اختلاف قدرت سهامداران – شرکت ها،جهت گیری مسئولیت اجتماعی ذینفعان شرکت و عملکرد محیطی شرکت های کوچک و متوسط در چین

Although stakeholder power theory has been at the forefront of environmental studies, extant research has focused on stakeholders' power while firms' countering power has not been systematically examined. Furthermore, different stakeholders may prioritize social goals differently. In this paper, we propose that stakeholder–firm power difference determines firms' environmental performance and stakeholders' CSR orientation (i.e., the degree to which a stakeholder holds firms' engagement in CSR as important) moderates this relationship. Utilizing a sample of 144 Chinese small- and medium-sized enterprises (SMEs), we found that governments-, competitors-, and the media-firm power difference indeed significantly affect Chinese SMEs' environmental performance. Besides, governments' and the media's CSR orientation moderate the relationship between stakeholder–firm power difference and firms' environmental performance. Research and practical implications are discussed.

Stakeholder power theory has been at the forefront in explaining the motivation and strategies of a company's environmental initiatives (Agle et al., 1999, Frooman, 1999 and Mitchell et al., 1997). While adequate attention has been given to the absolute power of stakeholders, the countering power of firms has not been systematically examined in the extant literature. This topic is especially acute in emerging economies because in the process of developing their regulatory, industrial, and social environments, firms can utilize “gray areas” to challenge stakeholders' power (Li and Zhang, 2007). Thus, the net power between stakeholders and the firm, instead of stakeholders' absolute power, should be a better predictor of the firm's environmental performance. Furthermore, in the context of an emerging economy, stakeholders may not desire environmental performance to the same extent as their counterparts in a mature economy do. Constrained by low income and low environmental awareness, some stakeholders may prefer to mobilize their power to pursue goals other than environmental friendliness. Drawing from research on stakeholder salience (Agle et al., 1999 and Mitchell et al., 1997), stakeholder influence strategies (Frooman, 1999), and the effect of institutional environments on firms' social performance (Maignan and Ralston, 2002 and McCarthy and Puffer, 2008a), we attempt to move the stakeholder theory forward by addressing two questions: (1) How does stakeholder–firm power difference, i.e., the net difference between a stakeholder's power over a firm and a firm's countering power to this stakeholder, affect Chinese small- and medium-sized enterprises' (SMEs) environmental performance? (2) How does stakeholders' CSR orientation, i.e., the degree to which stakeholders hold firms' engagement in corporate social responsibility (CSR) as important, affect the above relationship? In the present research, CSR refers to a company's configuration of social responsibility, social responsiveness, policies, programs, and observable outcomes as they are related to the company's relationship with society ( Wood, 1991). This definition has been found especially applicable to international CSR studies ( Maignan and Ralston, 2002), including the CSR studies conducted in the Chinese context ( Luo, 2006). We focus on Chinese SMEs because although China is playing an increasingly important role in the world economy and a substantial amount of effort has been devoted to studying Chinese firms' financial performance, little is known about their environmental performance (e.g., Fryxell and Lo, 2003 and Matten and Moon, 2008). SMEs in China warrant special attention due to the vast number of SMEs and their dominant position in the national economy. For example, 99% of ventures in China are SMEs which collectively generate 60% of total industrial GDP and 75% of jobs (China Statistical Yearbook, 2008). Meanwhile, according to the Ministry of Environmental Protection of the People's Republic of China (2006), 80% of Chinese SMEs have pollution problems, which account for 60% of the national pollution. Indeed, large-scale empirical research on Chinese SMEs' environmental performance is urgently needed. Our study helps fill in a few gaps in stakeholder research. First, previous stakeholder theorists (e.g., Mitchell et al., 1997 and Pfeffer and Salancik, 1978) have largely depicted firms as recipients of stakeholder power, whereas the countering power possessed by firms has not been empirically explored. Although the importance of studying the mutual power between stakeholders and firms has been acknowledged (Clement, 2005 and Frooman, 1999), efforts to define and examine such a mutual power in CSR studies are limited. In this study, we systematically assess the impact of the net power difference between four major external stakeholders (i.e., governments, competitors, customers, and the media) and SMEs on SMEs' environmental performance in an Eastern Chinese manufacturing region. Second, although extant stakeholder research recognizes that stakeholders in general prefer improved environmental performance (e.g., Kassinis and Vafeas, 2006), it rarely incorporates the fact that the degree of that preference may vary among stakeholder groups. In this paper, we account for this variance by proposing the notion of stakeholders' CSR orientation. When the stakeholder–firm power difference is the same, stakeholders with stronger CSR orientation will direct more of their power to influence firms' environmental performance. Hence, our study extends stakeholder research by taking into account the effect of stakeholders' CSR orientation when examining the stakeholder–firm power relationship. Third, our study highlights the important role of institutional environments in stakeholder research. Due to the idiosyncratic political structure, social norms, and legal environment in China (Baron and Tang, 2009 and Tang et al., 2008), conclusions regarding the stakeholder–firm relationship drawn from Western studies may not be generalized to the Chinese context. For instance, China became the first major country that bans the production, selling, and usage of plastic bags with thickness under .025 mm, on June 1, 2008. Such an impulsive action can probably only take place in China (i.e., without a lasting, draining legislative process) due to heavy governmental interventions in economic activities. In addition, as the media in China do not possess the same level of independence as their Western counterparts do, it will further complicate the interaction between the media and firms. In this study, we illustrate how the unique institutional environment in China may change the power exchange between stakeholders and SMEs. To this end, we first review studies on stakeholder salience theory and stakeholder influence strategies. We then draw on the current institutional environments in China along with the perspective of liabilities of smallness to propose hypotheses regarding the relationships between stakeholder–firm power difference and Chinese SMEs' environmental performance. We also predict that such relationships are subject to the moderating effect of stakeholders' CSR orientation. Ten exploratory interviews, a Pilot Study of 40 Chinese SMEs, and a main study consisting of a large-scale survey of 300 SMEs (suppliers of a major chemical product manufacturing company) in China were conducted. Conclusions and implications are provided in the end.

6.1. Key findings and implications Do SMEs possess countering power to stakeholders' pressures on organizations' environmental performance? Do different stakeholder groups hold firms' engagement in CSR equally important, especially in an emerging economy? In this paper, we conducted ten exploratory interviews, one pilot study, and one main study in China to address these research questions. Our findings indicate that (1) SMEs do possess countering power to stakeholders, at least in the current institutional context in China; (2) as a result, it is important to consider the net power difference between stakeholders and SMEs when examining SMEs' environmental performance; (3) in accordance with propositions in previous studies, external stakeholders generally prefer firms committed to environmental protection, but the degree to which stakeholders hold firms' CSR engagement as important varies among different Chinese stakeholder groups; and (4) stakeholders' CSR orientation moderates the relationship between stakeholder–firm power difference and SMEs' environmental performance. Our findings have revealed a stakeholder–firm power relationship in China that is distinct from that in the West. While most extant stakeholder studies have focused on stakeholders' absolute power in examining firms' environmental performance, following the classic power theory (Casciaro and Piskorski, 2005 and Pfeffer and Salancik, 1978), we propose that the relative power relationship should more accurately describe the stakeholder–firm interactions. This relativity perspective has been strongly advocated by stakeholder theorists (e.g., Frooman, 1999), and we add to this work by systematically investigating the power exchange relationship between SMEs and four major external stakeholders in the context of an Eastern Chinese manufacturing region. These findings also add to our knowledge of institutions and communities. For instance, we examine our hypotheses in a community of suppliers primarily in Shandong Province in Eastern China. Our results indicate that even given the proximity of the community and the links through the large chemical firm, the customers and competitors, as representatives of the local economic community, had less influence on SMEs' environmental performance than the public dimension of this local community, i.e., the governments and the media. Further, the CSR orientation of governments and the media had a more significant impact on the power–environmental performance relationship than the CSR orientation of customers and competitors. Such results may be due to the tight state control of information flow and the media in the current institutional environment in China. Thus, our findings may be more pronounced in this venue and not be replicated in other economies where the media enjoy a relatively high independence from governments. More specifically, at the current stage of economic development in China, governments appear an essential and exclusive stakeholder for SMEs and can effectively pressure SMEs to adopt environmental protection procedures. Nonetheless, Chinese SMEs can manage such pressure by helping governments achieve economic goals and in return bargaining for a lenient enforcement of environmental regulations. This finding not only reflects the significant power of governments in a state-directed economy but signals mechanisms of survival for SMEs in a relationship-oriented economy (Hoskisson et al., 2000). Governments of low-income regions may be especially vulnerable to the countering power from organizations. Contrary to our prediction and the findings reported in Western studies, the media–firm power difference has a negative effect on SMEs' environmental performance in China. According to stakeholder studies conducted in the West, since the media do not have any stake in organizations, they serve as one of the most effective guardians of public benefits, and their survival relies on their credibility and devotion to protecting the public interests (Henriques and Sadorsky, 1999 and Kassinis and Vafeas, 2006). However, our findings indicate that the greater the media's net power over Chinese SMEs, the less likely they will draw environmental performance from SMEs. Although the media can attain power from governments' authorization, the trustworthiness and credibility of the media's power are so questionable that the public may actually expect the truth to be the opposite of what is reported. Further, as mentioned above, the media's influence on a firm's environmental performance relies on the existence of other stakeholders' power to take effect. As a result, it will be difficult for the Chinese media to draw the desirable outcome from other stakeholders and SMEs. The competitors–firm power difference is found to promote SMEs' environmental commitment. This result may help explain why the effects of competitors on organizational CSR activities have been reported as inconclusive, although competitors have been recognized as one of the most influential stakeholders for SMEs (Jenkins, 2006 and McCarthy and Puffer, 2008a). Competitors are an essential stakeholder for SMEs, but they are not the only key factor in establishing a healthy competitive environment. Thus, the influence of competitors on a target SME will not be as strong as that of governments. Our finding indicates that when competitors overpower a target SME, the SME will realize the catastrophic damages of the “race to the bottom” (Williamson et al., 2006), and consequently attempt to form a cohesive effort with other SMEs to integrate social aspects into its strategy. This finding echoes previous research which suggests that industry peer pressure is one of the most effective mechanisms to promote SMEs' environmental performance (Williamson et al., 2006). In Western studies, customers have been consistently proposed as possessing the ultimate power to make organizations adopt social codes (Frooman, 1999). However, in our study, we found a positive yet statistically insignificant effect of customers–firm power difference on SMEs' environmental performance, which, indeed, highlights the importance of studying SMEs' countering power to customers. Compared with their Western counterparts, Chinese SMEs are better able to attract customers with low-cost products/services than with environmental commitment (Kassinis and Vafeas, 2006). This finding is consistent with the result of our interviews, which suggest that at the current stage of development in China, customers seem to value low price and on-time delivery more than environmental performance. Beyond the findings relevant to the effects of stakeholder–firm power difference on SMEs' environmental performance, our results also indicate stakeholders' CSR orientation varies greatly. As reported earlier, governments and the media have a higher level of CSR orientation than customers and competitors. When the governments' CSR orientation is perceived as strong, a SME feels more pressure from the governments' net power to improve environmental performance. However, when the media's CSR orientation is perceived to be high, the negative effect of the media–firm power difference on the SME's environmental performance is reinforced, further suggesting the eroded credibility of the media in China. The positive but insignificant moderating effects of customers' and competitors' CSR orientation suggest that customers' and competitors' CSR orientations are not strong enough to impact the relationship between power difference and SMEs' environmental performance. 6.2. Implications for practice Our study provides several practical implications. In order to bring global environmental issues under control, the China factor cannot be over-stated. Our study indicates that as the most effective stakeholder, governments are critical in encouraging SMEs to pursue their social obligations. Competitors also exert a positive effect on SMEs' environmental performance. Customers, however, can surrender to SMEs' power, and the media are not a qualified screener of SMEs' environmental activities either. In order to better secure environmental performance from SMEs, although difficult, Chinese governments should reinforce environmental laws and regulations and strive to reduce opportunities for SMEs to counter governments' power. Encouraging self-discipline within the industry should also help improve SMEs' environmental performance. Organizations, especially SMEs, follow industrial standards closely in order to attain legitimacy (Abrahamson, 1996, Jenkins, 2006 and Weaver et al., 1999). Hence, one of the most effective means to facilitate environmental performance is through corporate peer pressures and industry-wide ethical standards (Campbell, 2007). In line with this argument, our study shows that rather than leading to the “race to the bottom,” the competition may actually contribute to improved environmental performance of SMEs in China. Customers should be the ultimate stakeholder to regulate firms' environmental behaviors because they determine the revenues for SMEs. However, our findings suggest that concerns of low income level and overall quality of life are inhibiting Chinese customers from exerting pressure on SMEs for better environmental performance. To change this situation, governments should aim to enhance the GDP per capita and quality of life for common people (e.g., health care, retirement benefits, living conditions, etc.). Fortunately, top Chinese officials have recognized that the ultimate solution to promoting a harmonious society is to create social wealth that common people can benefit from. We expect the customers' CSR orientation will improve with this social change in China. Increasing the independence of the media, if possible, should be another viable approach to monitoring SMEs' environmental performance. Our findings are not consistent with the conclusions reported in Western studies that the media are often the last safeguard of a society's social benefits. What is even more counter-intuitive is that the media's net power leads to deteriorated environmental performance of Chinese SMEs. A possible explanation is the public has lost its trust in the credibility of the media to such an extent that it would rather believe in the opposite of what is reported in the news. Such distrust has significantly weakened the viability for the Chinese media to call on other stakeholders to take action. To help establish a good reputation for the media, Chinese governments should probably try to loosen their control of information and allow the media to more accurately convey reality. 6.3. Limitations The results of the present research are subject to several limitations that should be carefully addressed in future research. First, our findings may be limited to the contexts in Northern and Eastern China. China has a large variety of cultural, political, and social climates (Boisot and Child, 1996). For instance, Southern China, being the pioneer of economic reforms, is more market-driven than Northern China, which has profound implications for the stakeholder–firm relationship. The media that are most proactive in monitoring organizations' social activities (e.g., Southern Weekend) are mostly located in the South. In order for our model to be appropriately applied in other contexts within China, certain variations are necessary ( Kim and Lim, 1988). Additional data gathered in other geographic locations will help fully evaluate the extent to which the present findings can be generalized to other groups of SMEs operating in environments different from Northern and Eastern China. Second, since two hypotheses regarding the direct effects of stakeholder–firm power difference (i.e., customers– and the media–firm power difference) on SMEs' environmental performance and three hypotheses regarding the moderating effects of stakeholders' CSR orientation (i.e., competitors', customers', and the media's CSR orientation) were not supported, future research is warranted to fully examine the relationships among these constructs. We attribute these results to the small sample size (N = 144 in the Main Study) and complex institutional environments in China (Tang, 2010), and encourage others to replicate our findings with a larger sample. As an exploratory study, however, the present research has made rigorous efforts to conduct multiple studies and obtain a broad sample of SMEs to test our hypotheses. Our results provide initial evidence that stakeholder–firm power difference explains more variance in SMEs' environmental performance and that the CSR orientation of different stakeholder groups varies greatly and moderates the relationship between stakeholder–firm power difference and SMEs' environmental performance. Third, several of the measures employed were self-reported in nature. Although these measures were based on ones used in previous research and have been shown to possess good reliability and validity with two studies, it is clear that these constructs are complex, particularly when they are measured in a different context (e.g., China) than the one where they were originally developed. To the best of our knowledge, most archival data on organizations' social performance are focusing on large corporations in mature economies (e.g., KLD data). Indeed, the lack of an unbiased, third-party evaluated database on Chinese firms' social performance has significantly hindered scholars' efforts in advancing research in this field. As most CSR issues are global issues, it is important to develop the most effective mechanisms to identify, analyze, and tackle CSR problems in different contexts, particularly in emerging markets, as these markets are playing an increasingly important role in the world economy. Fourth, we did not include any international factor into our analysis in the present research. The CEO of the Company informed us that 80% of his suppliers have international customers and that the larger the supplier, the more likely it will have international customers. Thus, we have included firm size, measured by the number of employees, in our model as a control variable. In today's global business context, however, the discrepancy in the environmental policy adopted by local and international companies may draw different environmental performance from the suppliers. Future studies should incorporate this factor in their model. Last, previous studies have sufficiently verified that a SME's power relationships with stakeholders should predict the firm's environmental performance (Agle et al., 1999, Frooman, 1999 and Mitchell et al., 1997), rather than the other way around. Further, it is difficult for a firm to change its power relationships with stakeholders because such relationships are generally formed by legal, social, and cultural forces (e.g., Agle et al., 1999, Frooman, 1999 and Mitchell et al., 1997). Path dependence scholars argued that a firm's prior social performance can affect its present social performance (Barnett, 2007). In cross-sectional studies, however, the causal relationship can always be disputable. Unfortunately we were not able to collect SMEs' prior environmental performance for a number of reasons. (1) SMEs' environmental performance rarely changes over a short period of time, especially when measured on a perceptual scale. Thus, the perceived previous environmental performance will be very similar to the current environmental performance. (2) When asking CEOs' evaluation of previous performance in a survey, the measure will be retrospective in nature and introduce biases into our model. The well-established corporate financial performance (CFP) — corporate social performance (CSP) relationship argues that when a firm has better previous performance, it will have more slack resources and be better able to afford an improved environmental performance. Thus, in the present research, we controlled slack resource, which should capture the majority of the link between CSP and CFP. In our data analysis, the adjusted R-square was .61, which indicates that the predictors identified in our model have explained a large portion of the variance in SMEs' environmental performance. Moreover, we suspect that as it is relatively easier for SMEs to change their operational patterns than it is for large corporations to do so (Covin and Slevin, 1989), their prior environmental performance may be less predictive of their future performance. Nonetheless, future studies should be designed in such a way (e.g., longitudinal studies) that the causality can be clearly indicated. 6.4. Suggestions for future research Notwithstanding the limitations, our study offers fruitful avenues for future research. First, we have only tested the stakeholder–firm power difference for four external stakeholders. Future studies should explore if a firm has countering power to other stakeholders, such as employees, communities, and non-government organizations. Second, our study has shown that the interdependence of stakeholders may change their power relationships with firms. For example, when the media–firm power difference is tested separately, it has a positive effect on environmental performance, whereas when other external stakeholders are under control, such a positive effect turns into a significantly negative effect. Thus, the investigation whether there is an interdependent relationship among stakeholders should greatly enrich our understanding of the stakeholder–firm power relationship. Third, as discussed earlier, firms in an emerging economy environment have more channels to counter stakeholders' power. It will be interesting to probe if firms in a mature economy are able to counter stakeholders' power, have mechanisms via which they exert power on stakeholders, and the extent to which such power is exercised. Fourth, our findings indicate that CEO altruism is an important predictor of organizations', especially SMEs' environmental initiatives. Indeed CEOs' values have been a major component in previous CSR studies (Agle et al., 1999, Jenkins, 2006, Murillo and Lozano, 2006, Murillo-Luna et al., 2008 and Weaver et al., 1999) and explain a significant amount of environmental performance. As the effect of CEO values on organizations' social and environmental activities has been explored extensively in former studies, it would be more beneficial for us to control for its effect in our model instead of replicating what other studies have done. However, one issue regarding CEO values remains unexplored: what antecedents lead to CEO values? We suspect that stakeholder–firm power difference certainly plays an important role, but the ethical climate within an organization as well as personal ethical values of the CEO will also be key explanatory factors regarding the CEO values. Unfortunately the exploration of this topic appears outside the scope of this paper. We encourage future studies to explore this important topic. Last, in the present research, we assessed general stakeholder groups only. That is, we did not examine the impact of subgroups within each stakeholder group (e.g., regional media versus national media) on SMEs. Stakeholder studies conducted in the CSR field are very generalized about which stakeholders are included in the measure and the generalized measure seems overwhelming (e.g., Agle et al., 1999, Eesley and Lenox, 2006, Gulati and Sytch, 2007 and Kassinis and Vafeas, 2006). In our study, we evaluated the situation of each stakeholder in China and deemed that the generalized measure could be appropriate to our study based on the following reasons: (1) The homogeneity of the sample, i.e., suppliers for one company, warrants that our sampled SMEs are facing the same type of customers and competitors. (2) Furthermore, in Northeastern China, the regional governments tend to be highly aligned with the central government in terms of making policies and implementing regulations. Thus, the generalization of the government stakeholder should be appropriate. (3) The media may actually pose the biggest challenge for the generalized measure. After reviewing a variety of media studies conducted in China, we found that most studies agree that the media in China, whether national or regional, tend to highly align their reports with the tone set by the governments (See, 2009). This is true even for regionalized and commercialized media, which are self-disciplined in order not to accidently cross the “red line” set by the governments (Stockmann, 2010). Thus, measuring general stakeholders' power should be appropriate. Further, it allows us to compare our findings with those of previous studies conducted in the West more easily. However, future studies should investigate the subgroups in each stakeholder category which will provide a more accurate picture of the stakeholder–firm power relationship.