Is the Perception of 'Goodness' Good Enough ...

J Bus Ethics DOI 10.1007/s10551-012-1323-5

Is the Perception of ‘Goodness’ Good Enough? Exploring the Relationship Between Perceived Corporate Social Responsibility and Employee Organizational Identification Ante Glavas • Lindsey N. Godwin

Received: 19 April 2011 / Accepted: 8 April 2012 Ó Springer Science+Business Media B.V. 2012

Abstract Drawing on social identity theory and organizational identification theory, we develop a model of the impact of perceived corporate social responsibility on employees’ organizational identification. We argue that employees’ perceptions of their company’s social responsibility behaviors are more important than organizational reality in determining organizational identification. After defining perceived corporate social responsibility (PCSR), we postulate how PCSR affects organizational identification when perception and reality are aligned or misaligned. Implications for organizational practice and further research are discussed. Keywords Corporate social responsibility Employee behaviors and attitudes Organizational behavior Organizational identity Sustainability

Reality is merely an illusion, albeit a very persistent one. *Albert Einstein Many have asked if it ‘‘pays’’ for companies to invest their resources in corporate social responsibility (CSR) efforts, sparking a surge of research exploring the relationship between firms’ engagement with CSR and their Both authors contributed equally and names appear in alphabetical order. A. Glavas (&) 366 Mendoza College of Business, Notre Dame, IN 46556, USA e-mail: [email protected] L. N. Godwin Division of Business, Champlain College, P.O. Box 670, Burlington, VT 05402, USA e-mail: [email protected]

financial performance (Campbell 2007; Margolis and Walsh 2003; Orlitzky et al. 2003). These studies have resulted in a range of findings, causing scholars to call for new measures of financial performance and deeper inquiry into the mechanisms through which stakeholder groups affect corporate performance (Campbell 2007; Margolis and Walsh 2003; Orlitzky et al. 2003; Peloza 2009; Wood 2010). Although we see the merit in debating whether CSR is financially beneficial to a company, the reality is that even as the debate continues in academia, a growing portion of businesses are engaged in CSR behaviors for a variety of reasons. Although one of those reasons is perhaps the hope of direct financial benefit, there are other reasons that companies may invest in this realm of work as well. We argue that one of those reasons is (or should be) the positive impact such behaviors have on employees’ organizational identification. Although the relationship between corporate social responsibility and stakeholders has created an extensive body of literature (Donaldson and Preston 1995; Freeman 1984; Jones 1885; Laplume et al. 2008), the impacts that a firm’s CSR efforts have specifically on their employees have gone somewhat understudied (Aguilera et al. 2007; Rodrigo and Arenas 2008; Turker 2009). Instead, the majority of research in CSR has focused on the impact CSR has on external stakeholders to the company. There is a growing body of evidence, however, indicating that a company’s CSR behaviors do significantly affect employees within the company. For example, Turban and Greening (1997) examined the relationship between a firm’s social reputation and its attractiveness as an employer, finding that prospective employees tend to identify more positively with, and favor working at companies that are good corporate citizens. Peterson (2004) found a positive relationship between perceptions of CSR and employee

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A. Glavas, L. N. Godwin

commitment. Another recent study revealed that employees were more engaged, creatively involved, and had higher quality relationships when they worked for organizations that were socially responsible (Glavas and Piderit 2009). Furthermore, a meta-analysis of research on corporate social performance included six studies in which employee constructs such as job satisfaction mediate the relationship between corporate social performance and financial performance (Peloza 2009). Aside from these studies, numerous other scholars have proposed that there is a positive effect on employees when they work for companies engaged in CSR efforts (e.g., Aiman-Smith et al. 2001; Albinger and Freeman 2000; McGuire et al. 1988; Peterson 2004; Sisodia et al. 2007; Valentine and Fleischman 2008; Waddock and Graves 1997). What has been missing from this body of work is a theoretical framework for understanding how an organization’s CSR efforts have an impact on employees. We argue that understanding the underlying processes regarding how employees are affected by CSR will help inform management theory and practice, allowing us to create models and organizational interventions that best leverage CSR for a positive effect on employees. Thus, to begin addressing this issue, we posit that one mechanism through which employees are affected by CSR is through organizational identification. Drawing on social identity theory and organizational identification theory, as well as building on the emerging empirical work that suggests CSR is related to employee identification (e.g., Kim et al. 2010; Peterson 2004; Rodrigo and Arenas 2008; Turker 2009), we develop a model of the impact of perceived CSR on an employee’s organizational identification. We place particular emphasis on the nature of the perception held by employees, arguing that perception perhaps plays a greater role in determining organizational identification than reality. While some previous studies have focused on perceptions of employees (e.g., Peterson 2004), or the impact of reality by measuring impact of employee participation in CSR (e.g., Kim et al. 2010), what has been less explored is the interaction between reality and perception. Because the images held of an organization are unique to each individual employee, these images may or may not match the images held by others inside or outside the organization (Dutton et al. 1994). This is an important dynamic to understand in an age where there is an increasing chance for discrepancy between perception and reality either because of lack of awareness regarding firms’ CSR activities, companies trying to ‘‘oversell’’ their CSR activities or sometimes suspicion of the intentions of organizations of their CSR activities (Bhattacharya and Sen 2004). We begin by briefly reviewing the literature on perception as it relates to CSR. Then, we explore the literature on organizational identification and postulate how perceived

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corporate social responsibility (PCSR) affects organizational identification. Next, we offer propositions regarding the impact of aligned PCSR (i.e., where perception = reality) and misaligned PCSR (i.e., where perception does not = reality) on organizational identification. We conclude with a proposed research framework for future empirical work to explore the impact of PCSR on organizational identification.

The Role of Perception As we strive to understand the impact of an organization’s CSR behaviors on their employees, we must pay heed to the role of perception in this equation. While actual CSR behaviors that an organization engages in can be assessed through a variety of means (i.e., analysis conducted by the investment research firm KLD Research & Analytics, Inc.1; Fortune Magazine’s rankings of ‘‘The World’s Most Admired Companies’’2), we argue that an employee’s perception of what CSR behaviors their organization is—or is not—engaged in is perhaps just as important to understand as reality. From Plato’s famous allegory suggesting that reality is but a mere shadow reflected on the wall of a cave (Plato and Jowett 1941) to the myriad of psychological studies during the past three decades showing the impact of perception on social behaviors (e.g., Snyder and Swann 1978), we know that perception is an important driving force in understanding an individual’s behaviors. Indeed, ‘‘the notion that perception (or the activation of a perceptual representation) may lead to corresponding overt behavior has been recognized since long ago by some of our most influential thinkers’’ (Dijksterhuis and Knippenberg 1998, p. 866). In their seminal article, Bargh and Burrows (1996) demonstrated the strength of the perception–behavior link by showing that the mere perception of another’s behavior actually increased the probability of engaging in that behavior oneself. Implications of their findings suggest that, despite the popular notion that we are in control of our behaviors, our social behavior is influenced at least in part without our conscious involvement. Building on this argument, further research demonstrated the powerful impact that perception can have on behavior. For example, Dijksterhuis and Knippenberg (1998) extended Bargh and Burrow’s findings to show that the perception–behavior 1

KLD Research & Analytics, Inc, is an investment research firm providing management tools to professionals integrating environmental, social and governance factors (ESG) into their investment decisions (www.kld.com). 2 The Hay Group has partnered with Fortune Magazine for over ten years to identify and rank The World’s Most Admired Companies (http://money.cnn.com/magazines/fortune/mostadmired/2010).

Is the Perception of ‘Goodness’ Good Enough?

link holds true for even complex behaviors. Furthermore, the impact of perception on shaping reality through selffulfilling prophecies has been documented from entire economies, where ‘‘expectations themselves spark fluctuations in the level of business activity’’ (Azariadis 1981, p. 395), to classrooms, where a teacher’s perception of students can affect how he or she interacts with those students (Rist 1970). Taking these findings together with specific research that has explored how CSR affects employee perception and subsequent organizational identification (e.g., Kim et al. 2010), we posit that an employee’s perception of CSR affects their behaviors. Because there are so numerous definitions of CSR (Peloza 2009), we offer the following definition of perceived CSR (PCSR) based on Waddock’s (2004) definition of CSR: The perception stakeholders of an organization hold of the impact of a company’s strategies and operating practices on the well-being of all its key stakeholders and the natural environment. This definition differs from perceived CSR as described by Peterson (2004), which is based on the work of Maignan and Ferrell (2000) and focuses on an organization’s ethical, legal, economic, and discretionary duties. Although other definitions of CSR are valuable, the definition we propose is more inclusive of all the key stakeholders, which is important for our focus on employees. Other definitions, such as the one proposed by Maignan and Ferrell (2000) that builds on Carroll’s (1979) definition of CSR, could allow for a company to be considered socially responsible if it positively engages in ethical, legal, economic, and philanthropic dimensions of CSR, but at the same time, does nothing positive for its employees, its suppliers, and/or the environment. We also frame PCSR more proactively (e.g., exploring how the company creates well-being and adds value to its stakeholders) rather than reactionary or compliance based (e.g., focused on the legal, economic, and ethical duties of the firm). Although our definition of PCSR can be applied to any stakeholder group internal or external to the organization—for example, customers can have PCSR toward a company—in this article, we focus our discussions on employees, situating PCSR within the organizational behavior literature, primarily organizational identity. It is to this topic we now turn.

Perceived CSR and Organizational Identification In the decade since the Academy of Management Review devoted a special issue to the topic of organizational identity and identification (Albert et al. 2000), the concept has continued to garner interest by organizational scholars (e.g., Fuller et al. 2006; Kreiner and Ashforth 2004), with some even suggesting that fostering organizational identification is a critical task for ensuring organizational

effectiveness (e.g., Pratt 1998). Derived from social identity theory (Ashforth and Mael 1989; Kramer 1991; Tajfel and Turner 1985) and self-categorization theory (Haslam and Ellemers 2005), organizational identification refers to ‘‘a cognitive linking between the definition of the organization and the definition of the self’’ (Dutton et al. 1994, p. 242) or ‘‘a perceived oneness with an organization and the experience of the organization’s successes and failures as one’s own’’ (Mael and Ashforth 1992, p. 103). Much of the work on organizational identity builds on the conceptualization postulated by Albert and Whetten (1985), which proposes that organizational identity is that which is central, enduring, and distinctive within the organization— thus, treating it as a stable and fixed construct. Others, however, have challenged this portrayal, suggesting that it is better to conceptualize organizational identity as a fluid and dynamic construct (Gioia et al. 2000). This latter conceptualization raises the question, ‘‘what factors impact an employee’s organizational identification?’’ Answering this question has important implications for the workplace, as stronger organizational identification has been shown to be positively associated with organizational outcomes, including organizational citizenship behaviors (Bartel 2001; Bergami and Bagozzi 2000; Dukerich et al. 2002), job satisfaction (van Dick et al. 2004), job involvement (Riketta 2005), and negatively associated with turnover intention (Cole and Bruch 2006; Mael and Ashforth 1995; Wan-Huggins et al. 1998). Much of the organizational identity literature is rooted in the premise that the more attractive an organization’s image is perceived to be by the employee, the stronger the identification an employee will have with the organization (Dutton et al. 1994; Dutton and Dukerich 1991). Several studies have supported this premise, showing a positive relationship between the attractiveness of the public image of a corporation and organizational identification (e.g., Dutton et al. 1994; Fuller et al. 2006). Although there are numerous views on the aspects of organizational identification (Whetten 2006), the two factors we will be focusing on include (i) perceived external and (ii) internal image. As we will detail in the following, each of these images is important components in an employee’s PCSR. One of the most common factors referenced in relationship to organizational identification is perceived external image, which is an internal stakeholder’s (i.e., employees) beliefs about how organizational outsiders (i.e., customers, suppliers, general public, etc.) perceive the organization (Dutton and Dukerich 1991; Dutton et al. 1994; Fuller et al. 2006). Perceived external image is often referred to in the literature as construed external image, but for purposes of this article, we use the term perceived external image to keep a consistent focus on the concept of perception. Perceived external image is different from

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corporate image, which is the image organizational outsiders hold of the organization. Perceived external image is also different from reputation, which is the stable and continued perception that outsiders have of the organization (Fombrun and Shanley 1990). Thus, corporate image and reputation focus on how organizational outsiders view the organization. Rather, perceived external images are the perceptions that insiders have of what outsiders think of their organization. For example, this would include how employees believe customers view their organization. Perceived external images are important to understand because they can result in increased organizational identification and contribute to an individual’s continuity of selfconcept and distinctiveness (Dutton et al. 1994). As the authors posited, when employees perceive that outsiders view the organization similar to how they view themselves, it allows for employees to maintain their sense of self or selfconcept. Furthermore, employees will find an image more attractive if they perceive that those outside the organization find their organization to be unique or distinctive. Employees may also find the image attractive if it is considered prestigious (Mael and Ashforth 1992; March and Simon 1958), or if fulfills a personal interest or need (Ashforth and Mael 1989). As Pratt (1998) suggests, employees of organizations that are associated with a specific vision or social cause may have increased organizational identification because they feel more connected to the organization than typical affiliation would predict. Similarly, recent research suggests that employees more positively identify with companies in which they perceive the virtues and character strengths to be inherently good (Dutton et al. 2010), and which they view to be socially responsible (Turban and Greening 1997). For example, a recent survey of MBA graduates from top business programs found that they are willing to sacrifice a significant part of their salaries to work for an organization that ranks high in corporate social responsibility (Montgomery and Ramus 2008). Another study conducted nationwide with US employees found that 86 % of employees who perceived their organizations to be socially responsible were strongly committed to the organization, whereas only 14 % of those who perceived their organization to be low in CSR were committed (Joyner and Payne 2002). Similarly, another study found that employees who perceived their organization to be low in CSR were less committed (Trevino et al. 1998). Although the previous two studies focused on commitment, a significant positive relationship has been found between the constructs of commitment and identification (Dutton et al. 1994; Turker 2009). Therefore, we argue that companies with a perceived external image of being socially responsible could be seen as not only prestigious to employees but also help fulfill their need for meaning and self-esteem; thus, positively affecting their organizational identification.

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Proposition 1 The more positively an employee perceives the external image of their organization’s CSR, the stronger their organizational identification will be. The organizational identification literature has primarily focused on employees’ images of what outsiders think of their organization, thus not differentiating between perceived external and internal image. Whereas a perceived external image is an employee’s perception of how outsiders perceive the organization, perceived internal image involves an employee’s perception of their own organization. Perceived internal image is different from projected image—another construct within the organizational identification literature—which is defined as a construction of public impressions created to appeal to an audience, rather than necessarily reflecting ostensible reality (Alvesson 1990; Bernstein 1984). An organization can have an internal and external projected image; however, projected internal images—the impressions an organization communicates about itself to manage employee perceptions— may potentially affect the perceived internal image that employees hold (i.e., management telling employees ‘‘we are a family here’’). Employees may or may not perceive the organization similarly to the intended projected image (Dutton et al. 1994). The distinction between perceived external and internal image goes beyond semantics; it is extremely important for the field of CSR. During the past decades, some corporations have deliberately attempted to project different external and internal images of their CSR efforts (Laufer 2003). One such trend, commonly known as greenwashing, is when corporations try to project a more positive image of being socially responsible than they are in reality (Laufer 2003; Ramus and Montiel 2005). A famous example is that of Enron, which at onetime, had a reputation as one of the most socially responsible companies (Sims and Brinkman 2003). There are countless other examples of organizations with similar mis-projections, so much so, that there are now Websites wholly dedicated to calling attention to such misalignment, such as the one launched by Greenpeace called Stop Greenwash.3 As a result, some companies have become very cautious in launching campaigns lauding their CSR behaviors for fear of being accused of greenwashing (Peattie and Crane 2005). Adding to the reluctance of corporations to project an image of being socially responsible, is the problem that both companies and stakeholder groups are often unclear and confused as to what actually constitutes good CSR, reflecting again the lack of clarity and complexity of this topic (Garriga and Mele 2004; Waddock 2004).

3

Stop Greenwatch: http://www.StopGreenwash.org/.


To illustrate this complexity, we offer few examples. First, consider Company A, which produces organic food that it distributes globally, and Company B, which does not produce organic food but only sells locally. Company A might be inclined to market itself as a company good for the earth, but if their food must travel thousands of miles to reach consumers, it is potentially creating more environmental harm than Company B because of the overall carbon footprint of its transportation chain (e.g., Coley et al. 2008). Next, imagine an oil company with a strong division focusing on creating alternative energy. Such a company could rightfully market itself as being socially responsible because it is creating new technology that can eventually help the planet. Yet at the same time, stakeholders would also have a legitimate criticism of the company’s overall environmental footprint and harm being caused through the extraction and consumption of fossil fuels. For example, BP is a company that has invested substantially in alternative energy and worked extensively on projecting an image of being socially responsible, but has recently come under increased criticism for its overall lack of social responsibility, especially after the oil leak in the Gulf of Mexico (Nelson and Mohr 2010). Finally, consider a company that is attempting to project a positive image based on its work alleviating poverty in the base of the pyramid—the poorest people on the planet. Yet, what if despite its good intentions, this company is causing severe disruptions of local culture through infusion of technology and goods? There are countless other examples, but as these few illustrate, there are many reasons that companies may hesitate to project an image of being socially responsible because of the difficulty to clearly and simply communicate with stakeholders as to what constitutes a socially responsible company. It is also difficult to find a company that is a perfect role model for CSR. Almost every company has flaws, and any stakeholder group searching for shortcomings will almost certainly find them. This is yet another reason why companies are reluctant to put themselves on a pedestal as being socially responsible for fear of being set up for criticism. Therefore, organizations such as the UN Global Compact (2010), the largest network of organizations dedicated to CSR, have stated that it is almost impossible to be a perfectly socially responsible company—rather, companies should not treat CSR as a destination to which they have arrived, but rather as an ongoing journey of improvements. Because of the stakeholder backlash against greenwashing, the differing views in perception of what constitutes a socially responsible company, and the hesitancy to market oneself as being socially responsible, some companies are increasingly reluctant to project any external image of CSR. This has led to a new trend called

greenmuting, the opposite of greenwashing (Makower and Pike 2008). Greenmuting is when companies deliberately do not project an external image of CSR behaviors. In such contexts, companies do not actively work to construct an external image regarding CSR, but employees could still have a perceived internal image of CSR—regardless of what the company is/is not projecting to external stakeholders. Therefore, it is possible that the perceived external and internal images are different that is why it is also important to explore perceived internal image as well. We anticipate that similar to perceived external image, a positive perceived internal image held by employees regarding the company’s CSR behaviors will have a positive impact on organizational identity. Proposition 2 The more positively an employee perceives the internal image of their organization’s CSR, the stronger their organizational identification will be. Impact of Salience of CSR Just as individuals’ perception of any stimuli is affected by multiple factors, so too is their level of PCSR. One factor that we anticipate playing an important role in influencing an employee’s organizational identification is the salience of CSR to the employee’s identification. According to identity theory, identity salience represents the way in which an individual’s various sub-identities (e.g., being a female, being a friend, being a spouse, and being an employee) are organized, with those roles that are more important to the self-image having a higher probability to be brought into play in a given situation. The position of a sub-identity in this hierarchy is, by definition, its ‘‘salience’’ (Stryker and Serpe 1982, p. 206). The salience an employee gives to their identity as a member of a particular organization is affected by the attractiveness of the perceived image of the organization (Dutton et al. 1994). Furthermore, the very idea of working for a company that is socially responsible might be attractive to varying degrees to individuals, because employees have differing values and attitudes towards work. Person–organization fit research, for example, has shown that employees prioritize their values differently (Chatman 1989; Judge and Bretz 1992). One of the work values frequently studied in person–organization fit is concern for others. It is quite possible that employees who rate highly on concern for others would also place greater value in a company that works to help external stakeholders and the environment. A similar argument can be made for altruism and helping others; both are dimensions that are frequently studied in the Organizational Citizenship Behavior literature and have been found to vary in salience to employees (Podsakoff and 1997; Smith and 1983). Additionally, the work meaningfulness literature posits that CSR might vary

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in its salience to employees because of different orientations toward work (Wrzesniewski and 1997). Some employees view work as merely a job (e.g., a means to a paycheck), others see it as a part of an overarching career and an expression of self-worth (e.g., promotion is important), and others see work as calling or, in other words, providing meaning and fulfilling a greater purpose—or a combination of the previous three orientations to varying degrees (Wrzesniewski 2003). For example, some employees might have all three views of work, but for some, the calling orientation might be more important than to others. For those employees with a stronger calling orientation, they will care more about their organization being socially responsible and are thus affected by their perception of their organization’s external and internal image as it relates to CSR (Rosso et al. 2011). Based on the range of importance that CSR can have for employees, we anticipate that: Proposition 3 The greater salience CSR has to an employee’s personal identity, the stronger the relationship between (a) perceived external image of CSR and their organizational identification and (b) perceived internal image of CSR and their organizational identification. Taking these three propositions together, we can begin to model the relationship between perceived images of CSR and organizational identification, illustrated in Fig. 1.

Perception Versus Reality Further consideration of an employee’s perceived internal image of their company’s CSR offers an interesting opportunity to examine what may happen when perception and reality are—and are not—aligned. Whereas perceived external images are the perceptions that employees have of what outsiders think of their organization (thus perceptions of others’ perceptions), perceived internal images are an employee’s perceptions of actual behaviors in which the

Fig. 1 Path model of relationship between perceived external and internal image of CSR and organizational identification

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company is or is not engaged. Thus, because CSR behaviors are measurable and therefore verifiable (see Graves and Waddock 1994, and Orlitzky et al. 2003, for explanations of how KLD data is used to measure CSR), we can compare the reality of what the organization is doing with the internal perceptions an employee holds of its CSR image. Therefore, for the following propositions, we focus on employees’ internal PCSR, but add a temporal dimension to postulate what happens when an employee becomes aware of organizational realities and compares them with their own images of the organization’s CSR behaviors. We treat organizational identification as measured by propositions 2 and 3 as a baseline. In propositions 2 and 3, we were only concerned with the impact of perceived internal images on organizational identification. In other words, we now add a temporal dimension and ask what happens when employees encounter data confirming or refuting their own perceptions of their organization? We posit here the effects of (mis)alignment between reality and perceived internal image. We propose that there are several possible dynamics that organizations might find themselves in depending on the alignment between reality and employee’s perceived internal image of CSR. These two tensions can be envisioned as two axes: Measured CSR actions, a representation of reality, is one axis, whereas the other axis represents an employee’s perception of the organization’s CSR (i.e., internal PCSR). Both axes can range from negative (i.e., ‘the company is engaged in ‘‘bad’’ CSR behaviors’) to positive (i.e., ‘the company is engaged in ‘‘good’’ CSR behaviors’). In the following section, we present four possible scenarios (see Table 1) in which perception and reality can be aligned or not, as well as the resulting different dynamics for organizational identification. In the first two scenarios, we consider what happens when there is alignment between an employee’s internal PCSR and the organization’s actual CSR behaviors. In scenario one, which we refer to as positive alignment, both the employee’s internal perception of their organization’s CSR image and the actual measured CSR behaviors of the organization are both positive. In such a scenario, there is alignment between perception and reality—the organization is being socially responsible and an employee perceives the organization as being socially responsible. The second scenario is one in which both the employee’s perception of their organization’s CSR and the measured CSR behavior are negative, which we refer to as negative alignment. In such a scenario, there is still alignment between perception and reality—the organization is not engaging in CSR behaviors and the employee does not perceive that the organization as being socially responsible. For both scenarios, there is alignment between perception and reality, so we expect the same relationship between

Is the Perception of ‘Goodness’ Good Enough? Table 1 Organizational dynamics resulting from the alignment and misalignment of measured CSR and an employee’s internal perceived CSR (PCSR)

Positive Negative

The organization’s measured CSR actions

An employee’s internal PCSR Negative

Positive

Positive misalignment

Positive alignment

Negative alignment

Negative misalignment

perceived organizational image and organizational identification that we predicted in Proposition 2. Therefore, employees with positive alignment will arguably have stronger organizational identification compared with employees with negative alignment because they have a more positive view of the internal image of their company’s CSR. Furthermore, we also expect salience to have the same moderating effect as in Proposition 3. We do not expect, however, that if an employee learns about additional positive CSR actions in a scenario of positive alignment—or negative CSR actions in a scenario of negative alignment—that their degree of organizational identification will change. The exception would be only if the magnitude of the discovery is large and if CSR is salient to the employee. Literature on cognitive approaches to learning suggests that our perceptions (such stereotypes we hold about our organization’s CSR practices) are rather persistent, even in the face of new information (Peeters 1983; Weber and Crocker 1983). The conversion model of stereotype change suggests that our perceptions are not changed by minor instances, but rather are changed by dramatic salient events (Weber and Crocker 1983). Extrapolating from this literature, we expect that the magnitude of an employee’s discovery about their organization’s actions will factor into their perceptual change, or lack thereof. For example, if an employee has positive internal PCSR (e.g. ‘‘I think my company is working to be sustainable’’) simply learning that their company has begun a new recycling initiative would likely not change their degree of organizational identification, but discovering the company has gone to zero-landfill status may be influential. Furthermore, if an employee has negative internal PCSR (e.g., ‘‘I don’t think my organization cares about the environment’’) and discovers that the organization is in fact engaging in negative CSR behaviors (e.g., ‘‘I did not know that we were dumping our recyclables into the garbage’’), we argue that their organizational identification will not be affected because they already had a negative perception of the organization’s CSR efforts. The exception again would

be in extreme cases where the magnitude of the offensive CSR behavior they discover is excessive (e.g., ‘‘I did not realize we were polluting the entire city’s water supply’’), organizational identification will decrease. Proposition 4a In situations of positive alignment, an employee’s organizational identification will not be affected unless the magnitude of positive CSR behavior discovered is much more positive from his or her previous perception, in which case organizational identification will increase. Proposition 4b In situations of negative alignment, an employee’s organizational identification will not be affected, unless the magnitude of the negative CSR behavior discovered is much more negative from his or her previous perception, in which case organizational identification will decrease. Proposition 4c Salience of CSR to an employee will moderate the impact that positive and negative alignment has on an employee’s organizational identification. The remaining two scenarios involve situations where there is a misalignment between perception and reality, providing rich fodder for theorizing and future research. In one possible scenario, which we refer to as positive misalignment, an employee who holds a negative internal PCSR image of their organization discovers that the organization is actually being socially responsible. In such instances, similar to situations of positive and negative alignment, we expect organizational identification to not be affected unless the discovery is quite dramatic or there are multiple positive discoveries over time. As discussed earlier, an individual’s perceptions are rather quite persistent (Peeters 1983; Weber and Crocker 1983). Research suggests that perceptions are often maintained even despite contradictory evidence (Edwards and Smith 1996; Jones and Russell 1980). As summarized by Crocker and Weber (1983), a single piece of disconfirming evidence is unlikely to elicit a major change in perception, but if there is an accumulation of many instances of disconfirming evidence, one’s perception is more likely to shift. As previously mentioned, the exception to this pattern is when the disconfirming information is dramatic (Rothbart 1981). Thus, we expect that the employee’s original negative internal PCSR images serve as a sort of anchoring bias that will continue to negatively affect their organizational identification unless it is strongly challenged by (several) the new positive discovery(s). Finally, for the reasons previously discussed, we again expect salience of CSR to an employee’s identity to influence the impact of the positive misalignment. Proposition 5a In situations of positive misalignment (i.e., when an employee perceives the image of their organization as not being socially responsible but they find

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out that in reality the organization is being socially responsible), an employee’s organizational identification will not be affected unless the magnitude and quantity of positive CSR behaviors discovered is large. Proposition 5b Salience of CSR to an employee’s personal identity will moderate the relationship between positive misalignment and organizational identification. The final scenario is one of negative misalignment, in which an employee holds a perceived image of their organization as being socially responsible, but then finds out in reality that the organization is being socially irresponsible. This discrepancy could be the result of a carryover effect from stories in the organizational culture from past good deeds the organization once did, or to more strategic deception on the part of organizational leadership to create a false perception of being socially responsible (e.g., greenwashing). It could also be that an organization sets very lofty goals around CSR, which might lead to an image of the organization being a model CSR organization, but then fails to deliver on these goals. Regardless of the malfeasance or innocence of the intentions, there is still a negative discrepancy between reality and perception. In this scenario, once an employee becomes aware that there is a negative misalignment between reality and their perceived internal image of CSR, we posit that the employee will experience cognitive dissonance. In social psychology, cognitive dissonance occurs when individuals are countered with negative information that is contrary to their beliefs (Festinger 1957). As proposed earlier, the level of salience CSR has to an employee will likely moderate their level of experienced discontent. That is, if CSR is not very important to them, they will likely be less affected after finding out that their perception was incorrect. If CSR is important to them, however, social psychology suggests that there is a drive for the preservation of self-concept. In such a situation, individuals typically react through rationalization, confirmation bias, or other ego defense mechanisms (Festinger 1957). In rationalization, individuals find justifications for the newly acquired information that helps preserve their original beliefs. With confirmation bias, information is disregarded as being untrue. In ego defense mechanisms, individuals try to preserve their own selfimage through denial or blaming others for the negative information. Applying these mechanisms to our scenario of negative misalignment, we argue that employees try to preserve their original positive perceived image of CSR by rationalizing the new information (the discovery of negative CSR behaviors by their organization). When presented with negative evidence, individuals have been found to rationalize by foregoing affirmations that threaten the selfconcept and turn to affirmations in unrelated compensatory

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domains (Aronson et al. 1995). Employees try to preserve the concept of the organization by justifying that the organization is still a good organization—similar to how a person would justify that they are still a good person and just happened to be in the wrong place at the wrong time if something bad happens to them. For example, members of an organization that has been under scrutiny for pollution could justify that their organization is still doing good in the world because it is employing people and thus keeping families fed. Or they might convince themselves that holding onto the image of the organization as being socially responsible is still justified because no organization is perfect. They might rationalize that their organization is on a journey toward social responsibility and thus despite this negative discovery, the company is ‘trying’ to be responsible. This rationalization may be accurate, as some organizations might truly be trying to become more socially responsible. While for others, the projected image might be that they are on a journey when in reality they are not really trying—they are merely paying lip service and engaging in symbolic activities, for the sake of public relations with employees and other stakeholders alike. The second possible reaction is one of confirmation bias. Prior research has shown that when individuals identify strongly with a group that is negatively perceived, they will employ defense mechanisms in which they try to disconfirm the evidence (Doosje et al. 1998). For example, if the employee learns that their company received negative external ratings regarding CSR activities, the methodology of the ratings might be attacked. Another method related to confirmation bias is actively seeking contradictory information to counter refute the negative discovery. For example, while the company may have been negatively rated by one agency, perhaps it has received an award or been rated more favorably by a different agency (e.g., an employee may think ‘‘although my company has been criticized recently for their investment practices, they are still ranked as a top company to work for’’). Employees then preserve their positive image by relying on selective information that confirms their original image while disregarding information that does not confirm their perspective. The final reaction is akin to ego defense mechanisms that aim to preserve the self-concept at the individual level. Employees may simply deny the accuracy of the negative discovery or instead blame others for the negative behaviors of the organization (e.g., the employee might think ‘‘the company would have invested more in alternative energy options if Congress would have changed the tax code so the company could afford to make changes’’). There is also an interaction between these various mechanisms. For example, ego defense can lead to defensive behavior in the form of justification and disconfirmation


strategies. Regardless of the mechanism employed to lesson the dissonance, we anticipate that employees with higher CSR salience will cling to their positive perception that the organization is socially responsible because they do not want to believe they are working for a socially irresponsible organization. As such, their organizational identification will likely remain unchanged. Proposition 6a In situations of negative misalignment (i.e., when an employee perceives the image of their organization as being socially responsible but they find out that in reality the organization is not socially responsible), employees will experience cognitive dissonance and react through rationalization, justification, and/or other ego defense mechanisms to maintain their current level of organizational identity. Proposition 6b Salience of CSR to an employee’s personal identity will moderate the relationship between negative misalignment and organizational identification.

Discussion In this article, we have proposed a relationship between perceived internal and external image of CSR and organizational identification, summarized in Fig. 1. When employees have a positive perceived internal or external image of CSR of their employer, their organizational identification is strengthened. We also propose that salience of CSR to an employee’s identity has an impact on the relationship between organizational identification and perceived internal and external image of CSR. In other words, the more attractive the image of CSR is to the employee, the more their organizational identification will be strengthened if they perceive their organization as being socially responsible. We also add a temporal dimension, exploring what happens when employees are confronted with information that confirms or disputes their perception. In situations of positive alignment between reality and perception, we do not expect any major differences to occur. However, it is in situations of misalignment that many different effects on organizational identification can occur as well as varying employee reactions. In a situation of positive misalignment (i.e., when an employee perceives the image of their organization as not being socially responsible but they find out that in reality the organization is socially responsible), we expect organizational identification to increase only when presented with dramatic new evidence and to be moderated by saliency of CSR. In a situation of negative misalignment (i.e., when an employee perceives the image of their organization as being socially responsible but they find out that in reality the organization is not socially responsible), and CSR is salient to an

employee’s identity, we expect employees to experience cognitive dissonance and employ ego defense mechanisms to preserve their original perception, and thus maintain their level of organizational identification. Practical Implications The model we propose (see Fig. 1; Table 1) provides a framework for considering the impact of employees’ perception of CSR on employees’ organizational identification. First, in situations of positive alignment (proposition 4a) and especially positive misalignment (proposition 5a), if organizations are in reality much more socially responsible than employees originally perceived, this scenario offers a potent opportunity on which companies can capitalize. For example, if a company is indeed engaged in CSR behaviors, numerous strategies and practices can be employed to help project a more positive internal image to their employees, which in turn we anticipate would strengthen organizational identification. However, because we propose that the perceived magnitude of the action has to be great, the strategies that a company uses to create awareness need to be comprehensive. Simply sending an internal newsletter will most likely have no impact. Therefore, companies need a strategy that includes a mix of communication of their CSR behaviors through forums, internal reports, training, and targeted communication with supervisors (Maignan and Ferrell 2004). If the company works to align reality and employee perception, they could begin to shift toward positive alignment. Second, in situations of negative alignment—employees have low PCSR and the organization is not socially responsible (proposition 4b)—the organization should explore the degree of salience of CSR to employees (e.g., through surveys). If the organization finds out that employees, or a subgroup of employees, care about CSR, then an opportunity exists to increase CSR actions through strategies focused on that subset of employees. Finally, situations of negative misalignment (proposition 6a), in which employees have high PCSR but find out the organization is not socially responsible, are perhaps the most dangerous for organizations. Because the path through which employees react in negative misalignment (i.e., cognitive dissonance) is different from the other scenarios, it is extremely important for organizations to pay attention to this scenario as it could form a dangerous blind spot. The leaders of the organization should both monitor employee perceptions and measure actual CSR—for example, the KLD databasei has been commonly used to measure eight corporate social performance attributes (Graves and Waddock 1994; Johnson and Greening 1999). It is possible that organizations in such situations might not feel the need to do anything given that employees still have high organizational identification, but long-term effects can be detrimental. For example, in the case of Enron that was perceived to have high CSR but in

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reality had low CSR, eventually socially irresponsible behaviors were the demise of the company (Sims and Brinkman 2003). As explained in proposition 6a, social psychology theory suggests that people have an ability to see what they want to see, often ignoring the negative that results in creating blind spots. Therefore, such situations should be monitored if the organization cares about its long-term success. As previously mentioned in the article, organizations might greenmute (i.e., not disclose their CSR activities) or might focus on creating awareness among external stakeholders. For example, 93 % of S&P 100 companies are reporting their ecological and societal activities (Social Investment Forum 2009). More than 6,000 businesses have joined the UN Global Compact (UN Global Compact 2010), which requires usage of the Global Reporting Initiative framework, a globally established set of guidelines for disclosing CSR strategies and activities. However, despite the increase in reporting, the question remains of whether these reports are seen only by a few people and even if they are seen by others, are they focused on external stakeholders with little communication internally towards employees. In this article, we have proposed that internal stakeholders (i.e., employees) could be positively affected by awareness of CSR activities, especially if the organization is socially responsible and CSR is important to employees. Because there are a growing number of organizations that are being socially responsible (Googins et al. 2009), finding ways to leverage the benefits of these behaviors—internally as well as externally—is creating a new imperative for sustaining competitiveness (Laszlo 2003). Future Research Organizational identity is a field that has been growing in recent decades. At the same time, scholarship in the field of business and society has been evolving as well. Our proposed model is an initial step toward integrating these two streams of research, which we hope will lead to further explorations within both fields. As such, the propositions offered here are an invitation for continued scholarly work in the field of business and society. For scholars of organizational identification, at first glance CSR could be perceived as just another factor that contributes to the image of the corporation. However, there are a few critical issues that make CSR worthy to specifically study in the realm of organizational identity. First, because of effects of greenwashing and greenmuting, there are often large discrepancies in employees’ perceived external and internal image of their organization’s CSR behaviors. Previously, organizational identity has primarily focused on the effects of perceived external image. However, because of the potential differences in external and

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internal images, perceived internal image also becomes an important construct to study. Also, exploring the differences between the two (i.e., perceived internal and external image) becomes a meaningful avenue of future research. Second, whereas various aspects of organizational image can be difficult to measure, CSR can be measured (as discussed earlier), thus opening up the realm of exploring the differences between perceived image and reality as well as the subsequent effects on organizational identity of employees. Finally, projected image has been an important aspect of organizational identification studies, which could be integrated with both of the previous points. Ripe for further exploration is the question of how easily manipulated are organizational images and what are the resulting consequences for organizational identification? Because CSR can be measured, it is possible to research instances in which CSR is low in reality, but at the same time the company is projecting an image of being socially responsible (i.e., greenwashing). Our model suggests that in such situations, the organizational identification of employees will be strengthened, but only in the short-term. Empirically exploring this proposition will result in a richer understanding of whether it is perception or reality that has the stronger long-term influence on employees’ organizational identification. As research unfolds, it would be particularly interesting to explore the interaction effect between perceived internal and external image. On one hand, it is possible that a covariance might be found between perceived internal and external image. However, it is also possible that because of effects of media that the perceived internal and external image might be different. For example, employees might perceive their external image as being negative, while at the same time have a positive perceived internal image. Based on our propositions, we would expect that a perceived negative external image would decrease organizational identification. However, it is possible that in such a scenario, organizational identification might remain strong or even increase. Organizational identification might increase because of a stronger in-group versus out-group mentality (i.e., ‘‘it’s us against the world’’). As just one example, it would be interesting to study employees at Walmart who are engaged in sustainability activities. It might be possible that because of negative media attention, employees might perceive their external image to be negative. But at the same time, given the amount of work in sustainability that Walmart is conducting, employees might believe that they are using the leverage of Walmart to create a better world. For the broader scholarly community, we hope that this framework provides fodder for researching underlying dynamics of how employees are influenced. Previous research in the field has primarily focused on determining


whether CSR has an effect on overall firm performance with very little research into the underlying dynamics. Furthermore, numerous researchers have noted that it is extremely difficult to assess the impact of CSR on firm performance and that future research should focus on the underlying dynamics (Aguilera et al. 2007; Campbell 2007; Margolis and Walsh 2003). Thus, as companies continue to engage in CSR behaviors (Googins et al. 2009), it is increasingly important to build research streams that explore the effects of CSR on employee work behaviors, performance, and productivity. Conclusions Whetten (2006), one of the first scholars to establish the concept of organizational identity, stated that his ‘‘principle interest is in fostering greater use of organizational identity in conjunction with other organizational studies constructs’’ (p. 220). Heralding the spirit of this statement as a call to broaden our scholarship and bridge constructs existent within the field, we offer PCSR as an expansion within the organizational identity literature. As the stream of business and society scholarship continues to grow, we see PCSR as an important link to the mainstream work happening in management scholarship. While the academic debate over the form and effectiveness of CSR behaviors will inevitably continue, there is growing evidence to suggest that companies face increasing pressures to engage in such behaviors. Consumers and investors alike reportedly want companies who are socially responsible. Take for example a business week/harris poll conducted in 2000 in the USA found that only 4 % of those surveyed believe that companies should have the sole purpose of making profit for shareholders, with 95 % agreeing that corporations should have more than one purpose and that they owe something to their workers and to the communities in which they operate (as cited by Jackson and Nelson 2004, p. 15). As companies seek to become more socially responsible for both altruistic and economic reasons, they are affecting not only wider society but also the individuals who work within their walls. Teasing apart the dynamics between employees’ perception of their organization’s CSR behaviors and the reality within the organization is an exciting arena for scholars as we attempt to answer the question: Is the perception of goodness really good enough?

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