Can Stakeholders Pressure Affect Organization's Performance?

Updated: Sep 27, 2020

Employee satisfaction and high performance can be achieved through Corporate Social Responsibilities (CSR). Stakeholder theory affords an initial point to assimilate stakeholder pressure and corporate social responsibility practices.

Societies these days have greater awareness and demand for environmental-based activities, especially welfare based activities for employees. According to scholars Bauman & Skitka, 2012, employee's #wellbeing is related to CSR. More specifically, is a result of Corporate Social Responsibility Practices CSRP. Various employee needs could be fulfilled through CSR activities. Whereas, further research by Sarfraz, Qun, Abdullah, & Alvi, 2018 argue that trust also provides a mechanism between CSRP and employee attitude.

Cropanzano and Rupp (2008) argue that the justice-related aspect in social exchange theory refers to a level of trust that is being developed through an exchange relationship between employees and their organization through internal CSR impact. Employee behaviour, as well as attitude, have an impact on the achievement of firm objectives and goals through employees’ CSR perception.


A resource-based view describes culture as a resource that if it does not support firm CSR activities then the firm might not practice CSR activities in spite of high stakeholder pressure. Hence, the effect of pressures from stakeholders concerning CSRP on organization performance and wellbeing of employees is gaining interest among scholars.

Organization’s CSR activities are influenced by shareholders, customers, employees, society and the government which is the most influential one. It is noteworthy that these CSR activities ultimately influence firms performance. In response to stakeholders’ pressure, firms develop some environmentally responsible strategies. In doing so, firms face some constraints like non-supporting organizational culture.

A research studied the effect of pressure from stakeholders over organization performance and wellbeing of employees by including the mediating effect of CSR oriented culture, CSR practices, organizational citizenship behaviour, organizational commitment, and organizational trust in Pakistan’s banking sector. It employed a quantitative and cross-sectional research design. A sample of 180 banks was studied by employing SmartPLS3.0 software using mediation analyses.

Results have shown a significant indirect impact of CSRP on performance while the direct impact of CSRP over organization performance is not significant. Furthermore, CSR practices’ direct impact on commitment is significant. However, the direct effect of commitment over organization performance is not significant. Serial mediators play a role between stakeholder pressure and organization performance and also play a role between stakeholder pressure and employee wellbeing.

For further generalizability of results, similar studies should be conducted in other sectors and countries.

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