Greater Social Pressure is Associated with Lower Financial Performance
Social pressure can hurt a company’s reputation, brand equity, or productivity. If activists call attention to a company’s poor environmental record, the pressure could dissuade consumers from buying its products, cause some investors to shun its stock, and reduce productivity by hurting employee morale and motivation.
In general, social pressure tends to boost corporate social performance while hurting financial performance. “Social pressure from government, NGOs, and activists has two kinds of effects,” says Baron. “It leads firms to increase social performance. And social pressure tends to be penalized in financial markets.”
Financial and Social Performance are Largely Unrelated
Why? Consider two contrasting grocery chains. Whole Foods positions itself as a socially and environmentally responsible grocer selling premium-priced products to a niche market. Another grocery chain might be lower on social performance while selling at low prices to price-conscious consumers. Which one will be more profitable — the high social performer or low social performer? It could go either way, since there are so many variables at play simultaneously in determining financial performance, notes Baron.
However, differing patterns exist among the subset of companies selling to consumers and those selling to other businesses, such as wholesalers and manufacturers. Among consumer companies, financial performance is positively associated with social performance, since consumers can directly reward a company’s socially positive behavior by purchasing its products. Among industrial companies, the opposite is true — financial performance is negatively associated with social performance. That’s because responsible behavior can be expensive, and there are no consumers to directly reward an industrial company.
Overall, the study “challenges academics and social investors alike to appreciate the complexity of firms’ relationships with society,” said the Center for Responsible Business in announcing the Moskowitz Prize winner.
trio reached several major conclusions.
Social Pressure and Social Performance Reinforce Each Other
Greater social pressure can result in better social performance. In other words, firms step up responsible behavior in response to pressure. Nike became an industry leader in promoting better working conditions in apparel and footwear factories in Asia and elsewhere after activists made the company a prominent target in the 1990s. Starting around 2005, Wal-Mart responded to critics by adopting more progressive employee, community, and environmental practices, including recent initiatives to cut energy use and require eco-responsibility among its suppliers.
The researchers also found the reverse is true — better social performance can lead to greater social pressure. Activists and NGOs often target firms precisely because they are responsive to social pressure. The firms are seen as “soft targets.” For instance, Starbucks’ socially responsible bent made it an attractive target for criticism and protests by activists pressing the company to sell “fair trade” coffee.
We compare the effects of two prominent organizational control mechanisms—social pressure and monetary incentive—on cognitive control. Cognitive control underlies the human ability to regulate thoughts and actions in the pursuit of behavioral goals. Previous studies show that monetary incentives can contribute to goal-oriented behavior by activating proactive control. There is, however, much less evidence of how social pressure affects cognitive control and task performance. In a within-subject experimental design, we tested 47 subjects performing the AX-CPT task to compare the activation of cognitive control modes under social pressure and monetary incentive beyond mere instructions to perform better. Our results indicate that instructing participants to improve their performance on its own leads to a significant shift from a reactive to a proactive control mode and that both social pressure and monetary incentive further enhance performance.
How to Handle Peer Pressures
The desire to fit in and feel like you are part of a group is normal, and most people feel this way sometimes, especially in the teen and young adult years. Peer pressure, that feeling that you have to do something to fit in, be accepted, or be respected, can be tough to deal with. It can be overt (i.e., friends telling you to do something) or less direct (e.g., friends joking around about your not doing what they are doing, seeing others at a party doing shots and feeling left out if you don't, knowing a friend tried LSD and feeling curious about it). While peer pressure can be helpful at times (e.g., recognizing that your friends are studying more than you are as a motivator for you to work harder, noticing that your drinking is more extreme than your friends' and deciding to cut back), it can also cause you to do things you may not be sure about, or even things that you don't really think are right for you. Dealing with this pressure can be challenging, but it’s important to reflect on your own personal values and preferences and make decisions based on those rather than on peer pressure
Manging peer pressure is usually not that difficult if you are only surrounded by people whose values, preferences, and behaviors are similar to yours. However, in a college environment, it's very likely that you will meet people with a wide variety of attitudes and behaviors. At times, it may feel easy to know where you stand and act accordingly, but at other times, you might feel confused, pressured, or tempted to act against your own judgment. What's more, college may be a time when you are away from home and family with more freedom to make your own choices than before. You might even feel a desire to do things your family doesn't do or doesn't think are OK as a way to establish your own identity and try new things. Again, it's important to reflect on what you think is important, your values, and who you want to be. It's also good to try and think ahead to potential consequences of an action. If you go with the crowd and do something you might not have considered before, what will happen? Could there be a negative outcome? Could you feel bad about yourself for acting against your values or judgment? All important consideration
When it comes to pressures around alcohol and other drug use, something else to think about is that most students overestimate how many of their peers drink or use drugs. The truth is that many fewer college students drink or use drugs than people assume. It's similar with sex and "hooking up"—most students have a skewed idea of what others are doing. Knowing the facts can help you to resist pressures based on the idea that "everyone is doing it" and that you must party to fit i
When faced with overt or indirect pressure to do something you're not sure about, try using the following strategie
Give yourself permission to avoid people or situations that don't feel right and leave a situation that becomes uncomfortable. Work on setting boundaries. It's OK for you to do what is best for yo
Check in with yourself. Ask, "How am I feeling about this?" "Does this seem right to me?" "What are the pros and cons of making this decision?
Recognize unhealthy dynamics: It's not OK for others to pressure, force, or trick you into doing things you don't want to or for others to make threats if you don't give in. It's not OK for others to mock, belittle, shame, or criticize you for your choices. You can ask others to stop these behaviors, or you can choose to avoid spending time with people who act in these ways
Spend time with people who respect your decisions and won't put unfair pressure on you to conform
Remember that you can't (and don't have to) please everyone or be liked by everyone. This can be hard to accept, but it helps to try
It's OK to use an excuse if the truth is too challenging. For example, if someone offers you a drink and you want to say no but feel awkward, say you're on medication or have to get up early the next day.
Take a friend who supports you along if you are going to be in a pressure-filled situation and let them know what your intentions are (e.g., "I don't want to drink, so if you see me about to, remind me that I wanted to stay sober").
Stand up for others when you see them being pressured. "Bystander intervention" (stepping in to help out when you see someone in trouble) can be an effective way to support others and send a message. If you don't feel comfortable directly confronting the person doing the pressuring, try distracting them or inviting the person being pressured to do something else (e.g., "Hey, come to the ladies room with me" or "Let's go over there and take a selfie").
Ask for advice or support from a parent or other trusted family member, a clergy person, a mentor, or a counselor if you need it.
..."u.s:n.s!.helps to try.
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