Not all technologies are created equal for stakeholders: constituency statutes, firm stakeholder orientation and investments in technology generality

Raffaele Conti, Elena Novelli*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

Previous research has analyzed the effect of stakeholder orientation on the amount of technological investment firms make but has ignored its effect on the characteristics of that investment. To address this gap, we explored the impact of stakeholder orientation on the degree of generality of a firm's technological investment. More general technologies (i.e., technologies easily deployable in a wider range of industries) are more likely to promote major changes in the firm's scope. However, these changes undermine the value of stakeholders’ past relationship-specific investments, which are tailored to a certain firm scope. Therefore, more stakeholder-oriented firms will invest in less general technological assets to reduce stakeholder concerns and opposition. This negative effect will be stronger in more uncertain industries, where stakeholders are more concerned that firms might use technology generality to change their scope following the realization of previously unforeseen contingencies. However, it will be weaker in more competitive industries, where stakeholders tend to make less relationship-specific investments and are less concerned with changes in firm scope triggered by an increase in technology generality. We test our hypotheses by exploiting the enactment of constituency statutes in 34 U.S. states during the period 1976–2000 as a plausibly exogenous variation in firms’ stakeholder orientation.
Original languageEnglish
Article number104470
JournalResearch Policy
Volume51
Issue number3
DOIs
Publication statusPublished - Apr 2022
Externally publishedYes

Keywords

  • Firm scope
  • General technology
  • Stakeholder orientation

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