistic" was
used to test the significance of the relationship
between the a priori ranking and the attitude-
based ranking for each item on the question-
naire. The null hypothesis was rejected for seven
of the sixty-five items at the 0.0 1 level, for
another five at the 0.05 level, and for an addi-
tional nine at the 0.10 level.
A letter was then sent to the chief executive
officer of each of the sixty-seven companies re-
questing their cooperation in the study. The
CEO was requested to select those individuals in
his organization who participate in major policy
decisions and have them complete the question-
naire. Twenty-three of the sixty-seven com-
panies responded with a total of 130 question-
naires. The number of responses varied by com-
pany depending on the size of the key decision-
making group. Seven best performers returned a
total of 48 questionnaires. Five worst companies
provided 16 questionnaires, while 11 honorable
mention firms returned 66 of the data-collection
scales.
The attitudes of top managers of companies
within the three catagories were compared.
Company averages were used for this compari-
son because of the variance in the number of
responses per company. One measure of the
strength of the results is that the ordering of the
companies on the responses was as expected
(best-most liberal, worst-most conservative, and
honorable mention between the other two) for
thirty-five of the sixty-five items. To provide a
more general assessment of the existence of dif-
ferences across categories, those items which had
appeared most effective in the pretest were ag-
gregated (direction was reversed where necessary
for consistency), and sum scores were compared.
The comparison of the sums of the 7, 12, and 21
items, which had been found to be significant at
different levels, are shown in Table 2. The order-
ing was as hypothesized in all three comparisons,
and in each case the scores for the honorable
mention firms were closer to the best than the
worst performers' scores. The results are shown
most graphically in Figure 1, in that, with the
exception of Company #33, there was no cross-
32
Table 2. Aggregate Mean Scores on
7,12, and 21 Selected Statements
Honorable
Statements Best Mention Worst
Performers Performers Performers
Pretest items
significant at
0.01 level
(7 items) 22.43 23.97 27.71
Pretest items
significant at
0.05 level
(12 items) 37.07 38.47 43.37
Pretest items
significant at
0.10 level
(21 items) 67.07 70.12 80.14
over between the scores of the management
groups for best versus worst companies. That is,
the items selected in the pretests did a generally
effective job of discriminating between best and
worst performers on the basis of management
group attitudes.
Analysis of Attitudes
After top management attitudes of firms of
varying corporate social performance were
found to be clearly different, a more detailed
analysis of the questionnaire results was under-
taken. The entire set of sixty-five statements was
factor analyzed to find groupings of statements
that were highly correlated and represented
special dimensions of the questionnaire. Thir-
teen factors were identified which explained
43.1 percent of the variance of the total variable
set. It should be noted that the small ratio of
observations to statements causes the stability of
the results to be questionable. In each of the
thirteen factors the variance was greater than or
equal to each of the original statements after
standardization (eigenvalue above 1.0). These
dimensions were interpreted on the basis of cor-
relation of individual items with the factors, and
most of the factors represented clearly identi-
fiable dimensions and provided useful structure
to the analysis of the attitudes.
The best and worst companies were compared
on the thirteen factors in a test of the hypothe-
sis that the two groups of companies were equal.
A factor score was computed for each company
California Management Review
on each factor, and company averages were
again used in the comparison because of the un-
equal number of responses from companies. It
should be noted that this use of the t-statistic is
rather unusual. The reason is that three popula-
tions of eighteen best companies, twenty-nine
honorable mention companies, and twenty
worst companies were identified on an a priori
basis and a census of the top managers of these
firms was attempted. If all companies had res-
ponded to the questionnaire, the use of inferen-
tial statistics would not be necessary since re-
suIts would be known with certainty. This was
not the case, however, since responses were re-
ceived from executives of 34.3 percent of the
companies. Statistical tests were used, therefore,
to make inferences about the differences in the
three populations on the basis of the partial in-
formation from each of the populations. This
was done on the assumption that the nonres-
ponse effects were not different for the three
populations and the responses could be viewed
as a sample of the populations of firms. This
assumption is no different from that of a sam-
pIing research design in which response is not
complete. (The estimate. of the standard devia-
tion of each of the gr~ups was a?justed for a
sample drawn from a finite population.)
Figure 1. Aggregate Scores on 21 Selected Items for "Best" and "Worst" Companies
COMPANY 22*
70.33
COMPANY 40* COMPANY 46*
COMPANY 47* COMPANY 45*
7 I
50 55 60
*Denote~ rating among best performers.
**Denoteli rating among worst performers.
SPRING / 1977 I VOL. XIX / NO. 3
The results of the tests of equality of the factor
scores for the best and worst groups are shown
in Table 3. The labels of the factors were chosen
on the basis of the individual items which were
correlated with the factors at a 0040 level or
greater. Five of the factor scores were signifi-
cantly different for the two groups, and further
tests of equality of group means were conducted
for the individual items related to these factors.
The purpose of these analyses was to isolate
more clearly those attitudes which differentiate
the managers of responsive and nonresponsive
companies (see Table 4).
Factor 2: human rights. The highly correlated
statements which were grouped under the head-
ing "human rights" revealed the sharpest con-
trasts between the best and worst managers. Not
only were the factor scores for the factorsignifi-
cantly different at the 0.01 level, but eight of
the nine group mean scores for the individual
statements were significantly different. Execu-
tives from the best companies clearly exhibited
attitudes which were more favorable towards
minorities, the poor, and other aspects of human
rights. The only statement on which the two
groups of executives agreed was that women
ought to have the right to earn the same respon-
sibilities as men in business.
COMPA1'jY 62**
9.75
COMPANY 33* COMPANY 61**
76.29
85 90
COMPANY 65**
33
 Table 3. Factor Score Analysis: right of an employer to specify employee hair
Best vs. Worst Films length. The worst managers were more suppor-
Group Means
tive of that view as well as the right of the police
Best-Worst
Factor Comparison to enter a suspicious person's home by force.
Best Worst (t) They also took a relatively dim view of protes-
tors and radicals bringing change to society.
I. Privilege, power
and government Factor 5: privacy and morality. In keeping with
policy 0.24 0.45 0.865 the attitude profile which emerged in Factor 2,
2. Human rights 0.55 -0.48 3.255 3 it should not be surprising that the worst com-
3. Business and pany managers exhibited more cautious views of
broad social privacy and morality. Therefore, they were more
concerns 0.12 0.21 0.202
4. Discipline
opposed to hiring a known homosexual while
-0.19 0.01 0.421
5. Privacy and best company managers generally supported
morality -0.26 0.36 1.644 1 such a personnel practice. The two groups also
6. Retention of expressed significantly different attitudes
national toward euthanasia. The best company managers
strength -0.20 0.35 2.110 2 felt that a patient should be allowed to arrange
7. Customer
satisfaction 0.03 -0.09 0.469
for the termination of his life in the face of an
8. Aid to education 0.02 0.13 0.591 incurable illness, while the other managers
9. Caveat emptor 0.03 0.13 0.450 showed less support.
10. Business Factor 6: retention of national strength. While
prosperity 0.37 -0.28 1.954 2
11. Quality of life 0.05 -0.10 1.033
the two groups of managers did not differ over
12. Priorities and the proportion of the national budget devoted
order -0.28 0.14 1.824 2 to defense, they differed at the 0.10 level over
13. Distrust of the other two statements in Factor 6. As might
advertising -0.01 0.04 0.145 be expected, the more conservative managers
from the worst performance companies dis-
1. t 0.10 = 1.37 agreed with the statement that "Society should
2. t 0.05 = 1.81 be quicker to throw out old ideas and traditions
3. 't 0.01 = 2.23 and to adopt new thinking and customs." Given
The worst company managers were consistently their greater commitment to tradition, they
more negative toward minorities in general and were more supportive of the idea that organiza-
their role in business in particular. Thus, the tions should be able to build facilities wherever
groups differed on the extent to which inherited land is available so that economic growth might
racial characteristics were seen as being related be perpetuated.
to individual achievement and children of Factor 10: business prosperity. The difference in
racially mixed marriages were seen as a detri- emphasis on economic prosperity was central to
ment to society. More specifically, they differed Factor 10. Indeed, in many respects this factor
in attitudes toward statements that business suggests a potentially profound difference in at-
should set and attempt to meet minority hiring titude regarding the centrality of business to the
quotas even if it leads to reduced profits, and social system. Thus the best and worst managers
the limited number of black executives today is differed at the 0.01 level over the issue of
a result of past discrimination. whether the government should "ensure the
The best and worst managers also disagreed prosperity of business since the well-being of
sharply about other human rights issues. Their society depends on the wealth generated by bus-
views on statement 5 that aid to the poor iness." In keeping with their general agreement
usually supports the lazy were significantly dif- with that view, the worst managers also sup-
ferent at the 0.01 level, with the worst managers ported the argument that "A firm's profits
supporting that idea. Another highly significant should not be substantially reduced for in-
difference in attitude was associated with the creased environmental protection." Again, the

34 California Management Review

 Table 4. Factor Analysis

Correlation of
Response with Best HM Worst Overall Best-Worst
Factor Score Mean Mean Mean Mean Comparison
(SO) (SO) (SO) (t)
(Loading)

Factor 2-Human Rights 0.55 0.01 -0.48

-0.62 1. Even though the resulting cost may mean a reduction 2.22 2.89 3.08 2.73 4.187 3
in profits, business should set and attempt to meet (0.37) (0.57) (0.40)
minority hiring quotas.
0.60 2. Inherited racial characteristics play more of a part 4.19 4.04 3.59 3.99 1.446 1
in the achievement of individuals and groups than (0.84) (0.81) (0.70)
is generally known.
-0.57 3. Many blacks would be executives of major 2.92 3.10 3.37 3.10 1.995 2
corporations today if they had not been (0.47) (0.61 ) (0.34)
discriminated against in the past.
0.56 4. The children that are born as a result of racially 5.41 5.17 4.80 5.162 2.738 3
mixed marriages are detriments to society. (0.38) (0.47) (0.45)
0.52 5. Government programs to aid the poor usually support 4.03 3.72 2.95 3.64 2.725 3
those people too lazy to work. (0.82) (0.68) (0.61 )
0.45 6. Police should be able to forcefully enter a 5.07 4.97 4.46 4.89 1.465 1
person's home if they suspect him of unlawful (0.70) (0.50) (0.84)
activity.
-0.43 7. Women have the right to earn the same responsi- 1.42 1.33 1.69 1.44 1.305
bilities in the business world as men. (0.33) (0.31 ) (0.43 )
0.42 8. Employers should be able to require their 4.81 4.11 3.52 3.09 2.840 3
employees to have their hair cut to a specified (0.94) (0.92) (0.71)
length.
-0.41 9. Protestors and radicals are good for society even 2.86 3.08 3.43 3.09 1.404 1
though they may cause a change in normally (0.67) (0.54) (0.85 )
accepted standards.
Factor 5-Privacy and Morality -0.26 -0.11 0.36
-0.55 1. A business should not hire a person if they 4.50 4.24 3.05 4.06 2.681 3
suspect him of being a homosexual. (l.03 ) (0.67) (0.97)
0.46 2. Mercy killing should be allowed with the consent 2.57 2.95 3.34 2.92 1;899 3
of the patient in those cases where doctors have (0.65) (0.75) (0.86)
determined that the illness is terminal.

best management group held views that were less
supportive of the centrality of profits and the
business system.
Factor 12: preservation of order. Unlike the
other significant factors, Factor 12 lends little to
the understanding of attitudinal differences be-
tween best and worst company executives. The
only statistically significant difference (at the
0.10 level) was associated with the teaching of
birth control in elementary schools. The worst
managers were more negatively disposed toward
such a practice.
General attitude differences. In general, a clear
pattern of differences emerged between the two
executive groups. Especially was this true con-
cerning racial attitudes and perceptions of the
poor and other nonmainstream citizens. The
finding regarding racial attitudes may well be the
most significant given the national debate re-
garding institutional racism. This study reveals
profoundly significant differences between the
executives of socially responsive and nonrespon-
sive firms on this dimension. There is also evi-
dence that the negative racial views held by the
worst company managers were also associated
with pejorative attitudes toward the poor. In ad-
dition, it is clear that worst managers subscribe
to a more traditional ethos when it comes to
morality.
Another important finding is the difference in

SPRING / 1977 / VOL. XIX / NO.3 35

 0.46 3. The decision of whether or not to have an abortion 1.98 1.83 2.44 2.01 1.007
is strictly a personal matter. (0.83 ) (0.38) (0.90)
0.40 4. People should have the right to decline military 3.73 3.50 4.39 3.76 1.178
service if they have moral objections to the war. (UO) (1.05 ) (0.94)
Factor 6 <Retention ofNational Strength -0.20 -o.oi 0.35 om
-0.52 1. The greatest portion of the federal government's 4.02 3.99 3.66 3.93 1.206
budget should be allocated to national defense (0.67) (0.53 ) (0.34)
in order to remain a world power.
0.52 2. Society should be quicker to throw out old ideas 3.49 3.33 4.06 3.54
and traditions and to adopt new thinking and (0.69) (0.42) (0.65)
customs.
-0.47 3. In order to perpetuate economic growth, 5.13 4.93 4.59 4.92
organizations must be permitted to build (0.72) (0.28) (0.56)
facilities wherever land is available.
Factor 1 Or-Business Prosperity 0.37 0.01 -0.28
0.56 1. Government laws and regulations should be such as 3.91 3.42 2.90 3.46 2.351 3
to ensure the prosperity of business since the (0.87 ) (0.66) (0.70)
well-being of society depends on the wealth
generated by business.
0.50 2. A firm's profits should not be substantially 3.57 3.27 2.35 3.16 2.152 2
reduced for increased environmental protection. (1.25 ) (0.90) (0.78)
Factor 12-Preservation of Order -0.28 0.07 0.14
0.53 1. An athletic official should be able to penalize 3.34 3.75 3.95 3.67 1.209
severely a coach who vehemently protests a (0.70) (0.59) (1.13)
decision.
0.50 2. The thing big business is really interested in 2.38 2.37 2.30 2.36 0.364
is profit. (0.50) (0.47) (0.31)
0.49 3. Birth-control should be taught in elementary 3.41 3.75 4.27 3.76 1.763 1
schools. (0.80) (1.01) (1.02)
0.42 4. A $50 fine for littering is too low. 3.52 3.80 3.85 3.75 0.573
(1.19) (0.44) (0.88)

1. t 0.10' = 1.37
2. t 0.05 = 1.81
3. t 0.01 = 2.23
attitudes concerning the centrality of profits and
the business system. In addition to the state-
ments cited above, among the individual state-
ments producing a significant difference (0.05
level) was: "A first consideration of any society
is the protection of property rights." The worst
managers strongly supported this argument,
while their best company counterparts did not.
A number of other statements associated with
ecology, consumerism, personal rights, and the
like reveal a pattern of responses which differen-
tiate the two executive groups. In short, the best
managers reflect a greater concern for individual
rights and a greater responsiveness to demands
for change in the social and economic system.
Social and Economic Performance
Since the empirical evidence strongly supports
the argument that corporate social performance
is related to the attitudes of top management, a
second possible relationship merits attention.
That is, do socially responsive firms perform
their basic economic mission better or less well
than their relatively nonresponsive counter-
parts? Clearly there are numerous factors affect-
ing a firm's economic performance, and its social
responsiveness is, it might be assumed, a long-
run influence. In the short run, competitive ac-
tions, the money market, resource shortages, or
the vicissitudes of the stock market might be
expected to overwhelm any possible economic
influence of good or bad social conduct. It is
necessary, therefore, to identify a relatively
long-term measure of economic performance.
Analysis of this question is further complicated

36 California Management Review

 Table 5. Economic Performance by
by the problem of identifying firms for meaning- Social Responsiveness and Industry
ful and objective comparison. It makes little Earnings per share
sense to compare banks with steel companies or Growth
high technology firms with retailers. In addition, 1964-74 (%)
the question of how firms are to be judged as Relative to
good or bad, given the absence of standardized Ind ustry jFirm Absolute Industry
information on this aspect of corporate perform- Average
ance, has been a major barrier to meaningful Petrochem ical
analysis. Best
Standard (Indiana) 17.48 1.36
Given this combination of problems associated 19.21 1.49
Dow Chemical
with the evaluation of a relationship between Honorable Mention
economic and social performance, an approach Mobil Oil 13.41 1.04
was adopted in this study which was designed to Eastern Gas and Fuel 20.04 1.56
minimize the problems, though certainly they Atlantic Richfield 13.39 1.04
were not eliminated. Companies for the analysis Worst
Standard (California) 10.57 0.82
were again drawn from the Moskowitz lists given Texaco 10.77 0.84
that this source represented a consistent, outside E. I. DuPont -1.99 '-0.15
evaluation. The sixty-seven companies were Industry average 12.86
grouped on the basis of reasonable homogeneity.
Those industry groupings in which all three Industrial
Best
levels of social performance were represented by
Cummins Engine 3.52 0.47
companies with complete economic data were Weyerhaeuser 14.71 1.96
used in the analysis. The twenty-eight firms Honorable Mention
whose data passed these requirements comprised Koppers 14.48 1.93
groups that could be' defended on the basis of Worst
reasonable comparability. Finally, the relatively Bethlehem Steel 9.70 ' 1.29
Federal Mogul -5.92 .10.79
long-term indicator of economic performance Goodyear Tire and Rubber 4.38 i O.58
which was felt to be the best reflection of the U.S. Steel 11.60 : 1.55
quality of management effort was earnings per Industry average 7.50
share growth. These data for the period 1964-74
Retailing
were obtained from Fortune magazine. 7 Best
Thus, the companies were compared on the basis Jewel Companies 6.67 0.68
of ten-year growth in earnings per share after the Honorable Mention
Dayton-Hudson 10.86 1.10
companies had been broken into four relatively Marcor 14.47 ,1.47
homogeneous categories: petrochemical, indus- Giant Food 11.94 1.21
trial, retailing, and nondurable consumer goods. Worst
The company groupings and economic perform- S. S. Kresge Company 5.28 '0.54
ance are shown in Table 5. A test of the equality Industry average 9.84
of performance of the best and worst firms with- Consumer Goods
in category was not possible because of the (Nondurable)
sample size. The data were normalized, there- Best
Quaker Oats 8.96 1.09
fore, on the basis of average performance within
Honorable Mention
industry. The performance of each firm relative Campbell Soup 5.92 0.72
to its industry average is also shown in Table 5. Ralston Purina 12.33 1.50
The relative performance of the best, honorable Kimberly Clark 8.82 1.07
mention, and worst companies was then aggre- Worst
gated across the four categories (see Table 6). American Home Products 12.43 1.51
Colgate-Palmolive 12.14 1.48
The results of these analyses offer good news to Kraftco 4.43 iO.54
advocates of greater corporate social responsive- Nabisco, Inc. 0.69 '0.08
ness. As Table 6 shows, the best and honorable Industry average 8.22

SPRING / 1977 / VOL. XIX / NO.3 37

 Table 6. Social-Economic Performance of Firms
Average
Social Economic
Performance n Performance Standard
Rating Relative to Deviation
Industry
Best 6 1.18 0.45
Honorable Mention 10 1.26 0.30
Worst 12 0.69 0.25
mention firms outperformed their worst indus-
try counterparts. In fact, a t-statistic was used to
test whether there were significant differences in
economic performance between pairs of groups.
The test results revealed no difference between
best and honorable mention firms. However,
tests between best-worst (t==2.80) and honorable
mention-worst (t==4.59) were significant at the
0.01 level.
While the findings certainly will not support the
argument that socially responsive companies will
always outperform less responsive firms in the
long run, there is evidence that, in general, the
responsively managed firms will enjoy better
economic performance. It would be simple-
minded, at best, to argue a one-on-one cause-
effect relationship. However, it would appear
that a case can be made for an association be-
tween responsiveness to social issues and the
ability to respond effectively to traditional busi-
ness challenges.
Conclusions
The results of this study enjoy a certain logical
consistency. The major policies and practices of
corporations are shaped by a relatively small
number of top managers. Managers view these
policies and practices through the prism of their
personal values. Thus, a manager with what
might be termed broad or liberal attitudes with
respect to business and social issues might well
be expected to encourage corporate responsive-
ness concerning ecological matters, employee
welfare, consumerism, and the like. By contrast,
executives with a narrower view of the role of
business shaped by a more conservative set of
attitudes are likely to resist pressures on their
company to be more responsive to changing
social expectations. Therefore, it should not be
surprising that the responses to the attitude
38
instrument were consistently more liberal for
the companies classified by Moskowitz as best
social performers and that the opposite was the
case for the executives of worst performers. As
might be predicted, the honorable mention
scores were rather consistently between the two
extremes but closer to the best performers.
Furthermore, the findings regarding the relation-
ship between this social dimension of a firm's
conduct and its economic performance over
time too is logically consistent. A company man-
agement group which reflects rather narrow and
rigid views of social change and rising expecta-
tions might also be expected to respond less
creatively and effectively in the traditional but
also dynamic arenas in which business functions.
Hence there is the stronger economic perform-
ance of the best and honorable mention firms.
Perhaps their experience is the strongest argu-
ment to date that executives can recognize and
act on the broader social dimensions of man-
aging an enterprise without losing sight of their
basic economic mission.
Some concluding remarks probably should be
made regarding the comparative attitude profiles
of the executive groups. The findings with
regard to racial attitudes are both disturbing and
encouraging. It is disappointing that high-level
executives of some of the nation's largest firms
hold pejorative views of blacks, which doubtless
are reflected in corporate policies and practices.
Would a firm guided by such values truly offer
equal opportunity or be sensitive to the needs of
black consumers? And yet, the attitudes of
leaders of other major enterprises deal a blow to
the concept of monolithic racism deeply rooted
in big business. Indeed, this evidence of color
blindness would appear to be related to progres-
sive attitudes toward ecology, consumerism, and
other contemporary social concerns.
A more difficult finding to assess is the contrast
between the best and worst managers on the
centrality of profits and the business system. To
what extent is it important for the leaders of a
basic institution to believe in the critical nature
of their mission? In spite of their generally
superior economic performance, the best com-
pany executives assigned less importance to
profits and the central role of business in
society. Perhaps it represents a warning of chau-
California Management Review
vinism in the face of a broadening definition of
the social dimensions of business.
Authors' note: This study is a major component of a
program of research on the management of corporate
social responsiveness. The research program has been
sponsored by a grant from the College of Administrative
Science and the M. Riklis Support Fund, The Ohio State
University. The authors are indebted to Edward H.
Bowman for his constructive comments on an earlier
draft of the article.
REFERENCES
I. Neil W. Chamberlain, The Limits of Corporate Res-
ponsibility (New York: Basic Books, 1973), p. 202.
2. Ibid.
3. Dow Votaw and S. Prakash Sethi (eds.), The Cor-
porate Dilemma: Traditional Values Versus Contempor-
ary Problems (Englewood Cliffs, N.J.: Prentice-Hall,
1973), p. 74.
4. Raymond A. Bauer, "A Free Market for Responsi-
bility," The Center Magazine (January-February 1972),
p. 51.
SPRING / 19'17 / VOL. XIX / NO. 3
5. Clarence C. Walton, Ethos and the Executive (Engle-
wood Cliffs, N.J.: Prentice-Hall, 1969), p, 6.
6. Sidney Siegel, Nonparametric Statistics for the
Behavioral Sciences (New York: McGraw-HilI, 1956),p.
208.
7. "Earnings Per Share: For most companies, the fig-
ures shown ... are the 'primary' earnings given in annual
reports; these reflect not only the common share out-
standing but all 'common-stock equivalents,' a concept
that includes any debentures, preferred stock, or war-
rants whose market value is governed primarily by price
movements of the common .... Earnings for 1974 ...
are weighted averages of' outstanding shares, which all
companies now report. Weighted averages are used for
1964 where these are available; where they are not,
figures are based on a simple average of 1963 and 1964
year-end share outstanding. Per-share earnings for 1973
and 1964 are adjusted for stock splits and stock divi-
dends. They are not restated for mergers, acquisitions, or
accounting changes made after 1964.... The growth
rate is the average annual growth, compounded. No
growth rate is given if the company had a loss in either
1964 or 1974." (The Fortune Double 500 Directory,
1975,p.24)
39