Jiao, you describe your research interests as in “non-market strategy.”  Can you explain what this means and perhaps give an example of the kinds of ways that firms may seek to influence the environment in which they operate?

“Non-market strategy” is a label that we attached to a wide range of activities that includes sustainability initiatives by companies, political activities by companies, and corporate social responsibility investments.  Im interested in the ways that companies advance both social and corporate goals.  The name “non-market strategy” is really an artifact of the history of the scholarly work in our field.

You have a great body of work on how companies ultimately use their governance systems to improve social impact.  What are you finding?

Jiao’s work shows that there are two main ways in which CSR investments by companies have had impact over time.

First, companies have moved from a product-oriented approach to an employee-oriented approach.  Most CSR tends to benefit companies by allowing them to attract and retain employees.   Employee well-being is also a focus.

Second, companies make philanthropic gifts particularly in their communities, however they define that.   Ive studied the return on that investment, particularly when it’s been targeted at improving a company’s ranking in CSR reviews.   We haven’t had much data on how much it costs to improve these rankings.  When is the investment worth it?  And when does an improvement in a ranking require relative minor actions, like writing a handbook, that don’t have a big impact?

Anita remarked that this sounds like Jiao is finding evidence of a lot of greenwashing by firms.   When are companies truly good at doing this?

Sometimes donations make a difference.  There are firms that are strong at employee well-being.   The deeper question:  What can companies achieve, and how can they do it strategically?

Anita asked Jiao about her work on comparative governance.  You’ve been studying cooperatives, which I think of as an alternative way of organizing to a firm. Is that fair?

Yes, we should expect firms to do what firms are good at.  And governments to do what governments are good at.  And Non-Profits to do their thing.   The more that I observe corporate actions, the more that I come to the sense that relying on the goodness of the heart of executives is problematic.  We need structural solutions to social problems, not discretionary corporate philanthropy.

What Jiao is finding in her recent work on cooperatives is that the emergence of this alternative way of organizing can pressure large companies to change the way that they compete in the marketplace toward lowering prices and improving products for previously ignored customer groups, etc.   

Jiao gave an example of this from her recent work in Broadband.  She described how collectives in this industry, while small, can muster the resources to incur the fixed costs of offering Broadband in rural areas.  Once they do this, with the intention of providing access to rural customers, the large corporation is no longer a monopoly.  The presence of the cooperatively organized entrant constitutes a real threat to the profit stream of the incumbent.  To deter the threat, the corporation may seek to invest pre-emptively.  And this may be good for those rural customers.  Jiao and her coauthors call this “mission spillover.”  Just by existing, the cooperative causes the corporate incumbent to become more pro-social.

What has been the road you’ve traveled to get into these topics?  You began your graduate studies as an economist at the London School of Economics, and then studied Organization Theory at Columbia right?    Why did you make this transition?    And what has led you since you joined the faculty at Minnesota to focus on non-market strategy, governance, and CSR?

Even prior to the LSE, Jiao worked on a research center in China’s nascent civil-society movement.  She’s long been interested in different ways of organizing.   At Columbia, her advisor – Paul Ingram – encouraged Jiao to think through what it will take to accomplish social goals.

Anita asked Jiao if this summary of her journey was about right, and Jiao said it was “beautiful:”

Jiao started out by examining how corporations contribute to social goals, and now has come to the realization that companies face structural constraints that may impede their pursuit.  Greenwashing is deep.   And yet corporations as a whole are so important and prevalent and dominant in our societies as vehicles of organized action. So how do we get the structures around companies to change so that there is greater incentive for executives to pursue social aims?   Through cooperatives and other kinds of initiatives, this becomes possible.  Jiao is looking at the interaction of corporations with governments, Non-Profits, and other types of organizations – right there at the interactions between them – as highly important to the creation of incentives for corporate social responsibility.