Influence of Non-governmental Organizations on Corporate Sustainability Practices. Towards an Institutional-legitimacy Perspective

: There is growing adoption of corporate sustainability practice in both for-profit and not-for-profit organizations. This proliferation is largely due to the increasing concerns for social, environmental and economic factors in which we assume shared responsibility. Despite the growing attention of researchers and practitioners, several corporations failed to meet their sustainability responsibilities. Several reasons could be associated to this phenomenon such as lack of regulatory mechanism, accountability, etc. This review, however, seeks to examine how nongovernmental organizations (henceforth, NGOs) influence corporate sustainability adoption (i.e. sustainability reporting). In the review of prior research, we leveraged the institutional-legitimacy and corporate governance theories. The findings suggest that NGOs have greater potential in sustainability discourse through two salient actions, namely (1) collaborative partnership, and (2) confrontational tactics. While the former promotes stakeholder involvement in corporate decision making through dialogue, joint-projects on CSR, sustainability reporting, the latter, however, is the last resort – involving “naming and shaming” corporations for poor social and enviro nmental performance through public and social media. The objective of such action is to cause reputational damage to businesses. Finally, it is also observed that crucial to NGO power and influence is the collaboration with government and civil society organizations in the fight for environmental sustainability and accountability.


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promotes stakeholder involvement in corporate decision making through dialogue, joint-projects on CSR, sustainability reporting, while the latter, mostly as last resort, use "naming and shaming" of poor social and environmental performing companies using public and social media attracting global consumer boycott, class actions -leading to loss of business and higher reputational risk.
Crucial to NGO power and influence is the collaboration of government and civil society organizations in the fight for a more socially responsible way of business through accountability and transparency. We are seeing the rise of NGOs playing fundamental roles in the world, particularly, in community developments in Africa. Their activities pertain sustainable development discourse through fundraising, collaboration with MNCs, advocating for human rights, and campaigns for social and environmental conservation. In that sense, NGOs have potential to engage corporations in strengthening sustainability programs.
This review paper is organized accordingly; first with a brief introduction presented above, second, a theoretical review, followed by the last section on discussion and conclusion.

Stakeholder theory
Advocates of the Anglo-Saxion model argue that firms must maximize shareholder returns in order to meet the demand of its broader, non-managerial stakeholders (Brammer,  Stakeholder theory raise fundamental questions over the obligation organizations towards all its stakeholders in terms of their response to three key questions, namely (1) what is the responsibility of the corporation in an ideal society in its value-creating activity, (2) what desirable changes to the laws and institutions of societies need to be modified to reflect ethical ideals of a just society and (3) what are the moral responsibilities of managers in their dealing with shareholders and stakeholders within the context of those laws and institutions? (Freeman, 1994). To sum, firm's obligation (moral and/or legal) towards stakeholders is not limited to "respect" but also their "full participation in the decision making process" of the business as traditionally recognised in the "stakeholder economies" like Germany and Japan (Freeman, 1994;Hendry, 2001;Freeman, et al., 2004).
Accommodating stakeholders in a firm's decision-making process raises eyebrows among critics that it is a very demanding practice (e.g. Jensen, 2001;Hendry, 2001). Despite the critics of stakeholder theory, firms begin to recognise that stakeholder-friendly companies are those that are high performing and more sustainable (Hendry, 2001;Jensen, 2001). The theory does a good job by explaining and directing managerial (Laplume, Litz and Sonpar, 2008;Freeman, et al., 2004), value-seeking or value-maximizing behaviour towards the market (Jensen, 2001) which thus makes a good business sense (Freeman, 1994). The theory gives managers greater capability to deal with stakeholders through "financial rewards, language and action" to show that they value the relationship and wish to work to advance their common interest (Freeman, et al., 2004). Therefore, managers must develop relationships, inspire their stakeholders, and create communities where everyone strives to deliver the value the firm promises.

Institutional-legitimacy perspective
Leveraging the institutional theory perspective of governance, corporations can unify the differences in a shareholder-stakeholder debate (Krenn, 2016). The theory observes the holistic view, rather than an isolationist perspective of market forces (Freeman, 1994), "social embeddedness, and shared communities" (Brammer, Jackson and Matten, 2012) and cultural forces shaping corporate governance at the national and firm levels (Krenn, 2016). Pressure from within and outside the organizations determines its "inertia and stability" that is critical survival and marketplace success (DiMaggio and Powell, 1983).
Pressure from the firm's external context can impose "coercive, normative or mimetic" influence to which it must conform to acquire its legitimacy (DiMaggio and Powell, 1983). Suchman (1995) defines "Legitimacy is a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions." Organizations change to meet the demand of the society through "isomorphism" (DiMaggio and Powell, 1983) where they derived their "legitimacy" by conforming to pressures from their environment. Suchman (1995) demonstrates two reasons why corporations seek legitimacy namely, (1) to pursue "continuity and credibility" and (2) to gain acceptance and "active or passive support" from the conduct of its business. These pressures may arise from critical exchange partners, government, labor unions, the public, regulatory agencies, capital providers and various professional groups DiMaggio and Powell, 1983;Krenn, 2016). Pressure from non-managerial stakeholders often threatens the firm's financial performance. Hence, leveraging institutional-legitimacy perspective, firms can recognize stakeholders in terms of their "unique identities, positions and interests" that influence their business operations (Roe, 2004). Because competition extends beyond a firm's idiosyncratic resources and customers, the "power and legitimacy, for social and economic fitness" it commands is crucial to its survival (DiMaggio and Powell, 1983; Krenn, 2016).
Normative isomorphism results from both formal and informal pressures exerted on the organization based on the expectations in the society within which organizations function (DiMaggio and Walter,1983). Coercive isomorphism is derived from legal and political influence confronting the operation of the business in society (Suchman, 1995;DiMaggio and Powell, 1983) in the form of requirements for good governance and legal regulations such as financial reporting, financing etc. Mimic institutional isomorphism-Socially-responsible organizations learn from their competitors and market leaders on "industry best practices" aim at minimizing risks of uncertainty Parbonetti, 2012). Understanding the stakeholders based on their influence and interest is crucial to the due diligence and determines the way in which corporations relate to the marketplace participants.

Non-Governmental Organisations "NGOs"
Several groups of organizations operate under the umbrella of "non-governmental organizations", "NGOs", third sector or the "civil society organizations." Moreover, Arenas, Lozano

Source of NGO legitimacy
Suchman (1995, p. 574) defines legitimacy as ''a generalized perception or assumption that the actions of an entity are desirable, proper, or appropriate within some socially constructed system of norms, values, beliefs, and definitions.'' NGOs get their legitimacy from their mission in terms of their involvement in "social impact or cause-related" activities of sustainable development (Asfaw et al., 2017). "Social legitimacy" of NGOs is multifaceted such that it allows endorsement of their behaviour by its salient stakeholders (e.g., government and resource partners) and environmental pressure on how the firms use and manage resources (Marano and Tashman, 2012). NGOs seem to have better credibility than other organizations and become even more relevant to corporations in the context of corporate social responsibility (CSR). However, the greater power and influence of MNCs in Africa over the marketplaces, the society, and on government policy, has challenged the corporations, even further, on sustainability disclosure, assurance through effective non-managerial stakeholder engagement. To bring about a more accountable corporate governance practices such as CSR, sustainability reporting, NGOs must press for a more stakeholder partnership to combat corporate governance mis practices relating to social and environmental performances. Kolk (2008) note that NGOs call for transparency from two different angles: accountability requirement in the context of corporate governance over ethical aspects; and sustainability reporting that has broadened from the environment only to social and financial issues. Although, NGOs are the most active voices in criticizing companies for their insufficient CSR, and, they face lots of "stereotypes and ambivalent roles" as "advocates, judges, and fundraisers." (Arenas et al., 2009). To remain relevant in their discourse for sustainable environmental performance, NGOs must strengthen public environmental awareness because the environmentally conscious public will eventually force companies to improve their environmental performance (Asfaw et al., 2017) through different mechanisms such as sustainability reporting and stakeholder engagement. Avenues like public platforms and social media campaigns will enhance their public-environmental awareness efforts.

NGOs strategies for promoting sustainability discourse
Working with relevant government institutions, public servants and other interest groups would foster promulgation of "soft laws" on sustainability reporting (Winston, 2002).
Unfortunately, African countries continue to show a slow and low reporting regulation, and lower level of public engagement in corporate sustainability initiatives (Kolk, 2008 and international enforcement regimes and mobilize support from informed consumers, concerned government officials, and progressive companies. Studies argue that if corporations integrate sustainability practices with corporate governance, information symmetry for both the company and its non-managerial stakeholder will be enhanced (Kolk, 2008). Hence when all stakeholders' (including shareholders') information requests are satisfied, and that different (or sometimes conflicting) demands are catered for.
NGOs push for sustainability reports as a signal of a company's long-term commitment towards economic, social, and environmental performance (Kuzey and Uyar, 2017). Despite the limited studies on non-governmental organizations (NGOs) in terms of sustainability programs, we begin to see the joint-collaborative efforts of for-profit and not-for-profit firms towards issues relating to sustainable development. The growing awareness of sustainability matters has been reflected in the activist and advocate roles play by the NGOs (Nobanee and Ellili, 2016). Around the 90s, we begin to see NGOs at the forefront of sustainability campaign leading to their growth in number, power and influence. Guay and Doh (2006) argue that the national legal system and social concern shape the conduct

NGOs and stakeholder engagement
The role of NGOs has the potential to engage corporations even further on sustainability disclosure through effective non-managerial stakeholder engagement. Stakeholder engagement extends to a complex network relationship of global suppliers, NGOs, distributors, public servants  Proposition 1: the more NGOs use "collaborative" tactics, corporations are more likely to adopt effective sustainability practices to improve their reputation and legitimacy.
When partnerships fail to yield meaningful benefits, NGOs resort to a more drastic, confrontational "naming and shaming" for bad environmental performance (Winston, 2002).
Although non-managerial stakeholders, particularly NGOs, do not have any financial stake, their "confrontational strategy" can have a severe negative impact on the financial performance of the  (Asfaw, Botes and Mengesha, 2017;Winston, 2002). Despite their resolve for more dialogue and collaboration, many corporation-NGO partnerships continue as rather "adversarial" such that NGOs intensify the voice of "disgruntled" civil society group (Marano and Tashman, 2012).
NGOs could use key stakeholders to sign petitions, boycott and protest companies for poor environmental performance leading to loss of credibility and reputation (Asfaw et al., 2017). Mostly, the result of confrontational mode seeks "to demonstrate more to accountability, dialogue, and between NGO-civil society and government, (Matei and Apostu, 2014) recognizes the following policy dimensions: "Good Governance" based on sound social, environmental policies, and accountability to broader society; "Regulations" designed to help, implement social, environmental performance; "Taxation policies" as incentive for good performance, and conformance to best practices; "Coordination" by relevant stakeholders, including NGOs; and "official support" to civil society and NGOs to strengthen activities without undermining "autonomy and independence" through funding, contracts, and training opportunities.
Proposition 3: strong mutual commitment in the partnership between NGOs and civil society and the government will strengthen more NGO influence and power over the adoption of sustainability reporting in corporations.
Social and environmental disclosure is just one aspect of corporate sustainability practice. Just like for-profit firms, NGOs must ensure there is the credibility of information on sustainability reports. Credible reports provide value relevance to users of sustainability reports on many technical environmental and social indicators. Such reports should be verifiable to ensure assurance through independent investigation (Kuzey and Uyar, 2017). The increased adoption of sustainability practices and reporting is associated with tightened regulation . Therefore, NGOs partnerships with relevant stakeholders, such as civil society and governments would allow for effective monitoring to ensure value relevant non-financial disclosure.

Proposition 4: higher NGO power and influence can induce the adoption of quality and value-relevance of sustainability reports by corporations.
Engaging corporations for relevant disclosure of firms could embrace its image associated with transparency, the value of information symmetry for debt financing (Nobanee and Ellili, 2016), and legitimizing its business with the government and its broader non-managerial stakeholders.

Discussion
The purpose of the literature review is to assess the influence of NGO power on corporate sustainability practices through the lens of institutional-legitimacy perspective.  Winston, 2002). Such media exposure can be in the number of news articles relating to a company's sustainability performance reporting increases reputational risks associated with bad press for poor performance. Although dialogue form of consultation is encouraged but more drastic, confrontational tactics like a boycott, are required to promote a responsible corporate sustainability program. These corporations act swiftly when they know their financial resources are at risk from such "confrontational" actions. Further study can test empirically the above propositions. A thorough case study of specific NGOs would add value relevance to the understanding of NGOs power and influence.

Conclusion
There is a limited study on the influence of NGOs on corporate sustainability practices, particularly, in the empirical stream. However, recently we are seeing the rise of NGOs playing fundamental roles in the world, particularly, in the community developments in Africa. Their activities pertain sustainable development discourse through fundraising, collaboration with MNCs, advocating for human rights, and campaigns for social and environmental conservation. Therefore, the aim of this paper is to create an insight into the power and influence of NGOs in the course for corporate sustainability adoption (i.e. sustainability reporting). Leveraging on the institutional-legitimacy perspective, this study looks at how the participation of relevant stakeholder Preprints (www.preprints.org) | NOT PEER-REVIEWED | Posted: 19 July 2020 doi:10.20944/preprints202007.0441.v1 such as NGOs in corporate sustainability may influence social and environmental performance of corporations (Suchman, 1995; Brammer, Jackson and Matten, 2012b).
Using their powers and influence, NGOs may have two strategies or tactics to promote their involvement in sustainability discourse: "collaborative partnership" and "confrontational tactics." The former promotes stakeholder involvement in corporate decision making through dialogue, joint-projects on CSR, sustainability reporting, while the latter, mostly as last resort, use "naming and shaming" of poor social and environmental performing companies using public and social media attracting global consumer boycott, class actions -leading to loss of business and higher reputational risk. Crucial to NGO power and influence is the collaboration of government and civil society organizations in the fight for a more socially responsible way of business through accountability and transparency. The government must work closely with NGO in the areas of regulatory policy design and performance measurement, while civil society would help strengthen the call for prosperous social and environmental impact accountability of corporations.