When are stakeholder pressures effective? An extension of slack resources theory

There has been an intense debate on when stakeholder pressures are effective in driving firms to contribute to sustainable development. Drawing upon institutional theory and slack resources theory, we theorize that country-level sustainability performance interacts with slack resources in shaping corporate responsiveness to stakeholder pressures. Empirical results based on the data from 6th International Manufacturing Strategy Survey and secondary data of the Human Development Index and the Environmental Performance Index support our hypotheses. As hypothesized, in countries with low level sustainability performance, firms with considerable slack resources are more responsive to stakeholder pressures than their peers with limited slack resources. In contrast, in countries with high levels of sustainability performance, there are no significant differences between firms with and without considerable slack resources in their responsiveness to stakeholder pressures. This study contributes to a better understanding of organizational responses to stakeholder pressures. Moreover, it suggests that stakeholders, depending on country-level sustainability performance, should adopt different strategies to stimulate firms to participate in sustainable development.