Article2018

Why do companies obtain the B corporation certification?

Maretno A. Harjoto · Indrarini Laksmana · Ya‐wen Yang

68 citations0/0 files storedSocial Responsibility Journal

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Corporate Social Responsibility Reporting Environmental Sustainability in Business Corporate Social Responsibility and Sustainability

Abstract

Purpose This study identifies the factors that influence companies to obtain the B corporation certification. Drawing from institutional isomorphism, gender socialization theory, the ethics of care and social identity theory, the authors examine the impact of geographic locality, product market competitions and owners’ demographic characteristics on a firm’s decision to be a certified B Corporation. Design/methodology/approach Using two sets of data, a hand-collected sample of 743 small businesses receiving a B Corporation certification between 2007 and 2014 and a sample of 902 firms participating in a B Lab survey from 2011 to 2013, the authors examine factors that influence firms’ decision to obtain the B Corporation and their environment, social and governance (ESG) performance. Findings Firms in states that are democratic-leaning, have a lower hourly wage rate or have a greater religious population are more likely to be early adopters and leaders of the B Corporation movement than those in other states. On average, states with a higher unemployment rate and more democratic-leaning voters have more B Corporation certified firms in each year and over the years. Additionally, product market competition is positively associated with firms’ likelihood of obtaining B Corporation certification and their ESG scores. Practical implications This study brings new insights to the understanding of purpose-driven enterprises and factors that influence firms’ decision to go through the B Corporation verification and certification process. Originality/value This study establishes a theoretical foundation that becoming a B Corporation is a corporate social responsibility (CSR) action and shows that existing theories explaining the factors motivating companies to engage in CSR can also be applied to explain firms’ motivation to become B Corporations.

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References

1983The Iron Cage Revisited: Institutional Isomorphism and Collective Rationality in Organizational Fields 2004The iron cage revisited institutional isomorphism and collective rationality in organizational fields 2004The Social Identity Theory of Intergroup Behavior 2007The Social Responsibility of Business Is to Increase Its Profits 1983The Iron Caged Revisited : Institutional Isomorphism and Collective Rationality in Organizational Fields 1977The Population Ecology of Organizations 2007Strategy and society: the link between competitive advantage and corporate social responsibility 2009Women in the boardroom and their impact on governance and performance☆

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