Abstract
Collectively, institutions own an increasing proportion of outstanding corporate equities. As an emergent force in shaping corporate America, the linkages between institutional ownership and corporate social performance (CSP) require empirical examination. Not only do corporate policy makers need to know those areas where social performance may lure or inhibit capital infusions, lawmakers also need a better understanding of the social forces guiding corporate policy. As anticipated, this study found a positive relationship between the amount of institutional ownership of corporate stock and a company's social responsiveness as measured by the representation of women on its board of directors; however, no statistically significant relationship with social responsibility as measured by charitable giving was found. The exemplar of social issues management — compliance with the Sullivan principles — showed an unexpected, negative relationship with the level of institutional ownership.
This is a preview of subscription content, log in via an institution to check access.
Similar content being viewed by others
References
Ansoff, H. I.: 1984, Implanting Strategic Management, (Prentice-Hall, Englewood Cliffs: N.J.).
Aupperle, K. E., Carroll, A. B., and Hatfield, J. D.: 1985, ‘An Empirical Examination of the Relationship between Corporate Social Responsibility and Profitability’, Academy of Management Journal 28, pp. 446–63.
Baldwin, W.: 1985, ‘Mortality Plays’, Forbes (July 29), pp. 42–3.
Blume, M. E. and Friend, I.: 1978, The Changing Role of the Individual Investor, (John Wiley & Sons, Inc., New York).
Bowen H. R.: 1953, Social Responsibilities of the Businessman, (Harper and Row, New York).
Carroll, A.: 1979, ‘A Three-Dimensional Conceptual Model of Corporate Performance’, Academy of Management Review 4, pp. 497–505.
Clark, J. M.: 1957, Economic Institutions and Human Welfare, (Alfred A. Knopf, New York).
Davis, K.: 1973, ‘The Case for and against Business Assumption of Social Responsibilities’. Academy of Management Journal 16, pp. 312–22.
Davis K. and Blomstrom, R. L.: 1971, Business, Society, and Environment: Social Power and Social Response. (McGraw-Hill Book Company, New York).
Farrar, D. E. and Griton, L.: 1981, ‘Institutional Investors and the Concentration of Financial Power’, Journal of Finance 32, pp. 369–82.
Freeman, R. E.: 1984, Strategic Management: A Stakeholder Approach. (Pitman Publishing Inc., Boston).
Friedman, M.: 1970, ‘The Responsibility of Business is to Increase its Profits’, The New York Times 33, pp. 122–26.
Fry, L., Keim, G. D., and Meiners, R. E.: 1982, ‘Corporate Contributions: Altruistic or for Profit?’, Academy of Management Journal 25, pp. 94–106.
Fryxell, G. E. and Lerner, L. D.: 1989, ‘Contrasting Corporate Profiles: Women and Minority Representation in Top Management Positions’, Journal of Business Ethics 8, pp. 341–52.
Gaventa, J.: 1980, Power and Powerlessness: Quiescence and Rebellion in an Appalachian Valley, (University of Illinois Press, Urbana).
Harrison, P.: 1986, ‘On the Other Side of the Roadblock’, Directors and Boards 11(1), pp. 40–1.
Irvine, W. B.: 1987, ‘The Ethics of Investing’, Journal of Business Ethics 6, pp. 233–42.
Jensen, M. C. and Meckling, W. H.: 1976, ‘Theory of the Firm: Managerial Behavior, Agency Cost and Ownership Structure’, Journal of Financial Economics 3, pp. 305–60.
Jensen, M. C. and Warner, J. B.: 1988, ‘The Distribution of Power Among Corporate Managers, Shareholders, and Directors’, Journal of Financial Economics 20, pp. 3–24.
Klonoski, R. J.: 1986, ‘The Moral Responsibilities of Stockholders’, Journal of Business Ethics 5, pp. 385–90.
Lehman, C. K.: 1988, ‘Moral and Conceptual Issues in Investment and Finance: An Overview’, Journal of Business Ethics 7, pp. 3–8.
Lerner, L. D. and Fryxell, G. E.: 1988, ‘An Empirical Study of the Predictors of Corporate Social Performance: A Multi-Dimensional Analysis’, Journal of Business Ethics 7, pp. 951–59.
Lydenberg, S. D., Marlin, A. T., Strub, S. O., and The Council on Economic Priorities: 1986, Rating American's Corporate Conscience, (Addison-Wesley, Reading, Mass.).
Magner, D. K.: 1990, ‘Efforts Under Way to Persuade Universities to Use Investments to Press Business on the Environment’, Chronicle of Higher Education, April 25: A1 and A34.
McClenahen, J. S.: 1987, ‘Charging Shareholders, more Business Sensitivity to Issues?, Industry Week, March 23: pp. 24–5.
Miles, R. H.: 1987, Managing the Corporate Social Environment, (Prentice-Hall, Englewood Cliffs, N.J.).
Mintzberg, H.: 1983, ‘The Case for Corporate Social Responsibility’, The Journal of Business Strategy 4(2), pp. 3–15.
Mintzberg, H.: 1983, Power in and around Organizations, (Prentice-Hall, Englewood Cliiffs, N.J.).
Morrow, J. J. & Co, Inc.: 1988, ‘Corporate Control in the 1990s: Institutional Ownership, Activism, and Designs on the Board’, Directors and Boards 13(1), pp. 43–5.
Paine, L. S.: 1986, ‘An Inquiry on Ethics and Values’, Directors and Boards 11(1), pp. 31–3.
Reier, S.: 1988, ‘Out of (South) Africa’, Financial World (May 31), pp. 50–1.
Ruder, D. S.: 1989, ‘A Notion to Share Corporate Power’, Directors and Boards 13(2), pp. 10–2.
Sawyer, A.G. and Ball, A. D.: 1981, ‘Statistical Power and Effect Size in Marketing Research’, Journal of Marketing Research 18, pp. 275–90.
Schrader, D. E.: 1987, ‘The Corporation and Profits’, Journal of Business Ethics 6, pp. 589–601.
Schwartz, F. N.: 1986, ‘Beyond the First Generation of Women Directors’, Directors and Boards 11(1), pp. 39–41.
Shleifer, A. and Vishny, R. W.: 1986, ‘Large Shareholders and Corporate Control’, Journal of Political Economy 94, pp. 461–88.
Spencer, B. A. and Butler, J. K.: 1987, ‘Measuring the Relative Importance of Social Responsibility Components: A Decision Modeling Approach’, Journal of Business Ethics 6, pp. 573–77.
Standard & Poor's: 1984, Stock Guide, December, (Standard and Poor's Corporation, New York).
Tilson, D. J. and Vance, D.: ‘Corporate Philanthropy Comes of Age’, Public Relations Review 11, pp. 26–33.
Wall Street Journal 1987, Losing Ground? Surveyed Firms Report Fewer Women Directors, July 17: 23.
Wartick, S. L. and Cochran, P. L.: 1985, ‘The Evolution of the Corporate Social Performance Model’, Academy of Management Review 10, pp. 758–69.
Wokutch, R. E. and Spencer, B. A.: 1987, ‘Corporate Saints and Sinners: The Effects of Philanthropic and Illegal Activity on Organizational Performance’, California Management Review 29, pp. 62–77.
Zahra, S. A. and LaTour, M. S.: 1987, ‘Corporate Social Responsibility and Organizational Effectiveness: A Multivariate Approach’, Journal of Business Ethics 6, pp. 459–67.
Author information
Authors and Affiliations
Additional information
Betty S. Coffey's research interests are in the area of strategic management, organizational change, and social issues.
Gerald E. Fryxell is Assistant Professor of Management at the University of Tennessee, Knoxville. His current research interests are in the area of corporate culture, innovation, and strategic management.
Rights and permissions
About this article
Cite this article
Coffey, B.S., Fryxell, G.E. Institutional ownership of stock and dimensions of corporate social performance: An empirical examination. J Bus Ethics 10, 437–444 (1991). https://doi.org/10.1007/BF00382826
Issue Date:
DOI: https://doi.org/10.1007/BF00382826