Attitudes toward the Corporation and the Evaluation of Social Data

Paul F. Williams, The Florida Stare University

A scule ispresentedIOmeusure attitudes ubout the sock1 role ojcorporutions, und to test jijr uny ussociution between uttitudes und perceptions of the relevance of sociul dutu. Attitudes are jiwtd to be ussociuted with perceptions ojthe relevunce ojsociul dutu. The relationship between uttitudes und perceptions is also conditioned by the source oj the sociul dutu.

American corporations have been including social objectives in official statements of corporate policies. These objectives create a need for data useful for the assessment of strategies and the evaluation of performance in achieving social goals. Such data have come to fall under the general rubric of social information or social accounting. Since accountants are an integral part of the planning, control, and information gathering functions within business, they must concern themselves with the complexities in the use of social data. Many preliminary efforts seem potentially fruitful. One such initial effort has been suggested by Jensen: OIVZ ObJtX~iVc
ih to USC cvldence from these varied studies to begin to identify typch ot.pcoplc. Knowledge of such type>, could lead to better way5 oCpredicting human responbcs to corporate social impacts, informarlon. or lack of information thereof. and make corporations more viable as both economic and social institutions 16, pp. IhY-1701.

Research by marketers into the problem of identifying and characterizing markets has demonstrated the potential usefulness of attitudes as a means for identifying types of people. The possible link between attitudes and behavior has been a central concern of behavioral scientists; the evidence for a linkage is mixed [ 12, 141. Market segmentation studies utilizing cluster-based designs [ 16, p. 3171 have employed attitudes as explanatory variables with some success. Cunningham and Crissy [3] found that individuals whose behavior differed with respect to purchases of compact cars also differed significantly on certain atAddress correspondence to Paul F. IWiams, College of Business, Florida State University, Tallahassee, FL 32306. JOURNAL OFBUSINESSRESEARCH 10, 119-131 (1982) 0 Elsevier Science Publishing Co., Inc., 1982 52 Vanderbilt Ave., New York, NY 10017 0148-2963/82/01119-l

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titudinal dimensions. Burger and Schott [2] found that certain attitudes were related to private brand buying; Wildt and Bruno [ 151 found that attitude models predict quite well preference orderings for capital equipment. Concern about ecological issues was found by Kinnear and Taylor [8] to be a useful basis for differentiating individuals with systematically different cognitions about laundry products. Attitudes can predict behavioral intents and actual behaviors toward products or product classes. Information is a product. Perception of it may be influenced significantly by attitudinal factors. The purpose of this article is to report the results of a study conducted to determine whether certain attitude types evaluate social data differently than other types. Pertinent evidence is also provided on effect of situation on the attitude/behavior relationship. The demonstrated association between attitudes and the evaluation of social data has implications for the conduct of social accounting research, particularly where the phenomena of concern are individual information processing and decision making. Development of the Attitude Scale

The Framework Construction of the attitude scale began with the development of a pool of statements. Three attitude dimensions were used for guidance in deriving the attitude statements: 1) belief about the corporation as an entity, 2) moral choice, and 3) belief about the legitimacy of policy setters. The first dimension distinguished between the corporation as an institution and the corporation as a citizen. Statements were devised to attempt to differentiate persons on the following basis: persons who predominantly believe that the corporation should be considered a public institution (i.e., an abstraction that possesses no intrinsic, inviolable rights, but exists only to serve) versus persons who believe predominantly that the corporation should be considered a private citizen (i.e., an anthropomorphism possessed of personal motives and imbued with the same legitimate rights enjoyed by an individual). The second dimension distinguished between intuition and rationalism. According to Hogan [4] there have been two sets of principles with which to judge a persons obligations to society, the ethics of personal conscience and the ethics of social responsibility. The ethics of personal conscience (labeled intuition in this paper) is characterized by the belief that there are higher laws, unrelated to human legislation, which may be discovered by
intuition or reason; a human law is just if, and only if, it corresponds to or can be derived from the higher laws [4, pp. 205-2061

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121 (labeled rationalism) is characterized

The ethics of social responsibility by the belief

that the most defensible criteria for evaluating social action are the existing legal system and the general welfare of society. The manifest law is regarded as a rational instrument for the realization of the common good . . [4, pp. 2061.

Since social data have as their principal function the maintenance of accountability, persons beliefs about the origin of social obligation is likely to influence perceptions of the appropriateness of social data. Statements devolving from the moral choice dimension were thus intended to differentiate persons on the following basis: persons who believe that right conduct is intuitive versus persons who believe it is equated with law. The final dimension was belief about the legitimacy of policy makers. Statements associated with this dimension were to differentiate persons who believe that sources outside the corporation should have a legitimate role in the goal- and means-setting process from those persons who believe that management should be the sole maker of corporate policy. This dimension was included since social data reaches management from various sources whose legitimacy as participants in corporate policy-setting is still a moot issue. For each of the three dimensions, two sets of statements were composed, labeled in accordance with the positive response. Thus there were initially six sets of questions labeled as follows: Dimension 1: ( 1) Public (2) Private

Dimension 2: (3) Intuitive (4) Rational Dimension 3: (5) Management (6) Outsiders A total of 45 statements (see Appendix) were included in the initial battery. The statements were placed Analysis of Responses to the Statements in random order on a questionnaire adminstered to a sample of 194 business students. Each statement was accompanied by a 5-point scale ranging from strongly disagree to strongly agree. Responses to the statements were analyzed to reduce the original set of statements to a more interpretable set. The statements that were chosen for the final scale appear in Table 1. The process whereby the statements were selected consisted of two stages.

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Table 1: Statements
Dimension

Comprising

Final Scale
Statement Numbers

1 2

PUO Pr I R M 0 C PI, Private; I, Intuitive; R, Rational;

1, 5, 6, 13 11. 32, 44 9. 15, 19,40 16,33, 37 10, 24, 35, 38 14,31 29,42,43 M, Management; 0, Outsiders; C,

* Pu, Public; Compassion.

Stage one was an item-analysis. Responses to individual statements within each set were correlated with the total score on all statements within the set. For example, the set consisting of statements 1,.5,8, 13, 18, 23, 26, 39, and 42 was labeled Public. To determine which statements in that set did the best job in identifying persons who held such a belief, the responses on the nine questions were summed. Then each response was correlated with that sum of responses. Statements with correlation coefficients greater than 0.4 were considered as candidates for the final scale. However, to be included in the final scale a statement had to meet additional criteria. Stage two consisted of determining whether those additional criteria were met. Responses to the statements were factor analyzed. This procedure determined whether the underlying response structure was consistent with the prespecified dimensions, and to identify ambiguous questions. The factors that emerged were those anticipated. Statements that loaded uniquely on factors corresponding to prespecified dimensions were deemed to represent that dimension and were included in the final scale. Only statements with positive loadings were included. The original three dimensions were specified as contradistinctions. To be consistent, responses on one set of statements associated with any dimension should have high negative correlations with responses on the other set. The actual pattern of responses did not adhere to this ideal of consistency. Correlations between sets on any dimension were all low although generally in the appropriate direction. This finding indicates that intensity of belief at one end was not necessarily accompanied by an equal and opposite intensity at the other. The sources of the apparent low consistency in response could be of two types: subjects and/or statements. Subjects could have evaluated

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statements on cognitive dimensions other than those hypothesized in the conceptual framework. There is some evidence that this did occur since one of the factors that emerged could not be identified as one of the prespecified dimensions. However, this was not entirely the case since some correlations between items were in the appropriate direction, though of a low magnitude. A second subject-related source of apparent inconsistency could have been a lack of subject involvement with the task of responding to the statements. No substantial evidence exists to conclude whether this was the case. The second source of low consistency could have been construction of attitude statements. Statements may have been so ambiguous that responses were made in the absence of a thorough awareness on the part of each subject of the implications of his or her response. Reliability tests (discussed below) indicate that some of the statements were not interpreted in the same manner from one administration of the attitude instrument to the next. However, none of the statements with low reliability appeared in the final scales. The veracity of the conceptual framework based on the results of the factor analysis is somewhat devalued. What is not clear, however, is whether the conceptual framework has any potential for empirical support or whether the instrument developed was not sufficient to the task of verification. The validity of the conceptual framework is still at issue; no resolution is forthcoming from the results of this one study. In order to proceed to test for the possible association between attitudes and the evaluation of social data, an attitude instrument that discriminated among individuals was required. Thus it was decided to treat each set of questions as independent in order to increase the discriminatory power of the final instrument. Results of the factor analysis indicated two factors not identified by any of the prespecified labels. Statements loading on one of the factors touched two different dimensions and could not be satisfactorily labeled. It was not added as a distinct dimension in the final scale. The other factor was labeled and included as a separate dimension in the final scale. Statements loading on this factor were originally specified as being among the set of statements for which agree responses would imply an Intuitive individual. A reexamination of the content of those statements seemed to indicate that their common theme would be more appropriately labeled Compassion. Persons agreeing with the statements included in this dimension would be individuals tending to be sensitive to the needs of others. Instrument Reliability To assess the reliability of the attitude scales employed in this study, the test-retest procedure for determining the

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systematic variation in responses was implemented with a sample of 47 business students. The 47 subjects were not part of the sample used for the rest of the study. Measurements were taken at a 1O-day interval; four subjects failed to complete the second measurement, leaving 43 sets of responses for correlation analysis. Test-retest correlations of the 45 individual statements comprising the attitude instrument ranged form 0.057 to 0.746, with 81 percent of the coefficients falling in the range 0.3 to 0.7. Coefficients range from a low of approximately 0.40 for the Outsider dimension to a high of almost 0.79 for the Compassion dimension. For attitude measures these coefficients are resonably good. Peter [I I] surveyed the consumer behavior literature and reported reliability coefficients (when available) of scales used in selected studies. Reported coefficients for attitude scales ranged from 0.38 to 1.O in one study, 0.41 to 0.61 in another, and a mean of 0.672 in the third study. Thus the evidence from the test-retest procedure tends to support the conclusion that the attitude scales developed in this study provide systematic measurements on the underlying attitude constructs. Test of the Relationship between Atitudes and the Evaluation of Social Data To test for the effect of attitudes on the evaluation of social data, an experiment was conducted on a subsample of 61 business students. In addition to responses to the attitude statements, the individuals in this subgroup provided two additional responses to questions about their perceptions of the relevance of certain data items to managerial performance evaluation. These responses were elicited via an additional three-part questionnaire. Part one consisted of a description of a hypothetical manufacturing setting: pulp and paper plant. Each individual was instructed to assume that he or she was the plant manager. Part two of the questionnaire provided the respondent with a financial performance report that included measures of actual and budgeted net income, profit margin percentage, working capital turnover, and current ratio. This was included to mollify the experimenter-demand bias that would be more salient if part three of the questionnaire was presented alone. All respondents indicated the degree to which they perceived the report as personally relevant to the evaluation of his performance as plant manager in the scenario context. Responses were along a five-point scale from irrelevant (1) to highly relevent (5). The third part of the questionnaire consisted of social data presented in performance report format. The social measurement items were selected

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from the Human Resources Networks [5] compilation and from the AICPA [I] monograph. Three areas of social impact were represented: the environment, occupational safety and health, and equal employment opportunity. Three areas were chosen to avoid uncontrollable content effects that might be presented had only one area been chosen. Each battery contained two reports connoting good performance and one connoting a poor performance. This was done to minimize any evaluation effect that might influence responses if all reports connoted the same level of performance. Reports were varied only as to their source. Twenty-eight respondents received reports coming from formal, institutional sources: a state environmental protection agency, a labor union, and a federal job opportunity agency. Thirty-three respondents received reports from ad hoc sources (i.e., an environmentalist organization, an association promoting the interests of minorities, and a public interest group ). After considering the reports, respondents were asked to indicate the degree to which they perceived such data to be personally relevant to the evaluation of their performance as plant managers. Responses were used to test the null hypothesis of no difference in degree of perceived relevance of data from either type of source. The observed t = value for the test of mean difference was 1.40, which was not significant at alpha = 0.05 for a two-tailed test. For each respondent a score was Results of Regression Analysis calculated for each of the seven sets of statements comprising the final scale. The score for each set was merely the sum of the responses to the statements in the set. Scores for each set of statements were then used to predict responses to the social data relevance question ignoring data source. The results are presented in Table 2. With data sources uncontrolled there is some explanatory power attributable to the attitudes held by the respondents. A general bias to regard social data as more relevant appears to be associated with individuals who scored highly on the Compassion and/or Outsider sets of questions. To a lesser degree this was also true of persons scoring more highly on the public and management sets. In order to test source effects on perceived relevance of social data, attitude scores were used to partition subjects into attitude groups. The groups were formed via a hierarchical clustering procedure, described in Johnson [7], using selected scores on the attitude scales as the basis for forming groups. Scale values selected as the clustering variables were those that were significant at the .OS level in the regression analysis (i.e., the Outsider and Compasion variables ). The grouping procedure that was used provides no criteria for determining the number of meaningful groups. It was decided to select

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Table 2: Regression Analysis: Social Data Relevance as Criterion Measure; Attitude Scores as Independent Variables
Variable Beta F-Ratio Significance

Response

Multiple R Square

PU

PI
I R

M 0 C
Overall

0.06 0.02 0.01 0.03 0.06 0.14 0.14

3.00 0.35 0.05 0.25 3.24 5.61 10.16 2.10

0.09 0.56 0.82 0.62 0.08 0.02 0.00 0.02

0.28

the minimum number of groups for which adequate characterizations could be made; the number of groups so identified was three. Group one was characterized as the neutral group, since average scores on each scale within this group were in the intermediate range of possible values. Group two responses were high on both scales. Subjects in this group would tend to exhibit a sensitivity to others needs and to look favorably upon outside involvement in the conduct of business affairs. Group three had high scores on the Compassion scale but low on the Outsider. Subjects in this group were like group two members with respect to others needs, but would, contrarily, tend to look unfavorably upon outside involvement. After the attitude groups were formed, mean response on the social data relevance question was calculated for each group for each of the two types of message source. For groups one and two there were no significant response differences attributable to source. For group three, however, the source of the message did have an effect, with formal sources sending the significantly more relevant messages (r = 2.461, significant at 0.05 level). A plot of the mean responses by group (see Figure 1) indicates an interaction effect between attitudes and data source. Though no overall source effect was detected with the sample as a whole, the partitioning of the group by attitudes revealed that for a certain type of message recipient, source characteristic did influence perception of message relevance.

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Group

Group 2

Group 3

FIGURE 1. Plot of mean responses by group by source.

Summary and Conclusions The study reported in this paper demonstrated that persons attitudes about the role of corporations is associated with their perceptions of the relevance of social data to the evaluation of managerial performance. In addition, some evidence was provided indicating that the attitude/ evaluation association is conditioned by the source of the social data. Finally, the study demonstrated the usefulness of the attitude scale developed to test for the attitude/evaluation relationship. This is particularly important since future social accounting research will likely encompass the investigation of certain individual and group behaviors both in laboratory settings and within actual organizations. Because of the exigencies that accompany most business/accounting research, samples are seldom random. Careful identification of the composition of samples is particularly important for social accounting researchers. There may be much less consensus on the significance of social data per se than on more traditional forms.

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Results of this study also suggest avenues for future social accounting research. As the factoring of the attitude statements revealed, the dimensions of corporate social role are numerous. Research into the attitudes of businesspeople about the social role of business could begin to provide answers to questions about what they perceive to be the legitimate and possible ends and means of business. This information would be useful for providing insights into the reactions of business to certain government policies and certain popular movements. In this study the observed effect of the social data presented to subjects was the expression of an opinion as to the relevance of those items for evaluating managerial performance. Further research is necessary to investigate the relationships between the provision of social data and the overt behaviors of the recipients. Specific questions needing answers would include the following: 1. Does the introduction of social data into evaluation schemes change attitudes toward pursuing social goals? 2. Do individuals with certain attitude profiles fix on social data leading to behaviors inconsistent with the achievement of organizational objectives? 3. Do the characteristics of the source of social messages affect the actions taken by the message recipients? Answers to these questions should contribute to the improvement the overall performance of business as an institution. Appendix The following 45 statements comprised the attitude instrument: 1. A large corporation is like a university because both have as their central purpose serving the public interest. 2. The management of a corporation must accept the major responsibility for preventing any adverse side effects that result from its normal activities. 3. The sole purpose of the corporation is to act as the device through which persons pursue their individual goals. 4. A business corporation is not absolved of all its responsibilities simply because it is in compliance with the law. 5. The role of the president of a firm like Eastman-Kodak is that of a public servant. 6. The management of a corporation is responsible to many definable interests in society. of

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7. Expecting business corporations to be substantially more involved than other citizens in the solutions to social problems is unjustified. 8. The meeting of the social needs of the community is a proper charge to the cost of production. 9. There exist higher laws, not related to human legislation, which may be discovered by intuition. 10. The internal conduct of business affairs is not a matter for public involvement. 11. Corporations should have as much right to engage in political activity as any other private citizen. 12. It is the responsibility of the regulatory system established by law to prevent adverse impacts on society that might result from the use of certain products. 13. The purpose of the corporation can be quite simply summarized as service to society. 14. Representatives of the public, as well as management, should have significant roles in determining the conduct of business affairs. 15. The management of a corporation should do more than the law requires in its concern with the social impacts of its actions. 16. Right and wrong conduct for business corporations can be meaningfully defined only by the law. 17. Whether or not a firm should pay representatives of foreign governments in order to do business in their countries is a decision only the management of each firm should make. 18. Large business corporations are legitimate only if they are managed in the long-run interests of the public. 19. A law should be disobeyed when it conflicts with the dictates of ones conscience. 20. Management, not the EPA of Common Cause, should decide what production technologies a corporation will employ. 2 1. Business corporations have motives just like any other person. 22. The rule of law is the only foundation of a just society. 23. Business corporations should hold themselves accountable for the quality of life. 24. Standards for corporate performance must be left to the determination of management. 25. In conducting its business, the management of a corporation is not obliged to do so beyond what the rules-of-the-game dictate. 26. The large business corporation is only a legal abstraction with no natural rights. 27. The role of the manager is mostly that of an arbiter of societys diverse interests.

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28. The management of a corporation earning an adequate return on investment is fulfilling its obligations. 29. Concern for the welfare of others should be the principle that guides an individuals conduct. 30. A large business corporation survives only by being managed in its own interest. 31. Standards for corporate performance come legitimately from the public. 32. The large business corporation should be considered to have the same freedoms as do individuals. 33. In doing business, the management of a corporation should do no more than is required by law. 34. Business managers have an obligation to consider the often conflicting interests within society when formulating corporate policy. 35. Management should be the sole determiner of a corporations objectives. 36. The president of General Motors is ultimately accountable only to the stockholders of that corporation. 37. In all situations one must always accept the authority of the law. 38. It is not appropriate that representatives for the public interest be included on the boards-of-directors of large corporations. 39. A business corporation is a means to an end and not an end in itself. 40. Conscience is a better guide to a managers actions than whatever the law might say. 41. Corporations that generate significant social costs should be closely regulated by society. 42. Since most people are dependent on private industry for employment, corporations should be willing to sacrifice some efficiency in order to provide jobs. 43. Empathy, the ability to walk a mile in the other guys shoes, is what assures a just society. 44. A business corporation is just like any other private citizen. 45. As long as a corporation is responsive to the dictates of the marketplace, it will satisfy its moral obligations.

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