The Psycholinguistic Foundations of Responding to Stakeholder Pressures: Linking Individual and Group Language to Social Performance

Donal Crilly — London Business School

1. INTRODUCTION1. INTRODUCTION

What can executives’ language tell us about effective organization when faced with stakeholders with divergent interests?

Recent advances at the interface of linguistics and cognitive science (Jackendoff, 2007) reveal consistent relationships between linguistic style – how people speak (as opposed to what they say) – and psychological and social processes. Linguistic style provides information about the mental models that underpin decisions and actions.

2. WORDS THAT MATTER2. WORDS THAT MATTERWord Type ExamplesContent words

words that carry meaning

nouns, adjectives, some adverbs, and most verbs)

Function words

words that carry no semantic meaning

pronouns, and particles (conjunctions, some prepositions, and adverbs)

Focus of most studies of language in firms

Disproportionately reveal thought processes

The core linguistic markers of psychological states and processes are function words (Tausczik & Pennebaker, 2010). These words are usually overlooked in the analysis of organizations that prioritizes content. Among function words, particles – especially conjunctions (e.g. and, but, because, so) - are crucial because they connect units of speech and act as the “glue” in discourse (Fraser, 1990). They routinely indicate the relationships that speakers identify between distinct ideas or concepts and provide insight into how people categorize issues. 1

4. LINGUISTIC COORDINATION4. LINGUISTIC COORDINATION

3. LANGUAGE AND MENTAL MODELS3. LANGUAGE AND MENTAL MODELSWhich specific function words are the best indicators of how people categorize salient issues?

Word Category Examples Function

Causal Because, since

Specifies causal relationship between concepts; linked to analytical reasoning

Exclusive Except, only

Specifies focus of attention and – often - opposition between concepts; linked to nuanced, analytical reasoning

Additive/ inclusive

Additionally, and

Specifies equivalence between concepts and broadens focus of attention; linked to holistic reasoning

Negation Not, never Specifies opposition between concepts

“We have a responsibility to our shareholders and our employees. Additionally, we have to care for the planet as well as be profitable.”

“We have a responsibility exclusively to our shareholders, but not to society except where profits are at stake. We have no duty to care for the planet.”

Low analytic reasoning; broad attention focus

Highly analytic; narrow focus

Language is not only the product of individual psychology. It is also an outcome - and facilitator - of social interaction. When people meet, they routinely converge on patterns of communication. Interpersonal alignment in language is important when common ground is required for decision-making.

Common linguistic style has been linked to success speed-dating success. Similarly, the quality of Wikipedia pages is positively associated with common linguistic style amongst collaborators - even when they disagree about the content that belongs there (Pennebaker & Chung, 2013).

Alignment does not mean that individuals have to converge on similar content (codes, vocabulary, etc.). Individuals who work effectively together can converge on a common linguistic style. Irrespective of what they say, they structure their sentences in similar ways, using key parts of speech (verbs, prepositions, conjunctions, etc.) to a similar extent (Ireland et al., 2011).

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5. CONTEXT AND METHODS5. CONTEXT AND METHODS

6. RESULTS6. RESULTS

Context: Firms must respond to stakeholders with divergent interests. There is no unanimous definition of responsibilities towards stakeholders, and executives can conceive of the firm’s role in society in different ways. Prior research has linked what executives think to how successfully they manage stakeholder relationships. This study uses linguistic analysis to identify whether how executives think predicts their firms’ social performance. Data: 88 interview excerpts with senior executives from nine MNCs, matched in four pairs and triads on the basis of industry, HQ location, and size but differing in their corporate social performance (CSP) Linguistic measures: analysis of responses to question “What do you think are the responsibilities of multinational corporations towards society?” using the Linguistic Inquiry and Word Count dictionary, which identifies 1) parts of speech, 2) words relevant to psychological processes, and 3) salient dimensions of content.

Logistic Regression1

DV: Member of High CSP Firm

Social content 0.021 (0.056)

Money content -0.208 (0.229)

Exclusive particles 0.886*** (0.308)

Inclusive particles -0.140*** (0.051)

Negations 0.300 (0.538)

Causal words 0.397** (0.175)Observations 88

Executives from high CSP firms use more (p < 0.01) exclusive and fewer inclusive (p < 0.01) particles than peers from low CSP firms. This relationship holds even after controlling for salient content (e.g. references to society, references to money).

1. Cluster robust standard errors in brackets; controls for demographics (sex, native English speaker, tenure), industry, and linguistic complexity (total number of words, words per sentence) included

Executives from high CSP firms share a more similar (p < 0.05) linguistic style – measured by the rates at which they use nine basic categories of speech when defining CSR - with their colleagues than do peers from low CSP firms with their respective colleagues. Those based outside of the HQ and newcomers share a less similar (p < 0.05) style with colleagues.

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8. FOLLOW-UP8. FOLLOW-UP

7. CONCLUSION7. CONCLUSION

1. At the individual level, focused attention – which is reflected in exclusive language and negations – is associated with high CSP. This suggests (cognitive) specialization within the firm as a potential way to address diverse environmental pressures.

2. However, though executives in high-CSP firms might individually attend to very specific - and divergent - parts of the environment, their similar linguistic style might implies a common lens through which they view the issue of social responsibility and, thus, greater capacity for coordination.

3. Broadly, the study proposes language as a distinct microfoundation of organizing. As language is both individual and social, linguistic analysis can contribute to bridging the micro-meso divide in organization studies.

This study posits no causal relationship between language and the decisions that people take. Rather, language reflects underlying mental structures. However, what would happen if we primed people to attend to different kinds of words before making a strategic decision?

Setting: 45 Executive-MBA participants were randomly assigned to two groups. Both were given the same letter to shareholders to study. Group 1 members were asked to underline inclusive words (e.g. and, additionally). Group 2 members were asked to underline exclusive words (e.g. but, except). Decision scenario: Both groups read a short article about Microsoft’s acquisition of Skype and were asked to imagine themselves as consultants to Microsoft. Would they recommend Microsoft to take an equity stake in Skype or not? 4