Focusing on a firm’s imbalance between internal and external stakeholder orientations, we propose that the impact of this stakeholder disparity on the firm’s market value depends on country-level trust. Integrating sociology research on societal trust with strategy research on corporate social responsibility (CSR), we argue that firms in countries with higher outgroup trust experience more negative effects from gaps between internal and external CSR actions. In contrast, in countries with greater ingroup trust compared to outgroup trust, the negative impact of the CSR gap on firm value is mitigated. Our empirical analysis of firms across 46 countries supports our predictions. Our study is the first to theoretically and empirically demonstrate the multilevel social capital framework on firm value throughout the cross-national investigation of the interactive influence of firm-level stakeholder orientations and country-level trust radius.

This study explores the impact of local opioid exposure on the performance of U.S. public firms and examines whether these effects propagate through supply chain networks to their downstream customers. Methodology/results: Analyzing a sample of 2,617 public suppliers and 1,473 public customers from 2003 to 2020, the study finds that firms headquartered in areas with high opioid exposure see a reduction in sales. We establish causality by using the introduction of staggered state-level prescription drug monitoring programs (PDMPs) as exogenous shocks to opioid exposure and running a difference-in-differences (DID) test to analyze the impact. PDMPs could mitigate the negative impact of opioid exposure, resulting in a 5.7% increase in sales. Furthermore, we document that this negative impact propagates to downstream customers: a one-standard-deviation increase in supplier opioid exposure, measured by the average opioid-related death rate across the headquarters counties of its suppliers, reduces customer sales by 2.92%. This relationship is causal and holds when controlling for customers’ opioid exposure. We rule out the alternative explanations of common shocks. The spillover effect is more pronounced when suppliers are in labor-intensive industries and when customers face higher costs for switching suppliers. Finally, customers make strategic adjustments to manage supplier opioid risks.

This study examines the distributional consequences of broadening stakeholder governance; i.e. expanding firm governance rights to non-equity, or contracted, stakeholders. We theorize that broadening stakeholder governance initially reduces the residual value left to equity providers, due to increased coordination costs and heightened claims on firm resources by contracted stakeholders. However, these effects diminish as firms with broadened stakeholder governance mature. Over time, diminishing coordination costs and increasing returns from firm-specific investments generate enough value to increase the residual value left to equity providers. Additionally, we propose that contracted stakeholders with governance rights are willing to compromise their claims when the focal firm faces economic difficulties. As a result of these dynamics, we argue that broadening stakeholder governance is likely to increase firm survival. To test these arguments, we analyze longitudinal French tax and archival data on firm with varying governance structures. Taken together, our findings highlight the temporal trade-offs of stakeholder governance, which bear implications for value creation and value capture dynamics in firms with broadened stakeholder governance.