Embedded Versus Peripheral Corporate Social … McWilliams & Siegel, 2000). The ... ization relies on the psychological foun-dations of CSR and allows us to reinter-pret literatures

Industrial and Organizational Psychology, 6 (2013), 314–332.Copyright © 2013 Society for Industrial and Organizational Psychology. 1754-9426/13

FOCAL ARTICLE

Embedded Versus Peripheral CorporateSocial Responsibility: PsychologicalFoundations

HERMAN AGUINISIndiana University

ANTE GLAVASUniversity of Notre Dame

AbstractWe propose a new conceptualization to make sense of the vast and diverse body of work regarding corporatesocial responsibility (CSR): (a) embedded CSR and (b) peripheral CSR. This distinction relies on psychologicalfoundations originating primarily in industrial–organizational psychology and related fields (i.e., organizationalbehavior, human resource management) and allows for a better understanding of when and why CSR is likely tolead to positive outcomes for employees, organizations, and society. Embedded CSR involves an organization’score competencies and integrates CSR within a firm’s strategy, routines, and operations, and therefore affects allemployees. In contrast, peripheral CSR focuses on activities that are not integrated into an organization’s strategy,routines, and operations (e.g., philanthropy, volunteering). We use our conceptualization to explain the successof CSR initiatives at GE, IBM, and Intel, and to reinterpret the scholarly CSR literature in the fields of marketing,corporate governance and legal studies, and economics. We also describe how our conceptualization can helpbridge the much lamented micro–macro and science–practice gaps and helps guide future CSR research as wellas organizational interventions.

Corporate social responsibility (CSR) isan issue that enjoys the attention ofboth researchers and practitioners. On theresearch side, there is a vast scholarly litera-ture mostly in macro organizational studiessuch as strategy and corporate governance(e.g., Doh, Howton, Howton, & Siegel,2010; McWilliams & Siegel, 2000). Thescholarly interest in CSR is also reflectedby journal editorials (e.g., Devinney, 2009)as well as journal special issues (e.g.,Morgeson, Aguinis, Waldman, & Siegel,in press; Orlitzky, Siegel, & Waldman,

Correspondence concerning this article should beaddressed to Herman Aguinis.E-mail: [email protected]

Address: Department of Management andEntrepreneurship, Kelley School of Business, Indi-ana University, 1309 E. 10th Street, Bloomington, IN47405-170

2011; Rupp, Wright, Aryee, & Luo, 2011).On the practitioner side, we conducted asearch on Google on January 6, 2013 using‘‘corporate social responsibility,’’ and itresulted in more than 124 million hits. Inaddition, reporting on CSR initiatives hasnow become common practice for virtuallyall major corporations around the worldand rankings are compiled and publishedon a regular basis (e.g., Global MostSustainable Companies, 2012). Moreover,initiatives such as the United NationsGlobal Compact (United Nations GlobalCompact, 2012), of which the Society forIndustrial and Organizational Psychology(SIOP) became a member in December2012 (Scott et al., 2013), suggest that CSRhas become an issue of interest to organi-zations worldwide. Accordingly, due to theinterest on the part of both researchers and

314

Embedded versus peripheral CSR 315

practitioners, addressing issues about CSRhas great potential in terms of bridging themuch-lamented science–practice gap inindustrial–organizational (I–O) psychologyand related fields (Cascio & Aguinis, 2008).

The scholarly literature on CSR hasbecome increasingly complex. Althoughseveral reviews are now available (e.g.,Aguinis & Glavas, 2012; Brammer,Hoejmose, & Millington, 2011; Elliot,2011; Enderle & Murphy, 2009; Peloza &Shang, 2011), the literature remains highlyfragmented. As noted by Waddock (2004),‘‘parallel and sometimes confusing uni-verses exist’’ (p. 5). In a recently publishedliterature review, Aguinis and Glavas (2012)concluded that these parallel universes existbecause researchers have approached CSRthrough different disciplinary and concep-tual frameworks as well as different levels ofanalysis. Accordingly, a fundamental ques-tion still remains unanswered: When andwhy does CSR lead to positive outcomesfor employees, organizations, and society?

In this article, we offer a new lensand conceptualization to make sense ofa vast body of CSR work generated byresearchers and practitioners: the catego-rization of CSR into (a) embedded CSRand (b) peripheral CSR. Our conceptual-ization relies on the psychological foun-dations of CSR and allows us to reinter-pret literatures generated using differenttheoretical frameworks, levels of analysis,and methodological approaches. In par-ticular, our proposed framework, whichrelies on theories originating primarily inI–O psychology, organizational behavior(OB), and human resource management(HRM), will serve as a guide to helpframe future research as well as interven-tions regarding CSR. To avoid confusionand given the different definitions available(Carroll, 1999; Peloza, 2009; Waddock,2004), we define CSR following Aguinis(2011) and others (e.g., Aguinis & Glavas,2012; Rupp, 2011; Rupp, Williams, &Aguilera, 2010) as ‘‘context-specific orga-nizational actions and policies that takeinto account stakeholders’ expectations andthe triple bottom line of economic, social,

and environmental performance’’ (Aguinis,2011, p. 855).

The remainder of our manuscript is orga-nized as follows. First, we provide a def-inition of embedded and peripheral CSR.Second, we describe the processes andmechanisms (i.e., psychological founda-tions) underlying CSR. Third, we describeexamples of three firms (i.e., GE, IBM, andIntel) that build on their core competen-cies to integrate CSR within their strategy,routines, and operations. Then, we draw ondiverse bodies of scholarly work in the fieldsof marketing, corporate governance andlegal studies, and economics to illustratehow using the embedded versus peripheralCSR conceptualization allows us to get aclearer view of when and why CSR leadsto positive outcomes. Finally, we discussimplications of our conceptualization forresearch and practice.

Embedded Versus Peripheral CSR

Embedded CSR relies on an organiza-tion’s core competencies and integrates CSRwithin a firm’s strategy, routines, and oper-ations. In contrast, peripheral CSR focuseson activities that are not integrated into anorganization’s strategy, routines, and oper-ations. Our categorization of embeddedversus peripheral CSR relies on the sustain-ability literature (Laszlo & Zhexembayeva,2011) but is different from other catego-rizations that focus on predictors of CSR(i.e., normative versus instrumental) or out-comes of CSR (e.g., substantive versus sym-bolic). Instrumental (i.e., cost-benefit based)and normative (i.e., value-based) motives(e.g., Garriga & Mele, 2004; Swanson,1995) can both be found in each cat-egory of embedded and peripheral. Forexample, consider the case of philanthropyand volunteering, which are examples ofperipheral CSR. These activities can bebased on normative (i.e., they are the rightthing to do) or instrumental (i.e., thereare financial benefits derived from them)motives. Our categorization is also differ-ent from substantive versus symbolic CSR(e.g., David, Bloom, & Hillman, 2007;

316 H. Aguinis and A. Glavas

Tenbrunsel, Wade-Benzoni, Messick, &Bazerman, 2000), which is based on thedegree of congruence between intentionsand actions. For example, Arya and Zhang(2009) provided an illustration of substan-tive CSR in South Africa where transferringof a large stake to Black investors by aWhite-owned corporation was perceived tobe genuine (i.e., substantive CSR); but, CSRwas not embedded because it was not con-nected to the daily operations and practicesof the firm.

For CSR to be embedded, it needs tobe part of the organization’s strategy andits daily routines and operations. Thereare many examples of firms that engagein CSR initiatives by integrating theminto their strategy or daily practices androutines, but not both. Accordingly, inall of these cases, CSR is peripheral andnot embedded. Consider the very popularissue of eco-efficiency, which involvesan organization’s effort to cut costs whilealso reducing its environmental impact.Although this is a noble initiative andmost eco-efficiency programs are partof daily routines (e.g., employees usemotion detectors to activate light switchesthroughout the building), they are notdirectly tied to an organization’s strategyand its core competencies. Similarly, CSRis peripheral and not embedded when suchinitiatives are related to strategic goals butnot part of a company’s daily operationsand routines. For example, Petco, throughthe Petco Foundation, has helped millionsof orphaned animals find homes (Petco,2012). This program fulfills a noble purposeby helping animals avoid being euthanizedand is also good for business because Petconow has millions of new customers it canserve with its products. Although the PetcoFoundation creates shared value for bothsociety and the business, it is an illustrationof a firm engaging in peripheral and notembedded CSR. The reason is that the workis coordinated by the Petco Foundation,which was founded by Petco but is separatefrom the corporation, and CSR is notintegrated into the daily practices androutines of the firm. Put simply, although

there are business benefits, the activity doesnot generate business revenue directly.

Our conceptualization of embeddedCSR opens up an opportunity for I–Opsychology to bridge the much-lamentedmicro–macro divide (Aguinis, Boyd, Pierce,& Short, 2011). Because CSR is tradition-ally viewed as a macro field that is closelyrelated to strategy (Lee, 2008), we can drawparallels with the propositions put forwardby Ployhart (2012a, 2012b) regarding bridg-ing strategy with fields that focus mainlyon micro issues (i.e., I–O psychology, OB,and HRM). Specifically, Ployhart (2012a,2012b) made a distinction between strat-egy and I–O psychology, explaining thatthe I–O psychology approach is to try tofind results that can be generalized acrossfirms and contexts (i.e., context generic).In contrast, in strategy, researchers usu-ally seek results that are context specificbecause firms strive for competitive advan-tage and avoid implementing anything thatis generalizable. Although subtle, this dif-ference has caused an important dividethat can be bridged through multilevel the-ory and methods (Aguinis, Gottfredson, &Culpepper, 2013). This distinction is espe-cially important for embedded and periph-eral CSR. Peripheral CSR is context genericand can be implemented by any organiza-tion. For example, setting up a corporatefoundation that focuses on helping thosein need can be done by many firms,as the Petco example mentioned earlier.However, embedded CSR is by its naturecontext-specific because the organizationneeds to build on its unique core compe-tencies to implement CSR. Therefore, if CSRis embedded, it offers the opportunity forI–O psychology to contribute to our under-standing of context-specific conditions andmechanisms of CSR.

Psychological Foundations ofEmbedded Versus Peripheral CSR

Scientific fields addressing macro-levelissues such as economics have initiallydeveloped without giving a prominent roleto their microfoundations, which are the


foundations of a field based on individ-ual actions and interactions (Foss, 2011;Mollick, 2012; Ployhart, 2012a). CSRresearch is rooted in several macro-levelfields of study including strategy and cor-porate governance. Accordingly, it is notsurprising that its main focus thus far hasbeen the institutional level (i.e., address-ing regulatory elements such as laws andstandards as well as normative and cultural-cognitive elements that are shaped by soci-ety, consumers, and stakeholders externalto the firm; Scott, 1995), whereas in thelast few decades it has somewhat shiftedattention to the organizational level of anal-ysis (Aguinis & Glavas, 2012). Accordingly,Aguinis and Glavas (2012) concluded thatthe most important knowledge gaps theyidentified in their literature review of CSRrelate to the need to expand our understand-ing of individual-level issues because, as isthe case with all types of organizationalinitiatives, it is individuals who actuallystrategize, make decisions, and are respon-sible for their execution (Aguinis, 2011).

Our conceptualization of embeddedand peripheral CSR draws on the microliterature and answers calls to examinethe psychological foundations of CSR(Aguinis & Glavas, 2012). We do so byrelying on research that has originated pri-marily in I–O psychology, OB, and HRM.Specifically, the meaningfulness literaturesuggests that different organizationalmembers care about different issues. Thisliterature defines three kinds of orientationstoward work based on the meaningfulnessthat individuals find in work (Bellah,Madsen, Sullivan, Swidler, & Tipton, 1985;Wrzesniewski, 2003). The first is basedprimarily on material benefits and jobsecurity. The second is a career orientationwhere the focus is on advancement andthe ensuing rewards. Such benefits satisfyhigher-order needs such as self-esteem(Bellah et al., 1985). The third is a callingorientation in which work is seen asmaking the world a better place—as is thecase with CSR. Meaningfulness is neitherstatic nor a fixed property of a job ororganization; rather, it is subjective and is

a subset of sensemaking (Pratt & Ashforth,2003). As such, meaningfulness can beinterpreted from two lenses: (a) meaning-fulness at work—meaningfulness stemsfrom membership in the organization andnot necessarily from what one does (e.g.,my organization is committed to socialresponsibility, but my job does not directlycontribute to social responsibility); or (b)meaningfulness in work—meaningfulnessstems from what one does (e.g., my organi-zation is not really socially responsible, butmy job contributes to social responsibility).Often an organization can be consideredto be socially responsible at a macro-levelof analysis while individual jobs might notbe able to directly contribute to betteringsociety and/or the environment. In suchorganizations, often the social and envi-ronmental responsibilities are confined to asmall group of individuals or a specializedunit such as a Corporate Social Responsibil-ity Department. But employees might stillfind pride working for such organizationsdue to sharing an identity regardless oftheir particular jobs (Basu & Palazzo, 2008;Turban & Greening, 1996), which wouldcorrespond to meaningfulness at work asdescribed by Pratt and Ashforth (2003).On the other hand, if CSR is embedded, itpotentially leads to both meaningfulness atas well as in work.

Peripheral CSR might lead to adverseeffects if there is a disconnect betweenmeaningfulness at work compared to inwork. If an organization is projecting animage of being socially responsible butone’s job is not connected to social respon-sibility, employees might find a lack ofcongruence and authenticity, which couldresult in less identification with the orga-nization (Glavas & Godwin, 2013). Inaddition, an employee’s perception of fitbetween their personal and organizationalvalues could be affected negatively, whichis important because fit is related to jobsatisfaction and turnover (Edwards & Cable,2009; Kristof, 1996; Ostroff, Shin, & Kinicki,2005) as well as organizational commit-ment (Kristof, 1996; Ostroff et al., 2005)and organizational identification (Edwards


& Cable, 2009). Moreover, the lack of con-gruence between the organization appear-ing to be committed to social responsibilityand what an employee actually does couldbe perceived as greenwashing and unethi-cal (Laufer, 2003), which in turn could leadto employee misbehavior (Vardi, 2001). Insummary, peripheral CSR seems to havemixed effects. Some individuals may findmeaningfulness at work and be influencedpositively. However, others might perceiveperipheral CSR to be greenwashing and nottruly genuine. Thus, it is no surprise that theextant literature has been inconclusive onthe findings of CSR–outcomes relationships(Aguinis & Glavas, 2012).

In contrast to peripheral CSR, whenCSR is embedded, the disconnect betweenmeaningfulness at versus meaningfulnessin work is minimized. Specifically, CSRhas a positive effect on employees suchas enhancing organizational commitment(Maignan, Ferrell, & Hult, 1999), organiza-tional citizenship behaviors (Jones, 2010;Lin, Lyau, Tsai, Chen, & Chiu, 2010; Sullyde Luque, Washburn, Waldman, & House,2008), retention (Jones, 2010), and engage-ment (Glavas & Piderit, 2009). But, as men-tioned earlier, the underlying mechanismsthrough which CSR influences employ-ees have rarely been explored (Aguinis &Glavas, 2012). Relying on the psycholog-ical foundations of CSR, we argue thatpsychological constructs such as organiza-tional identity, organizational justice, val-ues congruence, as well as the previouslymentioned meaningfulness and calling lit-eratures, constitute underlying mechanismsand processes through which CSR leads toimportant outcomes for employees, organi-zations, and society.

In short, the literature on meaningfulnesssuggests that working for socially responsi-ble organizations helps employees feel thattheir work serves a greater purpose (Rosso,Dekas, & Wrzesniewski, 2010). Relatedly,Wrzesniewski (2003) posited that individ-uals who have a stronger calling orienta-tion will be influenced more positively byworking for a greater purpose. Moreover,CSR also could lead to increased values

congruence. For example, Graves andWaddock (2000) concluded that becausesocially responsible organizations care forkey stakeholders, employees for whom car-ing is an important value will experiencegreater person–organization fit.

Now, consider the literature on organi-zational justice. If organizational justice isexpanded to include perceptions of whetherstakeholders are treated fairly (i.e., CSR),then employees will be influenced posi-tively (Rupp, 2011; Rupp, Ganapathi, Aguil-era, & Williams, 2006). In addition, Rupp(2011) made an important contributionby clarifying that employees are not onlyaffected by how the organization treats thembut also by how the organization treats oth-ers. The I–O psychology literature has thusfar primarily focused on employee reactionsbased on how they themselves perceivebeing treated by the organization (e.g., per-ceived organizational support). However,CSR offers an expanded perspective thatincludes effects of organizational policiesand practices on internal as well as externalstakeholders.

Next, consider the literature on organiza-tional identification. Turban and Greening(1996) found that prospective employeesidentify more strongly with socially respon-sible organizations, which in turn leadsto greater attraction of talent to the orga-nization. Moreover, Dutton, Roberts, andBednar (2010) proposed that one of thepathways of identification with an orga-nization is through a virtue perspective.Organizations that embed CSR can be per-ceived as being inherently good and thusvirtuous. Specifically, an employee whoseself-concept is aligned with being a goodperson would identify more strongly with asocially responsible organization.

Finally, another psychological mecha-nism that underlies outcomes of embeddedCSR is that employees are able to presentmore of their whole selves at work. Oftenemployees live out only part of themselvesat work while outside of work they liveout other values through their roles asparents, friends, community contributors,and so forth. As Kahn (1990) put forward,


Table 1. Embedded Corporate Social Responsibility (CSR): Definition, UnderlyingMechanisms and Processes (i.e., Psychological Foundations of CSR), and Outcomes

Definition Relies on an organization’s core competencies andintegrates CSR within a firm’s strategy, routines, andoperations.

Underlying mechanisms andprocesses (i.e., psychologicalfoundations of CSR)

• Fulfillment of internal and external stakeholder needs• Enhancement of consumer and employee pride• Enhancement of consumer and employee identification• Improvement of consumer and employee values

congruence• Increase in meaningfulness in and at work• Enhancement in perceptions of organizational justice• Enhancement of positive selves (e.g., improved

self-concept)• Improved ability for individuals to present more of their

whole selvesSelected outcomes for employees,

organizations, and society• Improved employee engagement, job satisfaction,

organizational commitment, organizational citizenshipbehaviors, attraction, and retention

• Increased consumer purchase intentions• Improved reputation for firms• Increased financial performance for firms• Improved societal benefits• Improved environmental benefits

individuals who are able to live out theirwhole selves more fully at work are moreengaged.

Table 1 summarizes underlyingmechanisms and processes (i.e., psycho-logical foundations of CSR) and positiveoutcomes of embedded CSR for employees,organizations, and society. Next, we useour conceptualization of embedded CSR tounderstand the mechanisms that explain, atleast in part, the success of CSR initiativesat General Electric (GE), InternationalBusiness Machines (IBM), and Intel.

Embedded CSR in Practice

GE, IBM, and Intel are examples of firmsthat build on their core competenciesto integrate CSR within their strategy,routines, and operations. In each of thesefirms, CSR is not viewed as separatefrom overall organizational strategy anddaily operations—what we label peripheralCSR. Rather, all policies and actions areaffected by CSR throughout the entire

firm and at all levels ranging from theindividual to the entire organization. Next,we describe illustrative initiatives in moredetail. We emphasize that the followingexamples are not meant to portray theseparticular companies as being perfectlysocially responsible. In other words, we arenot discussing the degree to which CSR isembedded firm wide. Rather, these casesare meant to illustrate the approach usedtoward CSR and thus the usefulness of thedistinction (i.e., embedded vs. peripheral)to understand when and why CSR leads topositive outcomes.

GE

GE products generate 25% of the world’sdaily electricity. Therefore, GE is uniquelypositioned to have an impact on environ-mental and societal issues worldwide. GEhas used its core competencies to not onlytackle these issues but also create busi-ness value. For example, ecomaginationrepresents GE’s commitment to imagine and


build innovative answers to today’s environ-mental problems while driving economicgrowth (GE, 2012a). It is not only a majorpart of the company today, but GE’s moststrategic investment given that its commit-ment to grow ecomagination is twice therate of total company revenue.

Examples of some of GE’s products inrenewable energy are solar, wind, engines,and hybrid locomotives. In addition, GE isknown for its lighting products, especiallytheir light-emitting diodes (LEDs) that notonly greatly reduce the amount of energyusage but also contain no mercury (which isharmful to the environment) or glass (whichreduces the burden of disposal or recycling),and is produced locally where possible (GE,2012b). In addition, there are numerousother solutions that GE provides such assmart grid technologies, desalination andwater reuse solutions, and photovoltaiccells. The result has been a great success asseen in the generation of $85 billion in salesof ecomagination products (GE, 2012c).

What makes ecomagination unique isthat it is not housed in a separate divi-sion or a separate product line. Rather, it isembedded into GE’s existing divisions suchas Energy, Technology, and Consumer &Industrial. As a result, there is a recur-sive effect of the positive impact of CSRon employees as well as the impact ofemployees on CSR. As previously men-tioned, CSR influences employee commit-ment to the organization through pathwayssuch as meaningfulness, identity, and valuescongruence. As employees become morecommitted to the organization, they partic-ipate more actively in CSR initiatives. Asnoted by Frank Mantero, director of corpo-rate citizenship at GE, ‘‘[embedded CSR]gives the employees that type of owner-ship to affect the change that goes beyondthe awareness of ecomagination. From amorale standpoint, it has been a great pro-gram’’ (Daniels & Lacono, 2010). The latterpart of Mantero’s quote points to one of themost powerful outcomes of embedded CSR.Not only are employees more committed toCSR, but employees themselves are affectedin positive ways.

GE has embarked on several initiativesin order to integrate ecomagination intothe mindset of its employees (Daniels &Lacono, 2010). One such initiative isEnergy Treasure Hunts, which engagesemployees and also identifies projectsthat drive energy efficiency (GE, 2012d).Since GE began implementing the process,projects identified during these events havecontributed to reductions in excess of250,000 metric tons of CO2 and savingsin excess of $130 million. Moreover, itis programs like Energy Treasure Huntsthat helped employees see opportunitiesfor solving environmental issues while alsocreating business value. Consider the caseof a plant in Hungary where employeesfound that waste heat of air compressorscould be used for heating the buildingand also that heat could be generatedfrom biogas that results from local waste.As a result, 95% of the energy of theplant now comes from renewable sources.After numerous internal treasure hunts, GEdecided to extend its program to includecommunities by having their employeesact as consultants to schools, hospitals,libraries, airports, and other organizations.The success of ecomagination has alsospurred other initiatives within GE such ashealthymagination in which GE committed$6 billion to launch 100 innovations that cutcosts while improving access and quality tohealth (GE, 2012e).

Another indication of the high degreeof CSR embeddedness is the type ofpeople who GE targets as future employees.More precisely, GE specifically seeks outthose who want to make a differencein the world (GE, 2012f). As a result,GE is working toward building a culturein which employees are driven toward ahigher purpose (GE, 2012e). In additionto advantages in attracting talent, onceat GE employees are able to find moremeaning at work because they feel theirwork is contributing not only to the financialbenefit of the company but also toward thebetterment of society and the environment.Work becomes more than simply a ‘‘9 to 5’’job. Because GE recruits those employees


for whom purpose is important, workbecomes aligned to the self-concept of theemployees. On the basis of organizationalidentity theory, the greater the alignmentto self-concept, the more strongly theemployee will identify with the organization(Dutton, Dukerich, & Harquail, 1994).Then, as employees identify more stronglywith the company, they also become morecommitted and satisfied at work.

IBM

IBM is a company that builds on its corecompetencies of technology and consultingto provide solutions to societal and envi-ronmental problems that, in turn, createbusiness value. IBM’s Smarter Planet Pro-gram is providing solutions to energy usage,water waste, traffic, food waste, building,and healthcare. A key component of suchsolutions is efficiency in information sys-tems. IBM not only provides the informationsystems but also the solutions on how tomanage information (e.g., information tech-nology and analysis for smart grids). Forexample, more than 25% of the food inthe United States is wasted (EnvironmentalProtection Agency & United States Depart-ment of Agriculture, 2012). By providinginformation systems that allow for a reduc-tion in food waste, IBM is able to addressthe societal issue of hunger as well as amajor environmental issue because 20%of methane emissions are generated fromfood waste in landfills (Environmental Pro-tection Agency & United States Departmentof Agriculture, 2012).

Under the umbrella of the SmarterPlanet Program, IBM launched an initiativecalled Smarter Cities. In a keynote speechduring the launching of this program, thenIBM CEO Sam Palmisano stated that IBMis working to tackle challenges caused byurbanization with over 70% of the popula-tion being expected to live in cities by theyear 2050 (Palmisano, 2009). Coupled withpopulation growth, the sizes of our citieswill at least double in the coming decades,resulting in numerous environmental andsocietal challenges involving the efficient

use of building materials, energy, utilities,and water. In addition, there will be otherchallenges that receive less media attentionsuch as transportation congestion, whichnot only leads to increased emissions butalso accounts for up to 3% loss of totalGDP. By diminishing traffic through IBM’ssolutions, cars are on the road for a shorterlength of time, people have more timeto spend productively, transportation ofgoods is more efficient, and the resultingsavings provide an opportunity for IBM toenhance its financial bottom line. Althoughtransportation congestion is perhaps notone of the typical issues often associatedwith environmental issues, it is just oneexample of how many different aspectsof our lives contribute to environmentaloutcomes. Each one of these environmentalproblems is also a business opportunity forcompanies such as IBM.

IBM has also realized that positive out-comes will only be achieved if CSR is inte-grated throughout the organization—whatwe label embedded CSR. A report based ona study that IBM conducted on the modelof the enterprise of the future notes that‘‘engaging the workforce in these (CSR)efforts can have a positive impact onboth employee attraction and retention,yet many companies have not engagedthe workforce around this topic. Greateremployee involvement in environmentaland workforce development issues can pro-vide notable benefits to the organization, aswell as a platform to grow future employeeleaders’’ (IBM, 2008, p. 4).

Although most companies have valuestatements and there is a substantial bodyof scholarly work on the benefits of valuesalignment (e.g., Edwards & Cable, 2009;Kristof, 1996; Ostroff et al., 2005), in realitymost value statements are just words ona piece of paper or a company’s website,and the only true value is financial gainsfor the company. When CSR is embedded,the values become real. For example,one of IBM’s values is ‘‘innovation thatmatters, for our company and for the world’’(Palmisano, 2012). As stated by former IBMCEO Sam Palmisano (Palmisano, 2012):


In today’s world, where everyone isso interconnected and interdependent,it is simply essential that we work foreach other’s success. If we’re going tosolve the biggest, thorniest and mostwidespread problems in business andsociety, we have to innovate in waysthat truly matter. And we have to doall this by taking personal responsibilityfor all of our relationships—with clients,colleagues, partners, investors, and thepublic at large. This is IBM’s mission asan enterprise, and a goal toward whichwe hope to work with many others, inour industry and beyond.

Moreover, the values of IBM werecreated bottom up, by individuals ina process in which 319,000 employeesparticipated (Palmisano, 2012). Therefore,the values become real because CSR istruly embedded. As employees find greatervalues congruence, there is an increase injob satisfaction and retention (Edwards &Cable, 2009; Kristof, 1996; Ostroff et al.,2005) as well as commitment (Kristof,1996; Ostroff et al., 2005) and identification(Edwards & Cable, 2009). If CSR was merelywindow dressing (i.e., peripheral CSR), thenit would be questionable to employees ifthe values were real, which could evenresult in negative impacts on employeeidentification (Glavas & Godwin, 2013).

Intel

Intel is the world’s largest semiconductorchip maker (IC Insights, 2011) with themajority of revenue resulting from thedesign and production of chips for personalcomputers and servers (Barrett & Niekerk,2013). What drove Intel to integrate CSRinto its business was the principle called‘‘Moore’s law.’’ Gordon E. Moore, co-founder of Intel, forecast that the number oftransistors on a semiconductor chip woulddouble roughly every 2 years (Moore,1965). To move the industry forward,Intel aggressively pursued Moore’s law,which inherently meant that along with theincrease of the number of transistors on

a chip, the amount and size of materialsused would need to be drastically reduced.Otherwise, the original computers that tookup entire rooms might need to take up thespace of an entire building. At present, thesecond billion PCs and servers consume50% less energy and deliver 17 times thecomputing capacity of the first billion PCsand servers that were installed. Moreover,servers today consume 95% less energythan servers 15 years ago.

Intel integrates CSR into its strategyand daily practices. The ‘‘enrichment oflives of every person on earth’’ is partof the core vision of Intel, and one ofits four key strategic areas is ‘‘to carefor our people and planet’’ (CorporateResponsibility, 2011). As explained byCraig R. Barrett, retired Intel chairmanand CEO, and Gary Niekerk, Intel directorof Corporate Citizenship, the strategy andvision are operationalized through everyfacet of the organization (e.g., managementsystems, tools, and culture; Barrett &Niekerk, 2013). For example, performancemanagement systems incorporate CSR andinfluence compensation. ‘‘Design for theenvironment’’ is a collaborative approachbetween departments in order to ensure thatCSR is built into every aspect of engineering,manufacturing, and R&D. Perhaps theintegration of CSR is seen most clearly inthe building of Intel’s multibillion dollarfactories called ‘‘Fabs.’’ The principles ofCSR are built into the core of the designprocess and affect every decision ratherthan being an afterthought or just oneof the items on the checklist. In additionto benefits in energy reduction, materialusage in building, and clean air—all ofwhich are important to the manufacturingof semiconductor chips—water usage isreduced by 40% and all water used inproduction is subsequently reused multipletimes. First, it is reused in the factory andthen it is put back into the public systemfor purposes such as landscaping. Intel cando this because they purify the water usingthe ultrapure water (UPW) process, whichleads to water that is 10,000 times cleanerthan tap water. The result is savings of $1


billion per year on water alone. Due toCSR being built into the core of Fabs, thesefactories are welcomed by communities thatgive Intel a ‘‘license to operate.’’ One suchexample was in Chandler, Arizona, wherethe Intel Fab was welcomed while the localcommunity lobbied against and denied theopening of any Walmart (Barrett & Niekerk,2013).

Another indication of embeddedness isthat CSR is also integrated into the finan-cial systems. Financial goals and individualcompensation are tied to the implemen-tation of CSR (Barrett & Niekerk, 2013).As a result, employees become engagedorganization wide. As just one example,11 teams that engaged in an internal Intelprogram were able to save $136 millionthrough initiatives that were friendly towardthe environment but also cut costs (Bar-rett & Niekerk, 2013). In addition, CSRis also integrated within other areas andfunctions such as human resources. As aresult, cost cutting—which is often a typ-ical goal of CSR—becomes just the tip ofthe iceberg because the return on employeeproductivity is potentially much higher. Ifemployee productivity can improve even1%, the impact on the bottom line is enor-mous. As we know from the literature onperformance management, firms usually getthe types of employee behavior that theyreward (Aguinis, 2013). If companies saythey hope for one thing (e.g., CSR), but inreality, if they reward something else (e.g.,profit), then employees will tend to mostlyfocus on what is rewarded (Kerr, 1975). Aclassic example is Enron, which tried toportray an image of being socially respon-sible and actually won multiple awards,but in the end employees were driven pri-marily by financial profit at all costs (Sims &Brinkman, 2003). Intel provides an exampleof how to embed CSR with its performancemanagement system. Not only does reward-ing employee involvement in CSR lead togreater employee engagement in CSR, italso signals to employees that the companytruly ‘‘walks the talk.’’ As a result, employ-ees find a deeper set of values presentat work and are able to identify more of

their whole selves with their jobs. Workbecomes more meaningful as there is adeeper purpose that goes beyond only cre-ating financial profit. Employees are moti-vated in every action to also see how theycan improve society and the environment.

In summary, GE, IBM, and Intel illus-trate different approaches to CSR. Onceagain, we highlight that we do not intendto portray these particular companies asbeing perfectly socially responsible. How-ever, each company has different core com-petencies and therefore unique strategies forimplementing CSR. In the case of GE, thestarting point was its products. With IBM,it was its services. For Intel, it was inter-nal processes designed to use less energy,water, and, in the end, create a moreenvironmentally friendly product. But, thecommon denominator is that these threefirms used their core competencies to inte-grate CSR within their strategies, routines,and operations. Our conceptualization ofembedded CSR allows us to shed light onthe underlying psychological mechanismsand processes (e.g., employee engagement,meaningfulness, organizational identifica-tion, values congruence) that serve asexplanatory mechanisms for when and whyCSR leads to positive outcomes for employ-ees, organizations, and society. Next, weturn to using our conceptualization ofembedded and peripheral CSR to shed lighton what seem to be inconsistent findings inthe scholarly literature.

Reexamining the Marketing,Corporate Governance and LegalStudies, and EconomicsLiteratures Through an EmbeddedVersus Peripheral CSR Framework

The extant literature has been inconclusiveregarding the nature of the relationshipbetween CSR and financial and other typesof outcomes (Aguinis & Glavas, 2012;Margolis & Walsh, 2003; Peloza, 2009;Wood, 2010). In this section, we draw ondiverse bodies of scholarly work in thefields of marketing, corporate governanceand legal studies, and economics to


illustrate how using the embedded versusperipheral CSR conceptualization allowsus to get a clearer view of when and whyCSR leads to positive outcomes. Moreover,although the literature is highly fragmentedin terms of theoretical orientations, fieldsof study, and levels of analysis, usingour conceptualization to reexamine thesehighly heterogeneous and diverse researchdomains allows us to make sense of theselarge bodies of scholarly work. As we willexplain in the following section, individualsare at the core of the CSR decision-makingprocess whether they be managers or con-sumers. Therefore, research results aboutCSR originating in the fields of marketing,corporate governance and legal studies,and economics can better be understoodby exploring psychological foundationsthat rely on theories originating primarilyin I–O psychology, OB, and HRM.

Marketing

Peloza and Shang (2011) offered a review ofthe CSR literature that originated mainly inthe field of marketing, finding that CSR leadsto mixed outcomes—which the authorsposit could be resolved if CSR was clas-sified more precisely in terms of the typeof relationship a firm has with a con-sumer. In line with the premise of ourarticle, they noted that the 65% of stud-ies that were related to philanthropy mayhave reported negative financial resultsbecause firms that tie donations to salesmight be seen as self-serving, which resultsin negative outcomes. Although we stillknow little about how CSR creates valuefor consumers (Green & Peloza, 2011),social attributes of products affect con-sumer purchasing behavior even whenother tangible (e.g., quality-based compo-nents) and intangible (e.g., brand, countryof origin) attributes are taken into con-sideration (Auger, Devinney, Louviere, &Burke, 2010). Moreover, there are a fewthemes we have found in the literature thatexplain why there are mixed results of theeffect of CSR on consumers. One likelyreason is the confusion stemming from a

lack of definition of what constitutes CSR(Frankental, 2001). Moreover, Frankental(2001) concluded that consumers also havea difficult time differentiating between thetrue intentions of firms and whether CSRis greenwashing—manipulating stakehold-ers to believe that the corporation is caringfor the well-being of stakeholders. Becker-Olsen, Cudmore, and Hill (2006) found thatwhen CSR is not perceived to be gen-uine (e.g., greenwashing), the effect onconsumers is negative. However, Ellen,Webb, and Mohr (2006) found that con-sumers do not see self-interest of the firmas being negative—it is only if the CSRefforts help the firm but do not really helpsociety (e.g., greenwashing). Moreover, theauthors found there is actually a negativeeffect on purchase intentions if there is lowalignment between CSR efforts and the com-pany’s core business because it is viewed asbad business. In other words, because con-sumers view CSR as being peripheral (e.g.,not aligned with core business, viewed asgreenwashing), there is a negative finan-cial impact on the company because theyare less willing to purchase the company’sproduct and/or services. Put simply, con-sumers prefer to see a ‘‘win–win’’ approachin which products help both the companyand society/environment at the same time.

Taken together, our reexamination ofempirical results originating from the fieldof marketing suggests that peripheral CSRleads to mixed, and often negative, out-comes. Using our conceptualization, itseems that consumers will punish com-panies for peripheral CSR because theyperceive it not being tied to the core busi-ness. Alternatively, consumers will holdsocially responsible companies to evenhigher standards of quality and expect thatif companies attempt to be socially respon-sible, they should do so by embedding CSR.For example, Bhattacharya and Sen (2003)found that if the company is perceived tohave values of CSR embedded in the orga-nization and is viewed as being genuineabout its intentions (i.e., CSR is embeddedrather than peripheral), values congruencebetween the company and the consumer


will increase leading to greater pride inand identification with the company. Asa result, purchase intentions and finan-cial revenue increase. Similarly, Sen andBhattacharya (2001) found that fit betweenconsumers and the organization drove pur-chase intentions. In short, consistent withour conceptualization, the extant evidencesuggests that if companies are to engage inCSR initiatives, it is best to do so genuinely,to be transparent, and to tie CSR to the com-pany’s core business (i.e., embedded CSR).

Corporate governance and legal studies. Inthe corporate governance as well as legalstudies literatures, there has been a debateregarding the role of the firm in society.The law, as it currently stands in the UnitedStates and other countries, states that thefirm’s role is to work in the interest ofshareholders (Velasco, 2010). Accordingly,in the context of corporate governance,directors have freedom and discretion, but itis only in choosing the means, not the ends(Velasco, 2010). Stated differently, they canchoose to serve the interest of societyas a whole. But, if this choice is to thedetriment of shareholders, then it is againstthe law. Therefore, managers advocating aCSR agenda should do so keeping in mindhow such initiatives can also benefit theeconomic interests of the firm.

As a result of the debate on the theory ofthe firm, managerial discretion has been animportant research focus. The basic premisehas been one of agency theory and thatmanagers need to be controlled becausethey will otherwise act in self-serving waysand not in the interest of the firm andits stakeholders (Aguilera & Jackson, 2003;Davis, Schoorman, & Donaldson, 1997).However, other perspectives have emergedsuch as that of stewardship theory, whichdoes not refute but rather complementsagency theory and managerial hegemonyby explaining that managers might alsowork in the interest of the collective (Daviset al., 1997). This view is in line withfindings that managers may have valuesthat are aligned with CSR (e.g., Sullyde Luque et al., 2008; Swanson, 1999).

Therefore, the extent to which boardsof directors allow managerial discretionmediates the relationship between valuesand CSR (Buchholz, Brown, & Shabana,2008). The danger of discretion has beenthat managers might invest heavily inCSR at the expense of the firm (Jensen,2002). As Baron (2008) explained, moralhazard could exist if society rewards CSRnot only in the marketplace but also ina more societal context (e.g., gaining apersonal positive image in the communityas a result of spear-heading corporatephilanthropic efforts), because managersmight be motivated to carry out CSR evenwhen there is no value to the firm.

In summary, reexamining the corporategovernance and legal studies literaturesusing our conceptualization of embeddedversus peripheral CSR allows us to addressa key issue in this literature: the debate onthe role of the firm in society and the corre-sponding role of managers in deciding onthe societal actions and policies of firms. Anembedded CSR perspective allows firms tomitigate the tension related to how much ofa cost it is to the firm to give to society com-pared to the benefit the firm receives—asis the case with peripheral CSR. Withembedded CSR, all choices are made inthe interest of all key stakeholders (e.g.,society as well as shareholders). When CSRis embedded, there is no trade off betweenactions that benefit the firm versus thosethat benefit society. If the firm contributesto society, it must do so in a way that it isboth integrated into the core business andalso generates revenue for the firm.

Economics

Kitzmueller and Shimshack (2012) con-ducted a literature review and criticalanalysis of how economists view CSR. Onthe basis of the role of shareholder andstakeholder preferences, Kitzmueller andShimshack (2012) categorized CSR as strate-gic, not-for-profit, or the result of moralhazard. Moreover, they found that whenCSR is strategic, it leads to benefits for thefirm, mostly through increased consumer


demand. In addition, using economicmodeling, Benabou and Tirole (2006)found that if CSR is treated separately (i.e.,CSR is peripheral), it might actually createdoubt as to the true intentions of the firm.Using our conceptualization, peripheralCSR can both decrease prosocial behaviorwithin the firm as well as be punished in themarketplace. On the other hand, when CSRis embedded, there are no negative effectsbecause CSR is not treated as somethingseparate from the core business of the firm.

To summarize this section, our distinc-tion between embedded and peripheral CSRallows us to reexamine past findings in ahighly diverse and heterogeneous body ofscholarly literature by focusing on psycho-logical foundations. First, in the field of mar-keting, research has shown that consumerspunish companies if CSR is not perceived tobe tied to the core business and benefit thecompany (i.e., peripheral CSR). On otherhand, with embedded CSR, consumers findgreater value congruence and identifica-tion with the company (Bhattacharya & Sen,2003; Sen & Bhattacharya, 2001). In corpo-rate governance and legal studies, the keyissues revolve around the tension betweenshareholder interests and those of otherstakeholders—and how managers resolvethis tension. The notion of embedded CSRallows for a way to resolve this tension aswell as mitigate the danger for moral haz-ard because all choices are made so thatthey satisfy the needs of both shareholdersand also other key external stakeholders.From an economics perspective, peripheralCSR was found to lead to negative or, atbest, mixed results. On the other hand,embedded CSR influences reputation andfinancial performance of firms positivelythrough underlying psychological founda-tions of individuals in the marketplace. Forexample, consumers find greater alignment(e.g., values, identity) with companies thattruly integrate CSR into their core business.

Discussion

We offered a categorization of CSR intoembedded and peripheral. We relied on

theories originating in I–O psychology, OB,and HRM and described underlying mech-anisms and processes that collectively welabeled psychological foundations of CSR.We used these psychological foundations ofCSR to help explain when and why embed-ded CSR leads to positive outcomes. Wethen applied the categorization to practice,specifically to three mini cases of CSR asimplemented in GE, IBM, and Intel. Then,we used our conceptualization to reexam-ine and make sense of highly heteroge-neous and diverse streams of CSR researchin marketing, corporate governance andlegal studies, and economics, which com-prise bodies of scholarly work that coverdifferent theoretical approaches, levels ofanalysis, and methodological orientations.By focusing on the role of individuals (i.e.,consumers, managers), knowledge originat-ing in fields that address microlevel issuessuch as I–O psychology, OB, and HRM canhelp explain when and why CSR leads tospecific outcomes.

Our conceptualization can help explain,at least in part, the inconsistent resultsreported to date regarding the relation-ship between CSR and financial andother types of outcomes. For example,Orlitzky, Schmidt, and Rynes (2003) con-ducted a meta-analysis including 52 sep-arate primary-level studies and reportedsubstantial variance in the CSR-financialoutcomes correlation, although severalpotential moderating effects were also takeninto consideration. We examined the 52studies included in the Orlitzky et al.(2003) meta-analysis and were able to clas-sify 10 studies as addressing peripheralCSR, but it was not clear if the type ofCSR implemented in the other 42 stud-ies was peripheral or embedded. Orlitzkyet al. (2003) may have obtained differ-ent results had it been possible to moreclearly distinguish between peripheral andembedded CSR. In a separate meta-analysis,Margolis, Elfenbein, and Walsh (2009)reported that the relationship between CSRand financial performance is at best verysmall. Margolis et al. (2009) categorizedCSR into the following types: corporate


policies, disclosure, environmental perfor-mance, philanthropic donations, revealedmisdeeds, self-reported social performance,observers perceptions, third-party audits,and screened mutual funds. Similar tothe Orlitzky et al. (2003) meta-analysis, itis difficult to ascertain which CSR initia-tives were peripheral and which embedded.Therefore, it is no surprise that the extantliterature on CSR has been inconclusive asto the CSR-outcomes relationship.

Implications for Theory and Research

Very little CSR research has been conductedusing a microlevel of analysis that relies onI–O psychology, OB, and HRM (Aguinis &Glavas, 2012). Accordingly, the studies thatwere included in the meta-analyses men-tioned earlier synthesized research that,for the most part, has adopted a macro-level of analysis. Consequently, it has notbeen possible to study microfoundations ofCSR at a meta-analytic level. One impor-tant implication of our manuscript is that,to study effects of peripheral and embed-ded CSR, it will be necessary to usemeasures that consider the psychologicalfoundations of CSR. The Kinder, Lyden-berg, Domini, & Co. (KLD) measure of CSR,which is one of the most widely used inbusiness and society research (Wang &Choi, 2013), was created such that itassigns scores of ‘‘0’’ (does not exist) or‘‘1’’ (exists) to dimensions that constitutea specific strength or concern regardingthe following 13 issues: community, corpo-rate governance, diversity, employee rela-tions, environment, human rights, prod-uct, alcohol, tobacco, gambling, firearms,nuclear power, and military contracting.None of these categories specifically mea-sures embedded CSR. Moreover, althoughwe have conceptualized embedded versusperipheral CSR as two extremes of the samecontinuum, an anonymous reviewer sug-gested that there could be a continuumfor embedded CSR (i.e., low to high) andanother one for peripheral CSR (i.e., alsofrom low to high). A recently publishedvolume on managing human resources for

environmental sustainability describes sev-eral measures specifically created to assessand improve a firm’s environmental impact(e.g., ISO 14000 certification, EuropeanEco-Management and Audi Scheme; DowJones Sustainability Index; Jackson, Ones, &Dilchert, 2012). Thus, our manuscriptpoints to the need to develop measuresthat assess the peripheral versus embeddedCSR distinction.

A second implication regarding futureresearch is that CSR is often analyzed fromone level of analysis only. Aguinis andGlavas (2012) found only one empiricalstudy that was truly multilevel in nature thatwas conducted at the institutional, organi-zational, and individual levels of analysis.Embedded CSR is multilevel by defini-tion. Accordingly, future research shouldadopt a multilevel perspective. Specifically,employee values, attitudes, and behaviorsare nested within organizations striving tobe socially responsible. Then, those sameorganizations are nested within a particularcultural and societal context. Accordingly,multilevel research is needed to addressthis type of nested data structure (i.e.,hierarchical; Aguinis et al., 2013).

Our conceptualization of embedded CSRalso allows for a substantial expansion ofmultidisciplinary research regarding CSR. Iforganizations treat CSR as separate fromtheir core business, then scholars are likelyto perceive CSR as something that is atopic that should be studied as a separateorganizational function. However, if CSRis integrated throughout the core business,then it permeates accounting, finance,human resources, marketing, operations,sales, and strategy. As such, scholars whohave not yet done so can now contributetheir own research to our knowledgeabout CSR. Moreover, a multidisciplinaryapproach can also benefit different existingresearch streams. For example, Aguileraand Jackson (2003) argued that agencytheory has been undersocialized and doesnot take into account the influence ofinstitutional embeddedness. On the otherhand, institutional theory is oversocializedand does not consider the meso and micro


levels of analysis, specifically the conflictsand coalitions between stakeholders at thefirm level. Also pointing to the need formultidisciplinary and multilevel research,Hainmueller and Hiscox (2012) foundthat individual differences (e.g., gender)influence how individuals react to CSR. Inother words, future CSR research should bemultidisciplinary in nature.

Finally, our conceptualization of embed-ded CSR answers numerous calls for theexpansion of I–O psychology research. AsKozlowski and Klein (2000) put forward,emergence is a process through whichlower-level phenomena influence higher-level phenomena. Previously, scholars havecalled for studies of how CSR affects indi-viduals (e.g., Aguilera, Rupp, Williams, &Ganapathi, 2007; Aguinis, 2011). In addi-tion, I–O psychology can play a role in pro-ducing knowledge about how individuals inan organization affect CSR. For example, wedo not have sufficient knowledge regardingwhy and how the values and personalitiesof employees influence organizational pro-cesses such as CSR. In addition, as noted byPloyhart (2012a), I–O psychologists shouldcontinue to engage in valuable research atthe individual and small group behaviorlevels; however, by expanding our hori-zon to also consider strategic issues, wecan broaden the field’s impact and rel-evance. Answering the call of Boudreau(2012) for I–O psychology to branch out toother disciplines, CSR offers an opportunityto bridge I–O psychology with other fieldssuch as marketing, corporate governanceand legal studies, and economics, amongothers. Also, CSR addresses another need,which is to link I–O psychology to businessprocesses (Curtis, 2012). If CSR is embed-ded, then it is naturally integrated into thebusiness processes.

Implications for Practice

First, an important challenge for practice isthat CSR is often treated as the agenda of theC-suite or a few selected individuals (e.g.,CSR department or corporate foundation),yet many organizations want to implement

CSR organization wide. Our conceptualiza-tion and application to specific companiesillustrates the advantages of adopting anembedded approach to CSR.

Second, a distinction between embed-ded and peripheral CSR allows managersand their organizations to more clearlyidentify not only the benefits of CSR butalso the mechanisms through which CSRinfluences the organization and its stake-holders. In addition, a clearer integrationof CSR into a company’s core business(i.e., embedded CSR) allows for a clearerassessment of what the company is doingregarding CSR. Coupled with transparentcommunication, stakeholder trust is moreeasily achieved. With peripheral CSR, it isdifficult to assess the extent to which a firmis socially responsible.

Third, another implication for practiceis that our conceptualization addresses thetension of managers between serving theinterests of the firm and those of society.Conley and Williams (2005) conducteda field study of the CSR movement inthe United Kingdom. Although it becameclear from the interviews that stakeholdersfeel CSR is much more than a passingtrend, the interviewees felt that there isstill tension between caring for stakeholdersand economic benefits. On the one hand,interviewees felt that long-term CSR is ineveryone’s best interest but, if CSR doesnot pay off in the short term, it leadsto a potential conflict of interest withshareholders. These results support theassertion of Margolis and Walsh (2003)that managers face a tension betweeninterests of the firm and society. One ofthe reasons for this tension is that thenotion of a socially responsible corporationis potentially an oxymoron because ofthe naturally conflicted nature of the firm.Specifically, as noted by Devinney (2009,p. 54),

it is my argument that the failure to findthe holy grail of CSR—‘‘doing well bydoing good’’—is that none of the studiesexamining CSR activities versus perfor-mance provide a well articulated model


as to how the activities flow through tocapitalized performance measures . . . Ifwe cannot map the path that shows howfinancial, organizational, and social per-formance is influenced by CSR activities,these activities will be imperfectly man-ageable, and investments in CSR will beinefficient and wasteful.

In other words, if CSR is to lead topositive outcomes, it seems that the pathtoward bypassing the tension of interestsis to fully integrate CSR into financial andorganizational systems—what we labeledembedded CSR. In that way, CSR isdiscussed openly and transparently andshareholders and the board will be fullyaware of such initiatives before movingforward with implementation.

Concluding Remarks

Our conceptualization of embedded andperipheral CSR allows us to reinterpret avast and highly heterogeneous scholarlyliterature originating in a diverse set offields using different theoretical lenses aswell as methodological orientations. Also,our conceptualization integrates the prac-titioner and scholarly literatures on CSRthereby helping narrow the much-lamentedscience-practice gap in I–O psychologyand related fields. The deleterious conse-quence of this gap was noted by Cascioand Aguinis (2008), who concluded that‘‘if we extrapolate past emphases in pub-lished research to the next 10 years, weare confronted with one compelling con-clusion, namely, that I–O psychology willnot be out front in influencing the debateon issues that are (or will be) of broad orga-nizational and societal appeal’’ (p. 1074).Moreover, our conceptualization address-ing the psychological foundations of CSRincludes an integration of micro (i.e., I–Opsychology, OB, HRM) and macro (e.g.,corporate governance, economics) researchstreams thereby helping narrow the existingmicro–macro divide in organizational stud-ies (Aguinis et al., 2011). Taken together,our contributions allow practitioners to

understand conditions under which CSRreally matters and why as well as encour-age researchers to think about CSR using adifferent lens, which will hopefully lead toinnovative multilevel and multidisciplinaryresearch agendas. As noted by Ployhart(2012a), ‘‘I–O psychology has much to offerin the understanding of competitive advan-tage, and moving into a strategic adjacentpossible has many benefits for us’’ (p. 79).In closing, I–O psychology has as muchto contribute to CSR as CSR can contributeto I–O psychology science and practice(Aguinis & Glavas, 2013).

References

Aguilera, R. V., & Jackson, G. (2003). The cross-national diversity of corporate governance: Dimen-sions and determinants. Academy of ManagementReview, 28, 447–465.

Aguilera, R. V., Rupp, D. E., Williams, C. A., &Ganapathi, J. (2007). Putting the S back in corporatesocial responsibility: A multilevel theory of socialchange in organizations. Academy of ManagementReview, 32, 836–863.

Aguinis, H. (2011). Organizational responsibility:Doing good and doing well. In S. Zedeck (Ed.),APA handbook of industrial and organizationalpsychology (Vol. 3, pp. 855–879). Washington,DC: American Psychological Association.

Aguinis, H. (2013). Performance management (3rded.). Upper Saddle River, NJ: Pearson Prentice Hall.

Aguinis, H., & Glavas, A. (2012). What we knowand don’t know about corporate social responsi-bility: A review and research agenda. Journal ofManagement, 38, 932–968.

Aguinis, H., & Glavas, A. (2013). What corporateenvironmental sustainability can do for industrial-organizational psychology. In A. H. Huffman, &S. R. Klein (Eds.), Green organizations: Drivingchange with I-O psychology. New York, NY:Routledge.

Aguinis, H., Boyd, B. K., Pierce, C. A., & Short, J. C.(2011). Walking new avenues in managementresearch methods and theories: Bridging microand macro domains. Journal of Management, 37,395–403.

Aguinis, H., Gottfredson, R. K., & Culpepper, S.A. (2013). Best-practice recommendations forestimating cross-level interaction effects usingmultilevel modeling. Journal of Management, 39,1490–1528.

Arya, B., & Zhang, G. (2009). Institutional reformsand investor reactions to CSR announcements:Evidence from an emerging economy. Journal ofManagement Studies, 46, 1089–1112.

Auger, P., Devinney, T. M., Louviere, J. J., & Burke, P. F.(2010). The importance of social product attributesin consumer purchasing decisions: A multi-countrycomparative study. International Business Review,19, 140–159.


Baron, D. P. (2008). Managerial contracting andcorporate social responsibility. Journal of PublicEconomics, 92, 268–288.

Barrett, C. R., & Niekerk, G. (2013). Sustainable busi-ness: A Fortune 500 company perspective. In A. H.Huffman, & S. R. Klein (Eds.), Green organizations:Driving change with I-O psychology. New York,NY: Routledge.

Basu, K., & Palazzo, G. (2008). Corporate socialresponsibility: A process model of sensemaking.Academy of Management Review, 33, 122–136.

Becker-Olsen, K. L., Cudmore, A., & Hill, R. P.(2006). The impact of perceived corporate socialresponsibility on consumer behavior. Journal ofBusiness Research, 59, 46–53.

Bellah, R. N., Madsen, R., Sullivan, W. M., Swidler,A., & Tipton, S. M. (1985). Habits of the heart:Individualism and commitment in American life.New York, NY: Harper & Row.

Benabou, R., & Tirole, J. (2006). Incentives andprosocial behavior. The American EconomicReview, 96, 1652–1678.

Bhattacharya, C. B., & Sen, S. (2003). Consumer-company identification: A framework for under-standing consumers’ relationships with companies.Journal of Marketing, 67, 76–88.

Boudreau, J. W. (2012). Strategic I–O psychologylies beyond HR. Industrial and OrganizationalPsychology: Perspectives on Science and Practice,5, 86–91.

Brammer, S., Hoejmose, S., & Millington, A. (2011).Managing sustainable global supply chains: A sys-tematic review of the body of knowledge. London,England: Network for Business Sustainability.

Buchholz, A. K., Brown, J., & Shabana, K. (2008).Corporate governance and corporate social respon-sibility. In A. Crane, A. McWilliams, D. Matten, J.Moon, & D. S. Siegel (Eds.), The Oxford handbookof corporate social responsibility (pp. 327–345).New York, NY: Oxford University Press.

Carroll, A. B. (1999). Corporate social responsibility.Business & Society, 38, 268–295.

Cascio, W. F., & Aguinis, H. (2008). Research inindustrial and organizational psychology from1963 to 2007: Changes, choices, and trends.Journal of Applied Psychology, 93, 1062–1081.

Conley, J. M., & Williams, C. A. (2005). Engage,embed, and embellish: Theory versus practicein the corporate social responsibility movement.Journal of Corporate Law, 31, 1–38.

Corporate Responsibility. (2011). 2010 Corporateresponsibility report. Intel. Retrieved from http://www.intel.com/content/www/us/en/corporate-responsibility/2010-corporate-responsibility-report-overview.html

Curtis, B. (2012). Psychological contributions to com-petitive business process. Industrial and Organi-zational Psychology: Perspectives on Science andPractice, 5, 105–108.

Daniels, C., & Lacono, E. (2010, May 1). Employeeinvolvement vital to success in sustainabil-ity. PR Week. Retrieved from http://www.prweekus.com/employee-involvement-vital-to-success-in-sustainability/article/168478/

David, P., Bloom, M., & Hillman, A. J. (2007). Investoractivism, managerial responsiveness, and corpo-rate social performance. Strategic ManagementJournal, 28, 91–100.

Davis, J. H., Schoorman, F. D., & Donaldson, L. (1997).Toward a stewardship theory of management.Academy of Management Review, 22, 20–47.

Devinney, T. M. (2009). Is the socially responsiblecorporation a myth? The good, the bad, and theugly of corporate social responsibility. Academy ofManagement Perspectives, 23(2), 44–56.

Doh, J. P., Howton, S. D., Howton, S. W., &Siegel, D. S. (2010). Does the market respond toendorsement of social responsibility? The role ofinstitutions, information, and legitimacy. Journal ofManagement, 36, 1461–1485.

Dutton, J. E., Dukerich, J. M., & Harquail, C. V. (1994).Organizational images and member identification.Administrative Science Quarterly, 39, 239–263.

Dutton, J. E., Roberts, L. M., & Bednar, J. (2010).Pathways for positive identity construction at work:Four types of positive identity and the buildingof social resources. Academy of ManagementReview, 35, 265–293.

Edwards, J. R., & Cable, D. M. (2009). The value ofvalue congruence. Journal of Applied Psychology,94, 654–677.

Ellen, P. S., Webb, D. J., & Mohr, L. A. (2006). Buildingcorporate associations: Consumer attributions forcorporate socially responsible programs. Journal ofthe Academy of Marketing Science, 34, 147–157.

Elliot, S. (2011). Transdisciplinary perspectives onenvironmental sustainability: A resource base andframework for IT-enabled business transformation.MIS Quarterly, 35, 197–236.

Enderle, G., & Murphy, P. E. (2009). Ethics andcorporate social responsibility for marketing inthe global marketplace. In M. Kotabee, & K.Helsen (Eds.), The SAGE handbook of internationalmarketing (pp. 504–531). Los Angeles, CA: Sage.

Environmental Protection Agency & United StatesDepartment of Agriculture. (2012). Waste not,want not: Feeding the hungry and reducingsolid waste through food recovery. Environ-mental Protection Agency. Retrieved fromhttp://www.epa.gov/epawaste/conserve/materials/organics/pubs/wast_not.pdf

Foss, N. J. (2011). Why micro-foundations for resource-based theory are needed and what they may looklike. Journal of Management, 37, 1413–1428.

Frankental, P. (2001). Corporate social responsibility-a PR invention? Corporate Communications-AnInternational Journal, 6, 18–23.

Garriga, E., & Mele, D. (2004). Corporate socialresponsibility theories: Mapping the territory.Journal of Business Ethics, 53, 51–71.

GE. (2012a). @ecomagination. GE. Retrieved fromhttp://www.ecomagination.com/about

GE. (2012b). LED technology. GE. Retrieved fromhttp://www.gelighting.com/LightingWeb/emea/products/technologies/led/all-led-systems-are-not-the-same.jsp

GE. (2012c). Ecomagination 2010 Annual Report.GE. Retrieved from http://files.gecompany.com/ecomagination/progress/GE_ecomagination_2010AnnualReport.pdf

GE. (2012d). Ecomagination treasure hunts. GE.Retrieved from http://www.ecomagination.com/showcase/treasure-hunts

GE. (2012e). Healthymagination. GE. Retrieved fromhttp://www.healthymagination.com/


GE. (2012f). Our people. GE. Retrieved fromhttp://www.ge.com/company/culture/index.html

Glavas, A., & Godwin, L. N. (2013). Is theperception of ‘goodness’ good enough? Exploringthe relationship between perceived corporatesocial responsibility and employee organizationalidentification. Journal of Business Ethics, 114,15–27.

Glavas, A., & Piderit, S. K. (2009). How does doinggood matter? Effects of corporate citizenship onemployees. Journal of Corporate Citizenship, 36,51–70.

Global Most Sustainable Companies. (2012). 2012Global 100 most sustainable companies: The fulllist. Retrieved from http://www.global100.org/

Graves, S. A., & Waddock, S. A. (2000). Beyond builtto last . . . Stakeholder relations in ‘‘built-to-last’’companies. Business and Society Review, 106,393–418.

Green, T., & Peloza, J. (2011). How does corporatesocial responsibility create value for consumers.Journal of Consumer Marketing, 28, 48–56.

Hainmueller, J., & Hiscox, M. J. (2012). Buying green?Field experimental tests of consumer support forenvironmentalism. Unpublished manuscript.

IBM. (2008).The enterprise of the future: Implicationsfor the workforce. IBM. Retrieved from http://www-935.ibm.com/services/us/gbs/bus/pdf/gbe03102-usen-ceo-workforce.pdf

IC Insights. (2011, December 19). Tracking thetop 10 semiconductor sales leaders over 26years. Research Bulletin. Retrieved from www.icinsights.com/data/articles/documents/359.pdf

Jackson, S. E., Ones, D. S., & Dilchert, S. (Eds.) (2012).Managing human resources for environmentalsustainability. San Francisco, CA: Wiley.

Jensen, M. C. (2002). Value maximization, stakeholdertheory, and the corporate objective function.Business Ethics Quarterly, 12, 235–256.

Jones, D. A. (2010). Does serving the community alsoserve the company? Using organizational identifi-cation and social exchange theories to understandemployee responses to a volunteerism programme.Journal of Occupational and Organizational Psy-chology, 83, 857–878.

Kahn, W. A. (1990). Psychological conditions ofpersonal engagement and disengagement at work.Academy of Management Journal, 33, 692–724.

Kerr, S. (1975). On the folly of rewarding A, whilehoping for B. Academy of Management Journal,18, 769–783.

Kitzmueller, M., & Shimshack, J. (2012). Economicperspectives on corporate social responsibility.Journal of Economic Literature, 50, 51–84.

Kozlowski, S. W. J., & Klein, K. J. (2000). A multilevelapproach to theory and research in organizations:Contextual, temporal, and emergent processes. InK. J. Klein, & S. W. J. Kozlowski (Eds.), Multileveltheory, research, and methods in organizations:Foundations, extensions, and new directions (pp.3–90). San Francisco, CA: Jossey-Bass.

Kristof, A. L. (1996). Person-organization fit: An inte-grative review of its conceptualizations, measure-ment, and implications. Personnel Psychology, 49,1–49.

Laszlo, C., & Zhexembayeva, N. (2011). Embeddedsustainability: The next big competitive advantage.Palo Alto, CA: Stanford University Press.

Laufer, W. S. (2003). Social accountability andcorporate greenwashing. Journal of Business Ethics,43, 253–261.

Lee, M. P. (2008). A review of the theories of corporatesocial responsibility: Its evolutionary path and theroad ahead. International Journal of ManagementReviews, 10, 53–73.

Lin, C., Lyau, N., Tsai, Y., Chen, W., & Chiu, C. (2010).Modeling corporate citizenship and its relationshipwith organizational citizenship behaviors. Journalof Business Ethics, 95, 357–372.

Maignan, I., Ferrell, O. C., & Hult, G. T. M. (1999).Corporate citizenship: Cultural antecedents andbusiness benefits. Journal of the Academy ofMarketing Science, 27, 455–469.

Margolis, J. D., & Walsh, J. P. (2003). Miseryloves companies: Rethinking social initiatives bybusiness. Administrative Science Quarterly, 48,268–305.

Margolis, J. D., Elfenbein, H. A., & Walsh, J. (2009).Does it pay to be good . . . and does it matter?A meta-analysis of the relationship between corpo-rate social and financial performance. Unpublishedmanuscript.

McWilliams, A., & Siegel, D. (2000). Corporate socialresponsibility and financial performance: Corre-lation or misspecification. Strategic ManagementJournal, 21, 603–609.

Mollick, E. (2012). People and process, suits, andinnovators: The role of individuals in firmperformance. Strategic Management Journal, 33,1001–1015.

Moore, G. (1965). Cramming more components ontointegrated circuits. Electronics, 38(8), 114–117.

Morgeson, F. P., Aguinis, H., Waldman, D. A., &Siegel, D. S. (in press). Extending corporate socialresponsibility research to the human resource man-agement and organizational behavior domains: Alook to the future. Personnel Psychology.

Orlitzky, M., Schmidt, F. L., & Rynes, S. L. (2003).Corporate social and financial performance: Ameta-analysis. Organization Studies, 24, 403–441.

Orlitzky, M., Siegel, D. S., & Waldman, D. (2011).Strategic corporate social responsibility and envi-ronmental sustainability. Business and Society, 50,6–27.

Ostroff, C., Shin, Y., & Kinicki, A. J. (2005). Multipleperspectives of congruence: Relationships betweenvalue congruence and employee attitudes. Journalof Organizational Behavior, 26, 591–623.

Palmisano, S. (2009). Building a smarter planet: Cityby city. IBM. Retrieved from http://www.ibm.com/ibm/sjp/10_01_2009.html

Palmisano, S. (2012). Our values at work onbeing an IBMer. IBM. Retrieved from http://www.ibm.com/ibm/values/us/

Peloza, J. (2009). The challenge of measuringfinancial impacts from investments in corporatesocial performance. Journal of Management, 35,1518–1541.

Peloza, J., & Shang, J. (2011). How can corporatesocial responsibility activities create value forstakeholders? A systematic review. Journal of theAcademy of Marketing Science, 39, 117–135.

Petco (2012). Petco foundation. Petco. Retrieved fromhttp://www.petco.com/petco_Page_PC_petcofoundationhome.aspx


Ployhart, R. E. (2012a). The psychology of competitiveadvantage: An adjacent possibility. Industrialand Organizational Psychology: Perspectives onScience and Practice, 5, 62–81.

Ployhart, R. E. (2012b). From possible to probable: Thepsychology of competitive advantage. Industrialand Organizational Psychology: Perspectives onScience and Practice, 5, 120–126.

Pratt, M. G., & Ashforth, B. E. (2003). Fosteringmeaningfulness in working and meaningfulnessat work: An identity perspective. In K. Cameron,J. E. Dutton, & R. E. Quinn (Eds.), Positiveorganizational scholarship (pp. 309–327). SanFrancisco, CA: Berrett-Koehler.

Rosso, B. D., Dekas, K. H., & Wrzesniewski, A. (2010).On the meaning of work: A theoretical integrationand review. Research in Organizational Behavior,30, 91–127.

Rupp, D. E. (2011). An employee-centered modelof organizational justice and social responsibility.Organizational Psychology Review, 1, 72–94.

Rupp, D. E., Ganapathi, J., Aguilera, R. V., & Williams,C. A. (2006). Employee reactions to corporatesocial responsibility: An organizational justiceframework. Journal of Organizational Behavior,27, 537–543.

Rupp, D. E., Williams, C. A., & Aguilera, R. V.(2010). Increasing corporate social responsibilitythrough stakeholder value internalization (and thecatalyzing effect of new governance): An applica-tion of organizational justice, self-determination,and social influence theories. In M. Schminke(Ed.), Managerial ethics: Managing the psychol-ogy of morality (pp. 69–88). New York, NY:Routledge.

Rupp, D. E., Wright, P. M., Aryee, S., & Luo,Y. (2011). Special issue on ‘behavioral ethics,organizational justice, and social responsibilityacross contexts.’ Management and OrganizationReview, 6, 481–483.

Scott, R. W. (1995). Institutions and organizations.Thousand Oaks, CA: Sage.

Scott, J. C., Aguinis, H., McWha, I., Rupp, D.E., Thompson, L. F., & Cruse, S. (2013). Newsfrom the SIOP-United Nations Team: SIOP hasjoined the UN Global Compact and so can you!The Industrial-Organizational Psychologist, 50(4),65–68.

Sen, S., & Bhattacharya, C. B. (2001). Does doinggood always lead to doing better? Consumerreactions to corporate social responsibility. Journalof Marketing Research, 38, 225–243.

Sims, R. R., & Brinkman, J. (2003). Enron ethics(or: Culture matters more than codes). Journal ofBusiness Ethics, 45, 243–256.

Sully de Luque, M., Washburn, N. T., Waldman,D. A., & House, R. J. (2008). Unrequited profit:How stakeholder and economic values relate tosubordinates’ perceptions of leadership and firmperformance. Administrative Science Quarterly,53, 626–654.

Swanson, D. L. (1995). Addressing a theoreticalproblem by reorienting the corporate socialperformance model. Academy of ManagementReview, 20, 43–64.

Swanson, D. L. (1999). Toward an integrative theoryof business and society: A research strategyfor corporate social performance. Academy ofManagement Review, 24, 506–521.

Tenbrunsel, A. E., Wade-Benzoni, K. A., Messick,D. M., & Bazerman, M. H. (2000). Understandingthe influence of environmental standards onjudgments and choices. Academy of ManagementJournal, 43, 854–866.

Turban, D. B., & Greening, D. W. (1996). Corpo-rate social performance and organizational attrac-tiveness to prospective employees. Academy ofManagement Journal, 40, 658–672.

United Nations Global Compact. (2012). UnitedNations Global Compact. Retrieved fromhttp://www.unglobalcompact.org/

Vardi, Y. (2001). The effects of organizational climateson misconduct at work. Journal of Business Ethics,29, 325–337.

Velasco, J. (2010). Shareholder ownership and pri-macy. University of Illinois Law Review, 3,897–956.

Waddock, S. A. (2004). Parallel universes: Companies,academics, and the progress of corporate citizen-ship. Business and Society Review, 10, 758–769.

Wang, H., & Choi, J. (2013). A new look at the corpo-rate social-financial performance relationship: Themoderating roles of temporal and interdomain con-sistency in corporate social performance. Journalof Management, 39, 416–441.

Wood, D. J. (2010). Measuring corporate socialperformance: A review. International Journal ofManagement Reviews, 12, 50–84.

Wrzesniewski, A. (2003). Finding positive meaning inwork. In K. S. Carmeron, J. E. Dutton, & R. E.Quinn (Eds.), Positive organizational scholarship:Foundations of a new discipline (pp. 296–308).San Francisco, CA: Berrett-Koehler.

Documents

Embedded Versus Peripheral Corporate Social … McWilliams & Siegel, 2000). The ... ization relies on the psychological foun-dations of CSR and allows us to reinter-pret literatures