Spotligth: Monday, 19 October 2020
In a monthly interview series, the Dynamics of Inclusive Prosperity Initiative will turn the spotlights on their PhD candidates. Learn more about their research projects, their link with inclusive prosperity and long term goals. This third edition features Yannick Wiessner who focuses on how organizations that consist of multiple, widely independent units, impact the social and natural environments in which they are operating.
Yannick Wiessner focuses on how organizations that consist of multiple, widely independent units, impact the social and natural environments in which they are operating.
My research focuses on how organizations that consist of multiple, widely independent units, such as business groups (BGs) or multinational enterprises (MNEs), impact the social and natural environments in which they are operating. These organizational forms are especially interesting to study as their multi-unit nature results in various counteracting dynamics that may either foster responsible behavior – or allow for irresponsibility. For instance, evidence on how foreign direct investments (FDI), i.e. investments by MNEs impacts the recipient of the investments is still inconclusive. In the same vein, despite a large body of academic literature examining BGs, hardly anything is known about these organizations’ engagement in corporate responsibility.
So far, the study on BG affiliates corporate responsibility is the most developed project I am working on. Preliminary findings indicate that firms that are affiliated with BGs engage more in responsible behavior than independent firms. We suggest that this effect is best explained when conceiving of BGs as networks of organizations that are socially embedded This finding is relevant as the most commonly used theoretical lenses in the analysis of BGs consider BGs as either too agentic, or too inward-looking to focus on the wellbeing of their broader environment and thus come to more cynical verdicts about these organizations.
Another interesting result of this study is that this positive effect of BG affiliation on corporate responsibility increasingly fades the lower the focal firm is within the hierarchical organization. In other words, if you imagine BGs as approximately pyramidal structures, then the further an affiliate is from the top, the less substantial is the effect of the affiliation with the group on the firm’s responsibility. This finding reflects my prior remarks on the dynamics within multi-unit organizations. BG affiliates characteristically coordinate, for instance regarding responsible behavior. However, the effects of these coordinating efforts seem to become weaker the more peripheral an organization is within the overall structure.
My take on inclusive prosperity is that the impact economic actions have on the natural and social environment need to be taken into account when assessing organizations’ actions. The outcome may, on one hand, be that economic action that is widely considered as attractive and beneficial – such as FDI – may actually have detrimental effects. On the other hand, as the mentioned example of BG affiliates’ corporate responsibility shows, a result of this research may also redeem some organizations or organizational forms that predominant perspectives so far would portray in an overly critical light.
Being exposed to a plurality of backgrounds, expertise, and opinions adds an additional element to my way of thinking that a pure focus on the management and organization studies may not so intensively encourage. Moreover, including social and environmental aspects not only in research, but ultimately in practice is a multi-facetted, hence multi-disciplinary venture. For instance, how FDI affects a recipient region is not simply determined by the inherently economic actions of the involved parties, but also by international law and investment treaties. I therefore consider being provided with the opportunity to discuss research with a diverse group of people beyond my own field not only as a source for personal inspiration, but as a critical resource to leverage in my research.
A major goal that I hope to accomplish is that my research has a practical influence beyond the academic world. For this reason, I decided to examine research questions, the answers to which are not only relevant to scholars or managers, but also to policymakers. For instance, informing the ultimate question of whether BGs as an organizational form are beneficial or detrimental to society is subject to academic debate. However, so far, the preliminary verdict has been shaped mainly be considerations of financial performance and the resulting implications on economic welfare. If policymakers wish to decide upon the future of these organizations that in some countries have been broken down by governmental efforts in the past, they need to include BGs’ socio-environmental impact into their assessment.
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