Patterns of B Corps Certification: The Role of Institutional, Economic, and Political Resources
Round 1
Reviewer 1 Report
The paper attempts to take on a potentially interesting analysis of why companies may want to get certified as B Corps. However, there are many confounding issues that are omitted, which make the paper’s contribution weaker. B Corps are voluntary certifications by companies to reinforce their claims of doing good in addition to doing well. They are not new organizational forms, as argued. Many now certified companies existed before B Labs was born. B Corps can also be startups, large companies, large multinationals, or related entities such as divisions, so they are not homogeneous.
Another confounding element is the creation of Benefit Corporations, which began in 2010. These corporations are entities that have a legal obligation to demonstrate social contribution as part of their charters. Benefit Corporations can get certified by B Lab, by one of the many other third-party certifiers, or they can self-certify. In addition, has been the rise of Socially Responsible Investing, so there has been a strong incentive for startups to claim social responsibility to get better investment terms.
Within the growth of Benefit Corporations and SRI, then, the paper is only looking at why a company may want to become certified by B Lab and not at the growth of a new hybrid business organization. The certifications by B Lab are a small percentage of all socially responsible organizations.
The hypotheses also have some issues. H1 takes on diffusion theory: How does a population adopt something new? This is normally analyzed as a penetration measure, which is the percent of the population that has adopted something. Instead, the authors just put forward raw numbers, which are tiny percentages and do not really show the diffusion pattern.
H2 claims there are network effects and tests this through spatial closeness. Except the spatial closeness measure is divided into 4 large areas of the US. This is a stretch to claim, for example, a company in Texas will have an influence on a company in Delaware.
H3 is somewhat suspect as the presumption is that the cost of B Lab certification is so expensive that companies will only take it on in good times. One would presume, then, that companies will drop it in bad times, but the data show otherwise; plus, the cost is not that much.
H4 is also somewhat suspect in that the argument is based on differences in countries and is therefore stretched for the US only. Are people that different in the US, as many studies have shown that Republican states give higher percentages of income to charities. Democrat states rely more on taxes. So who is more socially sensitive?
The reason H4 may be positive is due to multicollinearity. The authors never present correlations between their variables, but one can assume they are high. The west coast has the most venture capital and SRI, the greatest number of startups, and is strongly Democrat. So are H2, H3, and H4 all positive due to just California and not the reasons given?
Some additional methods issues follow. Establishments are not the same as companies. So growth in establishments is not the same as growth in businesses. Establishments can be divisions or locations of bigger companies that are headquartered in a different region. So which region gets credit for the B Lab certification, as it can be done at the division level? There were 851 companies looked at, and they only certify as a B Corp once. I am not sure why panel data are used, which then give degrees of freedom much higher than the 851 cases. Also, changing the B Corp number to a concentration of all B Corps just reinforces the upward growth so creates a bias in the numbers.
The authors have done a good job at creating a data base. I feel they need to rethink the best issues to study with their data.
Author Response
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Author Response File: 
Author Response.pdf
Reviewer 2 Report
Introduction – explain how the paper is structured by sections and what the reader will find to understand clearly the organization of this article.
In general, it is an interesting topic. I suggest some changes. Please, read carefully these comments to improve your paper:
Following the research on organizational ecology which are the main findings of your research? Explain it, please.
Explore other papers to understand clearly the literature.
Do the authors confirm all the hypotheses considering the literature? You should explore more literature to support the hypotheses, not only the results showed in the tables 1-5. It means, that your results should be connected with previous research in some aspects.
The number of companies analyzed is quite good. Future research can include other regions and comparing results, as the authors mention. But first, organize better your paper and explain clearly your contribution here.
I suggest that the authors increase the discussion linked with the theory.
Conclusions should include the main points of this research taking into account some aspects, such as theory, method, hypotheses and results. Here we will understand better if this work is significant.
Author Response
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Author Response File: Author Response.pdf
Reviewer 3 Report
The summary should include some reference to the results obtained.
Please, check the number of companies included in the study (853? 851?). There are different numbers along the text.
The objective should be rewritten so that it fits with the hypothesis.
Hypothesis 2 is very generic, it must be restated.
Hypothesis 3. How is the number of companies related with the resources? I do not understand the relationship.
Table 2. Year (2011.500) Mistake?
Author Response
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Author Response File: Author Response.pdf
Reviewer 4 Report
I have gone through the paper this is very interesting. B Corp is working very actively on the CSR and Sustainable issues therefore, the study has some significant value in the area. I have further some issues:
- Please specify the research goal and question
- Use a separate theory pointing hypothesis. I suggest institutional point of view
- Hypothesis development must be in the line of prior literature of theory
- Use sensitivity analysis
- What is the contribution?
- Discussion and conclusion must show the solution of the research agenda therefore, it is necessary to point CSR, environmental practices, and sustainability management policy.
You may look into:
Masud, M.A.K; Harun, M; Khan, T; Bae, S; and Kim, J.D. (2019). Organizational Strategy and Corporate Social Responsibility: The Mediating Effect of Triple Bottom Line, International Journal of Environmental Research and Public Health, 16(22), 4559.
Mahmood, Z; Kouser, R; & Masud, M.A.K. (2019). An Emerging Economy Perspective on Corporate Sustainability Reporting – Main Actors’ Views on the Current State of Affairs in Pakistan. Asian Journal of Sustainability and Social Responsibility, 4(8), 1-32.
Masud, M.A.K; Nurunnabi, M; & Bae, S. (2018). The Effects of Corporate Governance on Environmental Sustainability Reporting: Empirical Evidence from South Asian Countries, Asian Journal of Sustainability and Social Responsibility, 3(3), 1-26
Author Response
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Author Response File: Author Response.pdf
Round 2
Reviewer 1 Report
The paper has been improved but still suffers from many of the same issues as before. The biggest issue is the difference between what is discussed and what is actually shown. First, is the assertion that B Corp certification is a new hybrid form of organization. Socially responsible organizations have been around for decades. For a good history see Agudelo et al. (2019). The authors conflate investment in socially responsible activities with getting certified for doing so – they are not necessarily the same. Instead, what is being tested is why a company decides to get B Corp certified. The theory presented is resource dependence: that organizational population, economic and political resources flow to the companies that do so. But this was not tested. What was shown is that B Corps are growing, that they are growing in states with more startups, and they are growing in states that vote Democrat for president. Given that the general trends over the 10-year period have been up, the first two are not surprising.
What the authors claim to have shown, then, has not been shown, such as economic considerations. As the general trends in startups and B Corp certifications have been up, and they excluded companies who dropped certification so did not specifically analyze the 2 down years, it is difficult to draw any conclusions from their overall correlation. If the authors were to be more precise in what they tested versus what they argued, the paper would not have any surprising results.
Latapí Agudelo, M.A., Jóhannsdóttir, L. & Davídsdóttir, B. A literature review of the history and evolution of corporate social responsibility. Int J Corporate Soc Responsibility 4, 1 (2019). https://doi.org/10.1186/s40991-018-0039-y
Author Response
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Author Response File: Author Response.pdf
Reviewer 4 Report
The current version looks nice and trying to include all of my concerns.
Referencing is not well looking.
I hope the author could use more references based on CSR, Environment, and Institutional research.
Author Response
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Author Response File: Author Response.pdf
Round 3
Reviewer 1 Report
I appreciate your trying to refine the arguments, but the problem you have not solved is that your data do not demonstrate anything interesting. Let us look at each of the variables:
Vote democrat: not significant
Establishments: b=0, so you have no effect
Year: you found significance but a tiny R-squared, plus it has no meaning for theory
B-corp concentration: is your strongest variable but it has a correlation of .790 and is really meaningless as the dependent variable goes into the numerator of the independent variable. This becomes a tautology
Early adopter: this has significance and meaning in that early adopter states are more likely to diffuse, which is what diffusion theory would predict. What you do not have is any characteristics of the early adopter states, or why did those states adopt so quickly. So your only legitimate relationship shows nothing new.
At the end of your paper you talk about something you can test, which is the relationship of B Locals and their influence on B certification adoption. This would show your argument of institutional factors.
Author Response
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Author Response File: Author Response.pdf
