3 Literature Review
3.2 The Role of Business as a Social Development Partner
3.2.5 Ambidexterity: balancing economic and social outcomes
In the Global South (for example, in a middle-income country like South Africa) where the legitimacy of established business is politically questioned and regarded with suspicion by governments who perceive business and markets to have too much power (Davis, 1973), government intervention through laws and regulations has in many respects overridden the voluntary opportunity typically afforded business elsewhere and demanded a more active level of social participation through more of the “required” responsibilities described above. De Schutter (2008) for example argues for an “affirmatively created regulatory framework for CSR” .
To summarise the review on CSR and PSC literature, there is clearly an opportunity for business to bring its entrepreneurial creativity and agility, managerial and financial capabilities to bear in addressing the challenges that prevail in the communities where they operate. While companies operating in developed economies may have the luxury of choosing whether to enhance their social capital through proactive or discretionary participation in social endeavours, this choice may not be afforded companies operating in countries where governments, adopting a more interventionist role, have enacted regulatory instruments to compel business to pursue positive social change outcomes through the core of their operations and activities. This latter aspect is an area less explored by researchers to date and offers a further motivation for this exploratory thesis.
(2015) describe this state as the “ability to perform differing and often competing, strategic acts at the same time”, building off the earlier definition of Simsek, Heavey, Veiga, & Souder (2009).
Further to this idea of competing corporate objectives, the work of Alt and Craig (2016) examines firstly the intersection of strategic issues with social issues, noting that the latter may by virtue of its nature become elevated (to strategic) or it may be adopted as a result of an internal selling process. Such adoption may not be easy, particularly given the potential cost and what Howard-Grenville (2007) states as “the idea that what constitutes a problem for society may not necessarily represent a problem for an organization”, at least not at that point in time.
Accordingly, Alt and Craig explore the values within an organisation and its operating context, in an attempt to further explore why an organisation may, or may not, agree to adopt a social cause or issue that is proposed by an insider or “change agent”, such as an employee. In so doing the authors identity both the perceived legitimacy of the initiative and the concept of
“logics” (“elements of idiosyncratic internal cultures” – these being either commercial or social welfare logics) and how these typically contrast or even compete with one another. It is these logics, they argue, that are typically more influential than values, when evaluating a social development proposal that, as stated above, may “not necessarily be linked with the objectives of a for-profit organization” (2016).
An unusual exposition of how an organisation can manage this external versus internal tension is offered by Hahn and Figge (2015). They aim to contribute to the debate on organisational ambidexterity by examining corporate social performance (CSP) resulting from a business’s activities, a concept defined by Wood (2010) as the positive and negative “impact and outcomes for society, stakeholders and the firm” (see also Margolis & Walsh, 2003).
Departing from previously articulated debates on whether and how CSP actually enhances financial performance (Carroll, 1999), the authors delve into the often competing and fundamentally different rationales of morally-driven versus instrumentally-driven (i.e. profit-
driven) initiatives that firms undertake. Referencing existing ambidexterity literature, which notes that “both instrumental and moral rationales offer [differing] explanation[s] of why, and under which conditions, firms address social problems”, their paper looks at the tension (even contradiction) between social and economic performance. It emphasises that high levels of CSP may in fact be explained when firms are able to combine these tensions positively to achieve a more beneficial outcome in the pursuit of solutions to a societal issue. In other words, in such a situation the magnitude of the firm’s response to the social challenge is amplified, resulting in higher level of CSP. Interestingly, the authors note that this kind of complementary outcome can be achieved either by an instrumental initiative supplementing a moral initiative, or visa versa.
Probing this tension and the underlying processes underway inside organisations experiencing it, Cajaiba-Santana (2014) tries to bring together two traditional views of research into the process of social innovation: firstly, that social innovation is an institutional and thus agent- driven process (actions undertaken by specific, internal individuals); secondly, where social innovation is driven by the external or structural context. The author suggests “social innovation [may also be] created as a transformative force through the inter relationship between agents, institutional structures, and social systems”, quoting Hargrave & Van De Ven, (2006); allowing these processes (the external and the internal) to co-evolve interactively to produce new forms of social innovation (2014). This contrasts Mulgan’s (2006) articulation of a single process view.
Dorado and Ventresca (2013) explore the conditions that have facilitated the interplay between such actors and broader, institutional contexts. These conditions are, they argue, an important determination of whether “entrepreneurial engagement” can take place as a means to develop (even clumsy) solutions or social innovations. In this case the word “entrepreneurial” is taken in its broad, creative sense: “the simultaneous unbuilding and rebuilding of constellations of value-creating activities” that give rise to system-level change (2013).
Given the inherent paradox between these tensions (Eisenhardt et al., 2016) and that traditional for-profit organisations are assumed to avoid such tensions by prizing economic performance more highly, these theories are examples of a counterfactual alternative (Dacin et al., 2011) to
traditional views of organisational decision-making and a changing awareness of the role of business of society.
Whether the South African Financial Services companies, through their lived experience of developing, implementing and embedding the Financial Sector Charter over a period of 15 years, have been able to adopt an “ambidextrous” outlook, harness this tension between their instrumental and moral initiatives, and achieve a degree of positive social change in the country, as suggested by Hahn and Figge (2015) and Margolis and Walsh (2003), is a question that will be explored in Chapter 6.