Can society benefit from the celebrity-status of firms? : the effect of organizational celebrity on Corporate Social Responsibility

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Can society benefit from the celebrity-status of firms?

The effect of organizational celebrity on Corporate Social Responsibility

MSc Business Administration- Strategy Supervisor: Hesam Fasaei Student name: Donna Lisa Broekhuizen

Student number: 11038144 Date: 26th_{of January 2018}

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Statement of Originality

This document is written by Donna Broekhuizen who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document are original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Abstract

Nowadays various companies play a central role in society. They are continuously in our frame of reference, and we are influenced by their actions. These kind of companies, also called celebrity firms, are an example to our society, and therefore we should critically look at their impact on social, economic, and environmental issues. This thesis aims to shed light on this topic, and researches the effect of organizational celebrity on Corporate Social Responsibility. Research is conducted through databases, and the sample is based on U.S. Fortune 500 firms. Additionally, this thesis examines the moderation effect of slack resources and controls for industry, firm size, firm age, profitability, and riskiness. From the statistical results we can conclude that celebrity firms do not show different behavior than non-celebrity firms regarding their Corporate Social Responsibility performance. This implies that celebrity firms create and maintain their status through their core activities. Furthermore, this thesis is of value for managers as it proposes new ways to differentiate the organization in order to further strengthen celebrity as an intangible asset.

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1.

Introduction

Over the past few decades, several companies have acquired a central role in society. For example, companies such as Microsoft, Amazon, Google, Walt Disney, Apple, Boeing, and Hewlett-Packard. Their common ground is not the industry or activity which they pursue, their common ground is that they are universally embedded in the minds of the people. These companies are globally known because they have earned a celebrity-status, as they receive a high level of public attention and simultaneously elicit positive emotional responses from their stakeholders (Rindova, Pollock, & Hayward, 2006). Organizational celebrity is created through the dramatization of nonconforming actions of the firm by the media. The literature referred to in this research agrees that organizational celebrity has positive effects for the firm, as it has the ability to increase the access to resources and opportunities (Devers, Dewitt, & Mishina, 2009; Pfarrer, Pollock, & Rindova, 2010; Rindova et al., 2006). Additionally, it has the potential to become an intangible asset (Barney, 1991). Therefore, companies are ambitious to build and maintain a celebrity-status. However, organizational celebrity also evokes challenges. Due to their heightened visibility firms are under scrutiny, not only by the media as well as by other stakeholder groups (Brammer & Millington, 2006). Furthermore, celebrity is a dynamic construct and the firm must continuously adjust its nonconforming behavior in order to maintain the positive emotional response (Rindova et al., 2006), on top of that stakeholders’ expectations change as well (Russo & Perrini, 2010). Thus, as a consequence of organizational celebrity, companies are more sensitive to stakeholder pressures due to heightened visibility (Brammer & Millington, 2006). Additionally, they must frequently engage in nonconforming behavior. According to the Reputation Institute (2016), the aforementioned companies are the top global leaders concerning Corporate Social Responsibility (CSR). Aside from having obtained a celebrity-status, they are celebrated for their CSR activities. CSR can be a response in order to cope with the demands of organizational celebrity. It addresses stakeholder issues as the concept adopts a stakeholder approach (Freeman, 1984). As a result, it can play a significant role in visibly demonstrating a firm’s responsiveness to its stakeholders (Porter & Kramer, 2011), as it addresses social, economic, and environmental concerns by integrating them into the business model. Additionally, CSR is nonconforming as it has the ability to address issues in innovative ways and set new industry standards (Rangan, Chase, & Karim, 2015). Thus, CSR is a tool to contribute to the creation and manage the challenges resulting from organizational celebrity. However, the direct link between organizational celebrity and CSR has not been

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examined in the literature. This thesis aims to shed light on the relationship between being a globally well-known company and CSR activity.

The current literature provides knowledge on the characteristics of organizational celebrity such as visibility and dynamism. Additionally, the literature addresses the structural and social drivers of CSR. The following paragraph will illustrate the present knowledge on both constructs, celebrity and CSR, and the relation with each other. Nonetheless, voids in the literature also become apparent. First of all, the level of organizational celebrity is influenced by two characteristics. The first characteristic involves a high level of public attention generated by the media (Rindova et al., 2006). As a consequence, a firm’s visibility increases. Increased visibility and attention leads to more pressures from stakeholders (Brammer & Miller; Chiu & Sharfman, 2011; Gamson, 2015; Meznar & Nigh, 1995). As a reaction to these external influences, companies engage in CSR (Porter & Kramer, 2011). Brammer & Millington (2006) have researched the effects of visibility and stakeholder pressure on corporate philanthropy and concluded that more visible firms give more to charity. However, CSR is more than the donation of money to charities and include a wide range of activities (Rangan et al., 2015). Second of all, the second characteristic of celebrity demands organizations to maintain the positive emotional responses from the public through nonconforming behavior (Rindova et al., 2006). Celebrity is a dynamic component and therefore companies must continuously engage in nonconforming behavior, while being news-worthy. However, the literature has not defined what kind of nonconforming actions lead to this sustenance (Heckerts & Heckerts, 2002). Third of all, there are several drivers which influence CSR participation, such as firm size, diversification level, innovation, advertisement, consumer income, labor market conditions, and stage in the industry life cycle (McWilliams & Siegel, 2001). More recent research, also includes social evaluation constructs, such as reputation, which is defined as a driver of CSR (Fombrun, 2005; Lin-Hi & Blumberg, 2016; Siltaoja, 2006). Researchers argue that CSR and corporate reputation have a reciprocal relationship. However, the literature has not yet examined the potential consequences of other social evaluations constructs, such as celebrity, on CSR.

As the above paragraph illustrates, there are voids in the literature. Firstly, the literature has not examined the direct link between organizational celebrity and CSR. Brammer & Millington (2006) found that organizational visibility positively influences the level of corporate philanthropy, due to increased stakeholder pressures. Corporate philanthropy is an instrument to address social, economic, and environmental issues and is an element in the concept of CSR.

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However, there are numerous activities which go beyond the donation of money in order to enhance social welfare. The effect of celebrity on CSR activities such as improving organizational effectiveness, corporate governance, human rights, and the creation of sustainable business models has not been studied. Secondly, the literature has not addressed what kind of nonconforming actions are necessary in order to maintain positive emotionally responses. Especially, nonconforming actions have not been linked to CSR activities. Thirdly, the literature on CSR can be broadened by understanding its motivations and social drivers. Therefore, the theory on both celebrity and CSR and their causes and consequences can be extended more in-depth by examining the relation between the two constructs. Lastly, it is important to examine this relation as organizational celebrity and CSR are becoming increasingly more important topics. Nowadays, the media influences society’s frame of reference (McQuail, 1985), as we are continuously occupied by it through social media and television. Additionally, celebrity companies are repeatedly in the news as they are being celebrated for their actions. Simultaneously, society is becoming more transparent and better informed about the social, economic, and environmental issues we are facing (Jenkins, 2009). It is therefore important to critically look to what extent these famous companies contribute to social welfare.

Motivated by the research gap, the thesis makes several theoretical contributions. First of all, the thesis contributes to the existing literature by combining the literature on celebrity and CSR. The concept of celebrity is extended on a firm-level analysis, by arguing that organizational celebrity leads to increased participation in CSR. The thesis aim is to uncover a direct link between organizational celebrity and CSR through database research. More specifically, the thesis builds further on the theoretical model of Rindova et al. (2006) which explains how the media constructs firm celebrity. The framework is extended by linking the characteristic of public attention to increased visibility. This contributes to the celebrity-CSR literature, as the study aims to uncover that higher visibility, originating from organizational celebrity, increases CSR performance. Second of all, the effect of celebrity is researched on a broad range of CSR activities which range from corporate governance, employee diversity, human rights, environment, and product developments. As a result, the framework of Brammer & Millington (2006) is extended by including a more complete overview of CSR activities in addition to corporate philanthropy. Third of all, the second characteristic of celebrity includes nonconforming actions of firms and the emotional response elicited from the audience. These will be directly linked to CSR initiatives, such as operational effectiveness improvements and

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business model transformations. In doing so, the thesis will produce a more detailed account of the specific CSR actions undertaken as a consequence of organizational celebrity. Fourth of all, this thesis aims to extend the strategic management literature in relation to CSR by broadening the current framework on CSR drivers (McWilliams & Siegel, 2001), especially towards social evaluation constructs. At this point in time, the literature agrees that the level of research & development (R&D) spending, advertisement, consumer income, government regulations, tightness of the labor market conditions, and the stage of the industry life cycle influences CSR intensity (McWilliams & Siegel, 2001). This thesis argues that R&D spending influences the mechanism between organizational celebrity and CSR. While advertisement positively influences impression management efforts. Additionally, it is argued that organizational celebrity is a social driver of CSR, besides the already known structural drivers. As a result, it gives insight in what motivates companies to engage in CSR. As companies can engage voluntarily in CSR or in response to regulatory pressures.

Besides contributing to the literature, the thesis also aims to be of value for managers and businesses in general. The thesis provides new suggestions of how to cope with the challenges of organizational celebrity. It addresses how to respond to different stakeholder objectives and demands as a manager. It gives interpretation to what kind of CSR programs can help create and maintain organizational celebrity and Corporate Social Performance (CSP). Additionally, the thesis seeks to stimulate managerial thinking in how to maintain organizational celebrity while impacting the social, economic, and environmental bottom line. In doing so, it provides managers with new ways to differentiate the organization and maximize the value for the business as well as for society. This can lead to higher stakeholder satisfaction, improved competitive position, and environmental benefits. Thus, the study increases manager’s understanding of organizational celebrity and reduces pressure from stakeholders.

In closing the research gap and making valuable contributions to practice and literature, this study aims to answer the following research question:

What is the effect of organizational celebrity on Corporate Social Responsibility?

The structure of the thesis is as followed. Firstly, a brief overview is given of the current knowledge on both constructs. This section will be continued by elaborating on the effect of organizational celebrity on CSR. The methodology section will explain the sample, the variables, and how the research is conducted. This is followed by an overview of the results

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and the consequent implications. Lastly, the thesis is concluded with a discussion, limitations, and suggestions for future research.

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2. Theoretical framework

In this chapter the concepts of organizational celebrity and CSR are explained, as well as their relationship with each other.

2.1. Organizational celebrity

In the following paragraphs the concept of organizational celebrity will be explained, as well as the firm-level analysis of this thesis is justified. Additionally, we will discuss organizational celebrity as an intangible asset, along with the creation and maintenance of organizational celebrity.

Although the concept of celebrity plays an important role in society, the literature on celebrity is underexamined and fragmented among numerous bodies of literature, disciplines, and levels of analysis (Gamson, 2015). The concept of celebrity resides in humanities and social science disciplines. The theoretical foundation lies in the sociology of the media (Gamson, 1992). In this thesis, celebrity is defined according to two characteristics. First of all, celebrity is derived from the level of public attention the subject receives. The second characteristic is concerned with the emotional response the subject elicits from the audience. The response is evaluated positively if the subject succeeds to fulfil the behavioral needs of the audience (Rindova et al., 2006). Therefore, celebrity is defined by Rindova et al. (2006: 51) as: “Celebrity firms are

those firms that attract a high level of public attention and generate positive emotional responses from stakeholder audiences.”. The definition of Rindova et al. (2006) adopts a

firm-level analysis with regard to celebrity. The literature distinguishes between individual and organizational celebrity (Hayward, Rindova, & Pollock 2004). Research is more developed towards celebrity at the individual level of analysis in comparison to the organizational level of analysis. The level of individual celebrity is dependent on the extent the celebrity-status is manipulated by the media and if the individual possesses a real ability or achievement (Rindova et al., 2006). Therefore, the sustainability of the economic value of the celebrity is dependent on the media and quality of achievement. From an organizational lens, individual celebrity is derived from the attribution of the firm’s performance to the CEO. Whereas organizational celebrity is created through the collective outcomes of the organization. Therefore, organizational celebrity can become an intangible asset, as it is tied to a company (Barney, 1991). Whereas individual celebrity can be transferred to another company. Therefore, the firm is chosen as the level of analysis, as the interest is to research the strategic actions a company

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undertakes as a result of celebrity. Instead of the individuality of decisions and actions which are transferrable to another company.

Apart that the theoretical background of celebrity resides in the sociology of the media, it is a social evaluation construct. It can be compared to other social evaluation constructs such as reputation, status, legitimacy and organizational stigma in that they all have the opportunity to become an intangible asset for an organization. Celebrity differs from these other social evaluation constructs in terms of its definition, theoretical foundation, underlying social basis, the requirements of affective response and its consequent outcomes (Devers et al., 2009). Reputation and its effects have received a high level of attention in the literature relative to other social evaluation constructs (Lange, Lee, & Dai, 2011). As research often defines reputation as the most valuable competitive advantage a firm can have (Deephouse, 2000; Siltaoja, 2006). Reputation of an organization is a favorable generalized understanding in the mind of the public to what it is known for. The construct of reputation emphasizes the relation between the corporation and its stakeholders, as reputation has the ability to influence the stakeholders’ perception of the organization (Deephouse, 2000; Robert & Dowling, 2002). Therefore, reputation can be described in terms of meeting stakeholder expectations (Lange et al., 2011). Companies continuously seek ways to satisfy these demands and reap the benefits of reputation as an intangible asset. Although the concept of celebrity and its effects constitutes research voids in comparison to reputation, celebrity also has the possibility to be of value as an intangible asset. To illustrate, research on the previous mentioned social evaluation constructs assumes that the firm is already noticed by the public, as it is more focused towards the firm’s behavior and performance. Consequently, the literature does not address the way a firm attracts attention. Whereas celebrity specifically focuses on this preliminary stage. Additionally, the construct of celebrity addresses positive emotional responses from stakeholders. This affects the cognitive emotional response, which can result in favorable perceptions of the firm. Therefore, organizational celebrity has the possibility to become distinctive in its value as an intangible asset (Rindova et al., 2006). Intangible assets range from trademarks, intellectual property, know-how, networks, organizational culture, and reputation. There are four sources of intangible assets which can be classified into a functional differential, positional differential, cultural differential, and regulatory differential. Celebrity can be classified as a positional differential, as it is a result of past actions (Hall, 1992). A positional differential is created when a firm has positioned itself distinctively through its actions. From a Resource Based View (RBV) a resource can become a strategic resource when it has the

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ability to be valuable, rare, inimitable, and non-substitutable (Deephouse, 2000). An organizational capital resource is a strategic resource which can be strategically valuable as it can enhance the efficiency and effectiveness of a strategy (Barney, 1991). Additionally, strategic resources can lead to a sustainable competitive advantage (Barney, 1991; Hall, 1992). The literature is more developed towards reputation as an intangible asset and the effect of it on firm performance (Barney, 1991; Roberts & Dowling, 2002). However, organizational celebrity, as an intangible asset and a strategic resource, can also result in numerous benefits for the firm (Devers et al., 2009; Pfarrer et al., 2010; Rindova et al., 2006), which will be discussed later in more depth.

2.2 Characteristics of celebrity

There are several dimensions which contribute to the celebrity-status of a firm. The following paragraphs will discuss these in-depth.

2.2.1 Public attention

There are multiple characteristics which contribute to the creation and maintenance of organizational celebrity. First of all, the first part of the definition in concerned with the level of public attention the subject receives, which is influenced by the media. Rindova et al. (2006) argue that organizational celebrity is created through the dramatization of events by the media. Dramatic narratives are the exaggeration of the accomplishments of firms with a distinctive identity. Journalists enhance their own careers through this process as the dramatic narrative increases the impact of their story about an industry change. The media plays a central role in the creation of celebrity firms as they manage the content of the information communicated to a firm’s stakeholders about the culture, identity and leadership of the firm. The dramatized elements stimulate the public’s interest, identification, and engagement with these firms. It shapes the perception of the stakeholders of a particular firm. As a result of the heightened attention, celebrity organizations become more visible which can result in an increase in the awareness of the stakeholders about a firm’s actions and the consequent effects.

2.2.2 Impression management

Additionally, the way a firm positions itself towards the media also contributes to their celebrity-status (Rindova et al., 2006). Management can play an active role in the construction of organizational celebrity. As mentioned before, the firm benefits from the celebrity-status. Therefore, managers fuel the media with information in order to maintain this status. However,

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managers want to control the information that flows to the media as they must preserve a positive emotional response from its stakeholders. This is achieved through impression management efforts. Public relation experts provide the media with visual and written pieces which are ready for publishing. As a result, time and money is saved for journalists (Rindova et al., 2006). Especially firms with nonconforming actions are engaged in these efforts as they are more likely to face stakeholder criticism. By partly controlling the information used by the media, they can, to some extent, influence the perception of the public. Additionally, the impression management efforts provide journalists with greater access to information, and as a consequence the media can dramatize events more easily (Rindova et al., 2006). The proactivity of a firm to dramatize their own actions influences the level of coverage by the media, and therefore influences the level of public attention. As a result, firms themselves contribute to their degree of visibility.

2.2.3 Deviant behavior

The second part of the definition of celebrity is concerned with the positive emotional response from a firm’s stakeholders. Celebrity is gained when the nonconforming actions of the organization are positively evaluated. A positive emotional response is elicited if the behavioral needs of the audience are fulfilled. According to Rindova et al. (2006) firms contribute to their own celebrity by underconforming or overconforming actions. For example, overconforming actions can include policies towards the enhancement of communities, or innovations benefiting the environment, which go beyond stakeholders’ expectations. The literature also refers to this as being deviant. Deviance used to have a negative connotation, referring to disapproved behavior and actions violating socially accepted norms and values. However, the literature on deviance recognizes that positive deviance is also possible (Spreitzer & Sonenshein, 2004). From an objectivist perspective positive deviance refers to behaviors that overconform the normative expectations. Whereas a subjectivist perspective defines positive deviance as behaviors that are positively evaluated by an audience (Heckerts & Heckerts, 2002). There are multiple types of deviance which influence the perception of an audience. First of all, negative deviance is under-conformance resulting in a negative evaluation. Second, rate-busting is over-conformity which is negatively evaluated. A third outcome is deviance admiration. Deviance admiration occurs when nonconformity is positively evaluated. The behavior is seen as unacceptable, yet the collective response is positive. The last situation refers to positive deviance, where overconforming actions are positively evaluated (Heckerts & Heckerts, 2002). If the deviance of the firm is positively evaluated by the public, celebrity is

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gained. The action is evaluated positive if the stakeholders are supportive of the action. The four situations illustrate that companies do not only gain celebrity by overconforming actions. In addition, under-conformance can also result in stakeholder support. Thus, when deviant behavior is positively evaluated, celebrity can be gained as these companies are more likely to be dramatized by the media.

Furthermore, like other intangible assets, celebrity is not static, but changes over time. Organizational celebrity is a dynamic construct which simultaneously changes with an organization’s strategy (Rindova et al., 2006). Firms can choose to conform to industry standards by adjusting their nonconforming behavior, which reduces their celebrity-status. Where the reverse also upholds (Rindova et al., 2006), as companies must regularly create news-worthy events in order for journalists to dramatize their actions. Besides changes in strategic decisions of companies, the context of the firm also develops. Stakeholders expectations and demands shift as the company’s context of reference changes. Therefore, it is crucial for companies to evaluate which are their stakeholders and the relationships between them (Russo & Perrini, 2010). Thus, developments in the strategic behavior or environment influences the degree of nonconformity. This illustrates that organizational celebrity and nonconformity have a reciprocal relationship. The dynamic dimension can overlay with the matrix of Heckerts & Heckerts (2002). For example, a firm has engaged in nonconforming behavior. As a consequence, it has gained a celebrity-status and benefited from it through increased access to resources and strengthened competitive capabilities. Once the firm becomes less dependent on stakeholder attention, it can choose to reduce the nonconformity of its actions. In this way, the firm can increase its legitimacy and appeal to a broader market by changing its strategic behavior (Rindova et al., 2006). Therefore, changes in the strategic behavior or environment of the firm causes fluctuations in a firm’s celebrity. Organizational celebrity can be maintained through continuous engagement in deviant behavior, while being confident that this behavior is perceived positively by its stakeholders.

In sum, the literature is in congruence that organizational celebrity stems from the dramatic narratives of the media. The firm can influence their celebrity-status through nonconforming actions and impression management efforts. While the media dramatizes firm’s actions in order to explain change and uncertainty in an industry. When large-scale public attention is created together with a positive emotional response, a firm gains a celebrity-status. Furthermore, organizational celebrity is a dynamic component, which forces firms to continuously engage in

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deviant behavior while they must ensure that this behavior is positively evaluated by its stakeholders.

2.3 Corporate Social Responsibility

In the following paragraphs the concept of CSR will be explained, together with its structural and social drivers. Furthermore, the effects of CSR on firm performance will be discussed. Nowadays firms are held accountable for the impact of their actions on society and are expected to address social issues. As a consequence, the concept of CSR has emerged in the strategic management literature over the past few decades (Aguinis & Glavas, 2012; Margolis & Walsh, 2003; McWilliams & Siegel, 2001). CSR focuses on the policies and actions of firms that have positive social, economic, and environmental outcomes. There is a rich literature regarding CSR. However, the concept is highly fragmented because CSR is often studied through different disciplinary lenses, such as marketing, human resource management (HRM), psychology, and organizational behavior. As well as through multiple levels of analysis, varying from the individual, organizational and institutional level. Moreover, it is studied from multiple theoretical backgrounds, such as RBV, institutional, organizational justice, and social influence theories (Aguinis & Glavas, 2012). Additionally, stakeholder groups have different objectives and have different expectations from a firm’s CSR policies. Therefore, multiple competing definitions exist. In this thesis we adopt the definition of the European Commission (2011), who define CSR as: “The responsibility of enterprises for their impacts on society.

Enterprises should have a process in place to integrate social, environmental, ethical human rights and consumer concerns into their business operations and core strategy in close cooperation with their stakeholders.”. The definition illustrates that CSR adopts a stakeholder

approach and can contain different activities, which will be discussed in more depth later in this chapter. The following paragraphs address the structural and social drivers of CSR, as well as the effects of CSR.

There are several structural drivers which influence CSR participation. McWilliams & Siegel (2001) have researched the factors that influence the level and intensity of CSR activity. The research concludes that the level of research & development (R&D) spending, advertisement, consumer income, government regulations, tightness of the labor market conditions, and the stage of the industry life cycle influences CSR intensity. In the light of this research, R&D spending and advertisement are discussed. R&D spending is a structural driver of CSR, as it stimulates product differentiation. This leads to CSR-related product and process innovations.

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For example, product innovations are related to socially responsible attributes, whereas process innovations are concerned with the socially responsible production of the good (McWilliams & Siegel, 2001). Another structural driver of CSR found by McWilliams & Siegel (2001) is advertisement. The authors argue that advertising plays an important role in raising awareness for products with CSR attributes. Because not all the characteristics of the product are evident to the customer at first sight. Besides structural factors, social drivers also have the ability to influence CSR activity. As illustrated earlier, reputation has a more extensive body of research in comparison to other social evaluation constructs, this also accounts for reputation in relation to CSR. The majority of research argues that there is a positive relation between CSR and corporate reputation (Brammer & Pavelin, 2006; Fombrun & Shanley, 1990; Lin-Hi & Blumberg, 2016). It has even been argued that positive reputational effects are one of the key drivers for an organization’s engagement in CSR (Mzembe, Lindgreen, Maon, & Vanhamme, 2016). As companies strengthen their reputation, and meet stakeholder demands, through CSR initiatives (Fombrun, 2005; Siltaoja, 2006). Thus, corporate reputations are partly build by engaging in social, economic, and environmental issues. The latter shows that CSR is a way to satisfy stakeholder demands. However, the literature has not researched the potential consequences of other social evaluation constructs, such as celebrity, on CSR.

Besides structural and social drivers, it seems that companies are motivated for CSR by other reasons. CSR does not only benefit stakeholders on social, economic, and environmental grounds, but CSR is also beneficial for companies. Recent research has moved beyond the CSR benefits for society, and argues that corporate financial performance (CFP) improves (Fombrun & Shanley, 1990; Margolis & Walsh, 2003; Roberts & Dowling, 2002), and it can lead to a competitive advantage (Porter & Kramer, 2006). There are several meta-studies which indicate that the literature is in overall congruence that CSR has a positive effect on CFP (Beurden & Gössling, 2008; Margolis & Walsh, 2003; Orlitzky et al., 2003). Porter & Kramer (2006) argue that CSR activities should not be seen as a cost or constraint, as it can be an opportunity. Nowadays, companies engage in voluntary CSR. Which implies that companies do not engage in CSR in response to a scandal or public pressure anymore, but are awakened to their responsibilities to society. They go beyond avoiding the bad, and live by doing good (Lin-Hi & Blumberg, 2016). However, CSR strategies are frequently fragmented from the firm’s core strategy, relating to philanthropy or operational improvements (Rangan et al., 2015). These CSR activities are often responsive. On the other hand, companies can engage in strategic CSR, which can result in a competitive advantage. Strategic CSR is creating a unique social agenda,

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relating to the firm’s core strategy, which has a distinctive impact on society and business. It has the opportunity to unlock shared value (Porter & Kramer, 2011). Shared value is the enhancement of the competitiveness of firms, while advancing communities. An example of integrating CSR into a firm’s daily operations is by creating new sustainable business models. CSR initiatives within this range have proven to reduce the highest amount of costs and have the highest increase in revenues (Rangan et al., 2015). Thus, when a firm integrates CSR activities into their core strategy, this can lead to a competitive advantage. However, by emphasizing the positive relationship between CSR and CFP, the shareholder perspective seems to become dominant again. Because the positive link legitimizes CSR activities in relation to maximizing shareholder value. To illustrate, reputational benefits and legitimization of the license to operate are primary motivations which strengthen the organization’s competitive position (Porter & Kramer, 2011). Therefore, it seems that companies engage in CSR mainly for self-enhancement instead of maximizing social welfare. However, the economic benefits of CSR for the firm must not be the primary motivation to engage in CSR. The focus of companies must lie with solving social, economic, and environmental problems. In contrast to improving its own performance through CSR (Margolis & Walsh, 2003). 2.4 The effect of organizational celebrity on Corporate Social Responsibility

As illustrated earlier, organizational celebrity has the ability to be distinctive in its value as an intangible asset. There are several beneficial outcomes for the firm. First of all, celebrity provides the organization with access to resources and strategic opportunities which otherwise would have been limited (Devers et al., 2009; Pfarrer et al., 2010). Celebrity can contribute to the access of capital resources, attraction of talented employees, and production inputs. As well as celebrity contributes to the ability to create alliances and partnerships (Rindova et al., 2006). Secondly, high-level celebrity firms are more prone to announce positive earnings surprises than organizations without celebrity (Pfarrer et al., 2010). It can even be argued that these opportunities contribute to the firm’s competitive advantage (Rindova & Fombrun, 1999), and might even lead to a sustainable competitive advantage (Hall, 1992). Therefore, organizational celebrity can have strategic and economic value for the organization. Celebrity can differ in the extent and the value it generates as an intangible asset, because it is a function of the level of public attention and emotional reaction it produces (Rindova et al., 2006). Thus, companies are ambitious to create and maintain their celebrity-status as it results in numerous benefits. However, there are challenges attached to the creation and maintenance of organizational

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celebrity. The challenges will be discussed in the following paragraphs, as well as how these can be addressed.

First of all, organizational celebrity is created through high levels of public attention which are encouraged by the media. As a consequence of the heightened attention, organizations become more visible. The more visible firms are more affected by stakeholder pressures in comparison to the less visible firms (Udayasankar, 2008). The economics literature argues that information asymmetries exist between the corporation and its stakeholders. When corporate visibility increases, information asymmetries decreases between the two actors. Consequently, stakeholders are more likely to take actions in the form of implicit regulations (Brammer & Millington, 2006). Furthermore, the media can pressure organizations as they have the ability to set the public agenda. The media can influence the perception of the audience and therefore holds power over organizations (Deephouse, 2000). Additionally, according to the management literature, the awareness of stakeholders of the effects of an organization’s decisions and actions is increased through visibility. Actors are more prone to take interest in organizations which affect them (Meznar & Nigh, 1995). Chiu & Sharfman (2011) have found evidence that a firm’s visibility to its stakeholders has a greater impact on management decisions about CSP rather than economic performance. Therefore, visibility increases pressures from stakeholders to meet their social, economic, and environmental standards. Furthermore, researchers argue that visible companies in industries with visible issues, such as high emissions, are even more sensitive to social and political stakeholders (Brammer & Millington, 2006). Thus, because of the high amounts of public attention celebrity firms receive, firms face higher pressures from stakeholders to meet expectations than firms who do not enjoy a celebrity-status (Brammer & Miller; Gamson, 2015; Meznar & Nigh, 1995; Porter & Kramer, 2011). In addition, organizations want to satisfy their stakeholders as they affect the firm’s performance (Freeman, 1984).

In order to cope with the pressures from stakeholders as a result of the increased visibility, companies engage in CSR, as stakeholders are integrated into the concept of CSR. Nowadays most scholars and practitioners of CSR embrace the stakeholder approach (Aguinis & Glavas, 2012; Orlitzky et al., 2003; Porter & Kramer, 2006). However, multiple views on CSR exist. One might argue that CSR is the future of businesses, while others view it as a deviation from business purposes. Neoclassical theorists, such as Friedman (1970), adopt a shareholder perspective and argue that resources must be used to maximize shareholder value. CSR activities deviate from this purpose and are therefore seen as theft. CSR incurs costs which

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otherwise would have been avoided. It forms an agency problem as managers can use resources to progress their own ambitions and career. Furthermore, he argues that social concerns are not the responsibility of businesses. It is therefore argued that CSR has a negative effect on financial performance. On the other hand, there are theorists who believe that the purpose of a corporation goes beyond maximizing shareholder value. Freeman (1984) adopts a stakeholder view, and argues that firms should consider the objectives of multiple stakeholders such as employees, customers, suppliers, the environment, and community. Because these groups affect and are affected by a firm’s actions. It forces businesses to think about their responsibilities to society. According to this view, CSR has a positive effect on a firm’s financial performance (Waddock & Graves, 1997). This approach has been embraced by multiple scholars (Aguinis & Glavas, 2012; Orlitzky et al., 2003), and evidence shows that businesses adopt a positive view towards CSR and integrate it into their policies and actions (Porter & Kramer, 2006). This is further illustrated as stakeholders are integrated in the adopted definition of CSR (European Commission, 2011). Therefore, stakeholders’ expectations and demands are taken into consideration when creating a CSR strategy. However, it must be taken into consideration that the stakeholder view is dynamic as the context of the business changes, as well as stakeholder’s expectations change (Russo & Perrini, 2010).

Accordingly, celebrity firms are increasingly visible to its stakeholders as a result of the public attention generated by the media. In order to manage the pressures from stakeholders, organizations adopt CSR activities. CSR is a tool which addresses multiple stakeholder objectives, in order to create social, economic, and environmental benefits, while visibly demonstrating the firm’s responsiveness.

Secondly, organizational celebrity is created through nonconforming behaviour which elicits a positive emotional response from the audience (Rindova et al., 2006). The actions of firms are classified as nonconforming when they do not comply with industry standards. Additionally, celebrity has a dynamic component, as changes in the strategic behavior or environment of the firm results in fluctuations in a firm’s celebrity. As a result, companies must continuously engage in deviant and news-worthy actions, while the benefits of novel actions can only be realized to the degree that these actions are accepted and appreciated by the audience. In order to be progressive compared to the industry norm, companies have to be innovative. Innovation can be classified as deviant, as innovation is a behavioural pattern in which cultural goals are accepted, but the means to achieve them are rejected (Mohr, 1969). In other words, innovation is finding nonconforming ways to achieve goals. Furthermore, Mohr (1969) argues that

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innovation is often a search for prestige rather than the search for organizational effectiveness or efficiency. Accordingly, it can be interpreted that innovation can be used to achieve a prestige status, such as a celebrity-status.

In order to manage the dynamic component while engaging in nonconforming behavior and elicit a positive emotional response, firms engage in CSR. As the following paragraph will illustrate, CSR can be classified as deviant, while being positively evaluated, as it embraces a stakeholder approach. There is a wide range of possible CSR activities, which can be classified into three types. A first possibility is philanthropy. It includes donating money to civic organizations, engaging in initiatives within the community, and employee volunteering. Philanthropy differs from other CSR activities because it has an external aspect, it is not bound to the internal operations of the firm. The drivers of philanthropy have been researched by Brammer & Millington (2006). The study found that visibility, size and industry have a significant effect on the donation level of corporations. However, as the following will illustrate, CSR contains a wider range of activities than the donation of money. The second type of CSR relates to improving operational effectiveness. It seeks to improve the current business model in order to advance the efficiency and effectiveness in the value chain which delivers social and environmental benefits. Examples include reducing packaging, waste, and emissions. As well as improving the conditions for employees through programs which address health care and education. The third form of CSR transforms the business model. The current business model is questioned, and alternative ways of doing business are explored. Executives must act entrepreneurially in order to develop new ways to meet customer needs (Nidumolu, Prahalad, & Rangaswami, 2009). A new form of a business model comes into existence which specifically focuses on social, economic, and environmental issues (Rangan et al., 2015). As the last two classifications illustrate, CSR is related to improvements or transformations. These can also be classified as incremental and radical innovations. CSR is seen as a key driver of innovation (Nidumolu et al., 2009), and generates innovative practices (Vilanova, Lozano, & Arenas, 2009). Besides that CSR is identified as a driver of innovation, certain CSR initiatives can also directly be labelled as positive deviance (Spreitzer & Sonenshein, 2004). For example, a CSR program which is not aligned with the organizational or industrial practice, but is positively evaluated. It can be a progressive program which again, involves innovative ways to benefit society. Apart from CSR having financial benefits, strategic CSR is also a main determinant for innovation, as it especially stimulates process and product innovations. Strategic CSR has the ability to create a virtuous cycle between a firm’s growth strategy and

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CSR, which allows for innovative activities to develop (Bocquet, Le Bas, Mothe, Poussing, 2013).

Hence, the above paragraph illustrates the innovative aspect of CSR. CSR programs can improve and transform current models, which are nonconforming as they set new industry standards. In addition, as discussed earlier, CSR embraces the stakeholder approach which integrates multiple objectives. Therefore, CSR is positively evaluated by the audience. In this manner, CSR is a tool to simultaneously achieve positive emotional responses from stakeholders, while being deviant, and maintain organizational celebrity as an intangible asset. Thirdly, impression management efforts contribute to the creation and maintenance of organizational celebrity. As discussed before, impression management is the control of content flowing to the media by fuelling the media with self-provided information (Rindova et al., 2006). Impression management efforts are particularly employed by firms with nonconforming actions, as they are more likely to face stakeholder criticism. By influencing the information used by the media, managers can influence the perception of the public. It can be a challenge for managers to provide the media with the appropriate content. Through CSR engagement, managers have control over the content flowing to the media. Additionally, it is likely that CSR practices such as the improvement of operational efficiency and effectiveness and the transformation of business models, are covered by the media as the innovation has the ability to set new industry standards. Therefore, CSR represents a story of industry change, which can be used by journalists for dramatic narratives, while it is positively evaluated by the public. Thus, CSR is used for impression management efforts as it strengthens the creation and maintenance of organizational celebrity.

In sum, in order to contribute to the creation and manage the challenges resulting from organizational celebrity, celebrity firms employ CSR initiatives. Therefore, the following hypothesis is formulated:

H1: Organizational celebrity positively influences CSR performance.

In the previous paragraphs it is argued that in order to cope with the demands of organizational celebrity, firms engage in CSR. These demands can be satisfied more easily when a firm possesses slack resources. Slack resources are defined by Cyert & March (1963: 42) as: “The

difference between total resources and total necessary payments.”. The definition illustrates

that slack resources are uncommitted resources which can vary from raw materials, labour, and excess cash (Seifert, Morris, & Bartkus, 2004). They can be redeployed for the achievement of

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organizational goals. Slack resources can be redirected towards projects where the outcome is less certain, which can create an environment for innovation (George, 2005).

First of all, slack resources influence the degree to which stakeholder demands can be met. In this thesis, it is established that firms with a high visibility face more pressure from stakeholders than firms who are less visible. Companies with slack resources are less likely to face pressures from creditors, and as a result can devote finances and time in meeting the expectations of stakeholders (Brammer & Millington, 2006). Therefore, stakeholder objectives can be more easily met than firms who have fewer slack resources. Secondly, slack resources advance the engagement in nonconforming behaviour. Slack resources stimulate companies to engage in innovative behaviour (Damanpour, 1991; George, 2005). Because non-financial resources, such as labour, and financial resources can be dedicated to R&D. Consequently, firms can implement actions with a greater degree of deviance and with a higher frequency. As a result, slack resources are a tool to manage the dynamic component of organizational celebrity, as deviant behaviour can be applied more often. In this manner, the degree of non-conformance has the ability to stay constant. Third of all, slack resources advance impression management efforts. Financial resources can be invested in advertisement, which increases the effect of impression management efforts. Additionally, labour can be devoted to impression efforts, as the firm can commit talent to marketing plans and public relation experts (Rindova et al., 2006). Hence, additional financial resources and time support managers to shape the perception of the public. In sum, the relationship between organizational celebrity and CSR performance is influenced by the degree of slack resources. This results in the following hypothesis formulation:

H2: Slack resources moderate the relationship between organizational celebrity and CSR performance, such that slack resources will strengthen the relationship between organizational celebrity and CSR performance.

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HH1 Figure 1. Conceptual Model

H2

H1

3. Methods

In the following section the methods of this study are discussed. Quantitative research is chosen as research design, because it serves the objectives of the thesis. Database research is selected to examine the potential effect of organizational celebrity on CSR. The first section will describe the sample. Followed by an explanation of the measures and data collection.

3.1 Sample

The sample is derived from the Fortune 500 index of 2012 of U.S. based firms. The Fortune 500 is an annual index based on a firm’s yearly revenues. The sample includes private companies and cooperatives. The data is collected through Thomson Reuters and S&P Global Market Intelligence. The sample of 2012 represents the firms with the highest revenues in the U.S.. The sample is based on the Fortune 500 as most firms in this list receive high amounts of public attention, as well as information on their CSR is available. Also, the U.S. Fortune 500 provides the study with the ability to generate a sample of at least 120 companies. Additionally, the U.S. Fortune 500 is chosen as the sample, as opposed to the global Fortune 500, in order to eliminate the potential effect of country differences. Differences exist regarding corporate governance between U.S. companies and European companies. In addition, American and European investors pay different amounts of attention to long-term social and environmental issues (Aguilera, Williams, Conley, & Rupp, 2006). Therefore, the study is limited to U.S. companies. Furthermore, a cross-sectional study was chosen as the purpose of the study is to research the effect of organizational celebrity on CSR. Data of the year of 2012 is collected on

Organizational celebrity Corporate Social Responsibility

performance Slack resources

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the firm’s celebrity, while data from the year 2013 is collected on CSR. This time-frame is chosen as the majority of available Kinder, Lydenberg, Domini & Co (KLD) information was up and till the year 2013. A weakness of this type of study is that we will not be able to assess the effect of organizational celebrity over a longer period of time. Further selection of the sample was based on the following criteria. First of all, a company’s KLD data must be available for the year 2013. Secondly, further information about a company’s industry, assets, and profits can be found of the year 2012. This selection criteria generated a sample of 132 U.S. companies.

3.2. Measures and Data collection

In the following section the measures of the study are discussed. The dependent, independent, moderator, and control variables are explained. In addition, the measurements of the variables are justified.

3.2.1 Dependent variable

The dependent variable, CSR, is measured through the KLD index of the year 2013. The year 2013 is chosen as the effect of a firm’s organizational celebrity can be measured. Additionally, the MSCI database provided the broadest information up and till the year 2013. The KLD index provides data on the social performance of firms, which can be used to research the CSR activities of firms. KLD can be used to study firms who comply with CSR standards (Graves & Waddock, 1994; McWilliams & Siegel, 2001). The index includes eight components which give an indication about the social performance of a firm. The factors are related to community impact, diversity, employee relationships, environmental impact, product safety, and treatment of minorities (Graves & Waddock, 1994). The KLD database offers several advantages. First of all, it uses several attributes to indicate social performance. Secondly, the ratings are consistent and replicable as the ratings are performed by one group. Thirdly, KLD includes all Standard & Poor’s 500 firms as it supplies information to the investment community. Lastly, the ratings are performed by individuals who are independent and are not associated with the referred to companies, which increases the objectivity of the index (Graves & Waddock, 1994). However, the KLD index has its limitations. Firstly, all attributes are given an equal weight, while one might find one attribute more important than another. However, this is subjective per individual. Secondly, it is advised to include primary data in order to stimulate creative thinking (Harrison & Freeman, 1999). The KLD data of the sample is collected through the MSCI database. The collection of data includes the company’s strengths and concerns on the

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following components: community, corporate governance, diversity, employee relations, environment, human rights, and products. The total score of a company is calculated through the subtraction of the number of concerns from the number of strengths for each component, where the total score is the enumeration of each component.

3.2.2 Independent variable

In order to measure organizational celebrity, this thesis adopts the method of Pfarrer et al. (2010). They define organizational celebrity through visibility and positive connotation. First of all, the level of public attention is measured through the incidence of news coverage of the firm (Brammer & Millington, 2006; Brammer & Pavelin, 2006; Meznar & Nigh, 1995; Pfarrer et al., 2010). We counted the number of articles published about a firm in the year 2012 in Forbes. Forbes is chosen as media source, because it is a well-known American magazine pertaining to business and finance. It covers news on industry changes and is therefore likely to use dramatic narratives including celebrity firms. The articles are obtained through Factiva, which is a database provided by the Dow Jones and Reuters, and covers content from over 8000 global sources (Brammer & Millington, 2006). Twenty-nine companies of the sample received media visibility during the year 2012, with an average of 1.75 hits.

Second of all, in order to measure the positive emotional response, the paper of Pfarrer et al. (2010) analyzed the degree of positive and negative language in each article. They employed the Linguistic Inquiry Word Count (LICW) program. LICW is a tool to analyze the affective content, as it is able to identify emotion in the language (Tausczik & Pennebaker, 2010). A ratio is created to measure each article’s positive affective content in comparison to its total affective content. This is done because an article may have both positive and negative emotional content, where the ratio will provide a more balanced perspective. An article is coded positive, if the positive content was at least 60 percent of the total content. An article is coded negative, if the negative content was at least 60 percent of the total content. In between is coded as neutral. If a firm received media visibility and had a positive affective content, it was considered a celebrity company. This approach generated twenty celebrity companies. A dummy variable is created, 1 being a celebrity company and 0 not being a celebrity company.

3.2.3 Moderator

In order to measure the moderator, slack resources, we use the debt-to-equity ratio and the current ratio. The meta-analysis of Daniel, Lohrke, Fornaciari, & Turner (2004) indicates that

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these two ratios are the most common measurements used for measuring slack resources. The current ratio measures the current assets in relation to the current liabilities and represents the liquidity of a firm (Ahuja, 2000). Whereas the debt-to-equity ratio represents a lack of potential slack (Bourgeois, 1981; George, 2005). A lack of potential slack, also called low-discretion slack, indicates less flexibility for managers in the allocation of resources. Information is extracted from the Compustat database.

3.2.4 Control variables

The study makes use of several control variables in order to shape more robust results. The first variable for which the study will control is industry. Evidence is found that CSR participation and disclosure differs per industry (Maloni & Brown, 2006; Wanderley, Lucian, Farache, & de Sousa Filho, 2008). Additionally, studies treating CSR as the dependent variable control for industry sectors (Beurden & Gössling, 2008; Waddock & Graves, 1997). Industry is controlled for because of the following reasoning. Different industry environments face different pressures from institutions and other stakeholders to conform to social standards (Brammer & Pavelin, 2006). Therefore, the type of industry has the ability to influence the relation between organizational celebrity and CSR as some industries face higher pressures from stakeholders to engage in CSR. These pressures arise because of firm’s activities having negative externalities which leads to increased attention to certain issues by the stakeholders. Consequently, companies respond to these issues through CSR activities (Rowley & Berman, 2000). Companies are expected to meet stakeholder demands because they are dependent upon their stakeholders for their access to resources and thus the continuance of the firm. Thus, industries which receive pressure from stakeholders to be involved in social, economic, and environmental issues, are more prone to allocate resources to CSR purposes. Therefore, the industry variable will be controlled for. In order to identify the industry, the first two digits of the Standard Industrial Classification (SIC) code are used to classify the firm into one of ten industries. The identified industries by SIC are: Agriculture, Forestry, Fishing; Mining; Construction; Manufacturing; Transportation & Public Utilities; Wholesale Trade; Retail trade; Finance, Insurance, Real Estate; Services; and Public Administration. This method is also adopted by Waddock & Graves (1997). The SIC-code can be found in Compustat.

The second variable which has the potential to influence the relationship between organizational celebrity and CSR, is firm size. The meta-analysis of Beurden & Gössling (2008) has shown that firm size is highly important as it has the potential to influence CSR, and has

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been taken into account in several studies. Therefore, firm size is included as a control variable as the following reasoning will illustrate. In comparison to small-to-medium sized enterprises (SMEs), multinational enterprises (MNEs) seem to be more prone to engage in CSR as they have a higher visibility and have a greater impact on society (Udayasankar, 2008). However, SMEs make up 99 percent of the active companies within the European Union, and are responsible for 67 percent of the total jobs and 59 percent of the total added value (Eurostat, 2011). Therefore, they have a high impact on society and should also be engaged with CSR (Jenkins, 2009). However, there are other factors than visibility influencing the effects of firm size. Additionally, SMEs face barriers other than resource constraints which influence their CSR participation. SMEs often do not recognize social responsibility issues, there is a lack of institutions for joint responsibility, and the personal characteristics of a business owner can restrain CSR participation (LePoutre & Heene, 2006). Therefore, SMEs face more barriers in comparison to MNEs when engaging in socially responsible behavior. Consequent, firm size is controlled for when investigating the relationship between organizational celebrity and CSR. This is done by adopting one of the most common methods for measuring firm size, which is the measurement of total assets, which can be found in Compustat (Brammer & Millington, 2006; Waddock & Graves, 1997). We applied the natural LOG of total assets.

Additionally, we will control for a firm’s age, profitability and riskiness, as this affects the structure of the firm and therefore the governance towards CSR. As mentioned, the study will control for a firm’s age. The age of a firm influences the chance of being recorded by rating agencies, as well as by stakeholders. Thus, older firms might face greater pressures to engage in CSR as they are more visible to the public (Barnea & Rubin, 2010). Furthermore, the age of the firm can indicate different evolving landscapes. Over time, they might become more or less resistant with respect to stakeholders and CSR. In order to measure a firm’s age, we adopt the method of Shumway (2001), where the numbers of years are count since the company’s Initial Public Offering (IPO). The information is extracted from CRSP. Additionally, firm profit is used as a control variable. Because firms with a higher profitability have more resources available which they can invest in CSR. We adopt the method of Graves & Waddock (1994) who use return-on-assets (ROA) as an indication of profitability. This information can be acquired through Compustat. Lastly, we will control for the riskiness of the firm. Risk averseness can indicate that a firm is less willing to engage in nonconforming behavior and respond to stakeholder demands through actions which comply with industry norms. Therefore,

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the riskiness of a firm is measured through the long-term debt to total assets ratio (Graves & Waddock, 1994; Waddock & Graves, 1997). The information is retrieved from Compustat.

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4. Results

4.1 Data cleaning check

In order to prepare the data for analysis in SPSS, several steps were taken to control for missing or incorrect data. In the following paragraph the dependent, independent, moderator, and control variables are discussed.

The dependent variable, CSR (N=132, M=4.78, SD=3.799), has no missing items and has passed the test of normality (W(132) =.989, p=.412), which is further supported by inspection of the histogram. The independent variable, celebrity (N=132, M=15, SD=.360), has no missing data and includes 20 celebrity companies. The moderator, slack resources, has been measured through 2 ratios. Information on the current ratio was missing from 22 companies due to missing information on current assets and current liabilities. Therefore, it was chosen to exclude the current ratio, for the purpose of measuring slack resources. Because the 22 missing items would affect the accuracy of standard errors and p-values. Debt-to-equity by itself is a good indicator of slack as it is used in the majority of the studies investigating slack resources (Daniel et al., 2004). Inspection of debt-to-equity (N=132, M=.686, SD= 4.16), showed several outliers as the minimum is .000 and the maximum is 47.405. Three items were deleted as they had unrealistic values. Additionally, debt-to-equity is converted to positive values as the higher the ratio, the less resources are available. Therefore, all values are subtracted from 2. This method was chosen as it is necessary for the moderator to be either continuous or dichotomous in order to be tested. The data did not fit a dichotomous classification of high slack resources and low slack resources, as the range lies between 0 and 1.08 which indicates that none of the companies are in an unhealthy financial situation. Therefore, it was chosen to subtract the values of 2 in order to convert the debt-to-equity ratio to a positive measurement. The variable did not pass the test of normality (W(129) .828, p= .000). After transformation the variable still did not pass the test of normality (W(129) .751, p= .000). Therefore, a distribution of N=129, M= 1.7566,

SD= .21026 is accepted as the minimum, after conversion, is .92 and the maximum is 2, which

complies with the debt-to-equity ratio standards as it often varies from 0 to 2. 4.1.1 Control variables

Data on the control variable industry (N=132, M= 5.65, SD = 1.985) is complete. Manufacturing (35.6%) represents the biggest industry, followed by Finance (16.7%), Retail Trade (14.4%),

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Transport (10.6%), Wholesale (9.8%), Mining (5.3%), Services (4.5%), Public Administration (2.3%), and Construction (0,8%).

The variable firm size (N=132, M=10.8, SD=1.42), includes all items as they passed the test of normality (W(132) .973, p= .10).

Firm age (N = 132, M = 33.06, SD = 15.774) did not pass the test of normality (W(132) .854, p=.000). Transformation of the variable did not remedy the abnormal distribution (W(132) .779, p= .000). However, firm age is not normally distributed as CRSP has not registered IPO dates before 1968 of the NYSE American trade market. As a result, the distribution is skewed to the left. However, it is decided to include all items, as the data is correct.

The control variable profitability (N=125, M=0.55, SD=0.057) has 7 missing items due to incomplete data on the net income of particular companies. The variable did not pass the test of normality (W(125) .952, p= .000). The transformation of profitability did not result in a higher normality (W(112) .778, p= .000). After inspection of the distribution of profitability, it is decided to include the outliers, as the data is correct and it is estimated that the analysis can manage the outliers.

The control variable risk (N = 132, M = .1934, SD = .1561) has no missing data, however the variable did not pass the normality test (W(132) .805, p= .000). After transformation risk did pass the test (W(128) .982, p= .092). However, 4 items were deleted as they have a risk of zero. Therefore, the transformation did not remedy the abnormal distribution. Furthermore, after inspection of the histogram several outliers are detachable, indicating a risk of almost 1. These items were removed from the data, because a high long-term debt-to-assets ratio can also indicate that a company has financial insecurities, instead of consciously taking risks. Therefore, 3 items were deleted having a risk of higher than 0.8. This resulted in a new distribution of risk (N = 129, M = .1770, SD = .1141). After the removal, the variable did not pass the test of normality (W(129) .944, p= .000). However, items between .48 and .52 are not unlikely and the histogram showed a normal distribution. Therefore, these items were included in the analysis.

4.2 Correlation

In the following paragraphs the correlations between the measurements are discussed. First of all, the correlation between the dependent and independent variable are discussed, followed by an analysis of the moderator and control variables. Correlations between variables indicate a

Can society benefit from the celebrity-status of firms? : the effect of organizational celebrity on Corporate Social Responsibility