An exploration of community perceptions of elements of corporate social investments and value creation : a stakeholder theory perspective

Abstract

Value creation is central to stakeholder theory, which suggests that firms should take into account the interests of, and create value for, all its stakeholders. However, literature on stakeholder value creation has focused on value creation processes and elements of value creation for other stakeholders such as suppliers, shareholders and customers, with limited attention on communities as a stakeholder. Meanwhile, the limited literature available on community/social value creation has focused on the definition of the construct and observed outcomes of the value creation process without investigating elements that influence such outcomes. This research addressed this gap by exploring communities’ interpretation of elements that influence social value outcomes and appraisals of such outcomes, based on their experience of Corporate Social Investment (CSI) initiatives. The study used a qualitative multiple case study approach focusing on three communities in different geographic areas of South Africa that had experience with CSI projects implemented by three different firms in their locality. A total of 39 semi-structured interviews were conducted with community members in these communities. The findings of this study provide a community perspective of various elements that affect social value creation, value capture and value sustenance. These include elements such as local government involvement, firm understanding of local social needs, quality of engagements and corruption. By providing a community perspective of these elements, this research makes a contribution to stakeholder theory of value creation which has for a long time lacked this perspective. The study also present various reference states or factors that influence community perceptions and judgements (satisfaction or dissatisfaction) with CSI activities of a particular firm. These include external reference states such as communities’ comparison of what they received from a firm versus that received by other communities, the presence of offsetting and trade-off conditions, as well as internal reference states such as perceived firm capabilities and perceived econo-political justice. By highlighting these elements, this research expands theories regarding various reference states that influence stakeholder judgements. Consequently, the study presents a model for social value judgement from a community perspective.