A configurational theory of generalized exchange in stakeholder-oriented firms

Recent developments in stakeholder theory have refined our understanding of value creation via bilateral reciprocity. Generalized exchange is another important micro-foundational mechanism in value creation, but because of the potential for free-riding, it is surprising that some stakeholders contribute more resources to a firm’s value creating nexus than would be expected based on contractual obligations, and even beyond what bilateral reciprocity would predict. This paper aims to identify the minimum conditions that promote generalized exchange in a firm’s value-creating nexus. Because generalized exchange is causally complex – it can occur in multiple contexts and through various combinations of explanatory factors – a configurational theorizing approach is applied. We identify four combinations of attributes that consistently promote generalized exchange and limit free-riding behavior, such that generalized exchange can make a net positive difference in a firm’s nexus: the entrepreneurial logic (high rewards, strong institutional drivers), the conformity logic (powerful sanctions, strong institutional drivers), the influencer logic (powerful sanctions, individual/firm drivers), and the identification logic (high rewards, individual/firm drivers). This work provides an important additional explanation for why stakeholder-oriented firms tend to have higher performance, and can also help managers devise policies for increasing the amount of generalized exchange exhibited among their firm’s stakeholders.