Report from the Research Frontier: April 2019

New findings: Female leadership means fewer lawsuits and better CSR; Online consumer-to-consumer platforms like Craigslist reduce landfill waste

Every month, researchers publish dozens of articles on business sustainability. NBS highlights insights at the frontier of knowledge. See all monthly highlights.

Female Leadership Is Linked to Fewer Lawsuits and Better CSR

Firms with women in the top management team face fewer lawsuits over firm operations, report researcher Binay Adhikari and colleagues. Such lawsuits happen when managers are “willing to push the limits of the law to create value for shareholders,” the researchers write. Firms with female leaders seem to be more concerned about stakeholders, including the larger community.

The researchers studied lawsuit frequency by examining newly-filed lawsuits against S&P 1500 firms each year during 2002 to 2011. They found that firms faced fewer operations-related lawsuits when they had two or more women in the top executive team and/or a female independent director.

Operations-related lawsuits relate to many issues. Among other topics, the researchers looked at firms’ corporate social responsibility (CSR) performance, as poor CSR can lead to litigation. The researchers used the MSCI database, which identifies “Concerns,” or red flags, related to corporate action on environmental and social issues. Firms with even one woman on the management team have fewer MSCI “Concerns” — and the effect is even greater for companies with multiple female executives.

Article: Adhikari, B.K., Agrawal, A., & Malm, J. 2019. Do women managers keep firms out of trouble? Evidence from corporate litigation and policies. Journal of Accounting and Economics, 67(1), 202-225.

Online C2C Platforms Reduce Landfill Waste

Consumers can sell goods directly to each other through online platforms known as Consumer to Consumer, or C2C. Examples include OLX, Gumtree, and Craigslist. Researcher Suvrat Dhanorkar has found that the sites reduce consumer-generated or municipal solid waste (MSW). Studying Craigslist in the United States, he found that Craigslist’s entry into a geographic market resulted in a 2%–6% annual reduction in MSW generated per capita.

MSW includes durable consumer goods (e.g., furniture, packaging, appliances, equipment), nondurable goods (e.g., newspapers, plastic plates/cups), and other wastes (e.g., yard waste, food). Some items in MSW are waste, but others are reusable goods. Until recently, consumers didn’t have many channels for product reuse. Garage sales and donation drives were smaller in scope. Online platforms allow better matching.

So far, other aspects of the circular economy have gotten more attention, writes Dhanorkar. Many Closed Loop Supply Chains (CLSCs) remanufacture products such as cell phones and computers – reconditioning them or even disassembling them. However, these CLSCs are expensive to set up and require a steady supply of material. Dhanorkar explains that “the most ideal form of reuse is when the used consumer goods can be reused ‘as is’—i.e., they are not required to undergo any deconstruction, processing, or refurbishing.”

There’s an opportunity here for companies and policymakers, Dhanorkar told NBS. The varied reuse marketplaces — including ThredUp.com (fashion), Offerup.com (consumer products), Gone.com (electronics) and AbeBooks.com (books) — provide opportunities to positively shape consumer behaviors. For companies, industrial reuse markets (e.g., GreenDemolitions.com (construction materials), ReuseWood.org (wood), MaterialsMarketplace.org (industrial surplus)) might provide cost-effective channels to buy and sell byproducts and waste.

Article: Dhanorkar S. 2019. Environmental benefits of Internet-enabled C2C Closed-Loop Supply Chains: A quasi-experimental study of Craigslist. Management Science, 65(2), 459-954.