Balanced versus focused responsiveness to core constituencies and organizational effectiveness

Purpose – To test how responsiveness to key organizational stakeholders (owners, customers, employees) is related to organizational effectiveness (OE). Focused versus balanced strategies of responsiveness are compared. Design/methodology/approach – Employs Boolean algebra to study performance of 69 companies in three industries over a ten‐year period. Responsiveness to key stakeholders and performance are measured using publicly available data provided by these organizations (Compustat by Standard & Poor's). Findings – Provides evidence that balanced responsiveness to multiple constituencies is more likely to lead to high OE than focused responsiveness to a single one. Trade‐offs in responsiveness to key stakeholders are found supporting the idea that serving multiple interests is challenging. Most results are not industry‐specific – the usefulness of a balanced strategy of responsiveness may be generalized. Research limitations/implications – Responsiveness embraces organizational behaviors not covered by accounting information. Development of more comprehensive responsiveness measures may be a fruitful avenue for further research. Analyses are limited to a subset of key stakeholders and three industries. Practical implications – Provides evidence that organizations avoiding extreme unresponsiveness to any of its key stakeholders are more effective. Aiming for above‐average responsiveness to any constituency only pays off if no other constituency simultaneously enjoys below‐average responsiveness. Originality/value – This article develops a comprehensive methodological framework to assess strategies comparing balanced versus focused responsiveness to multiple organizational constituencies. Empirical results should be of relevance to strategy practitioners and scholars alike.