Companies owe it to society to do good because their corporate actions have a big impact on society, SMU Assistant Professor Say Gui Deng firmly believes.

By Michelle Lee

SMU Office of Research & Tech Transfer – Had it not been for an internship with Nobel Peace Prize-winning Grameen Bank in Bangladesh in 2011 and a microfinance consulting project in rural Vietnam, SMU Assistant Professor Say Gui Deng could well be a management consultant today.

The experience with microfinance instilled in him a powerful conviction that companies have a responsibility to make the world a better place.

“That was the very first time I saw what it means to be destitute,” recalled Professor Say, “and it reinforced my belief that companies owe it to society to do good because their corporate actions have a big impact on society. Beyond alleviating poverty, organizational failures and misconduct like accounting fraud, pollution and labour exploitation clearly undermine societal rights and welfare.”

Working at Grameen Bank not only interested him in social issues from an organizational perspective, but also led to a realization that management consulting was not for him. Rather, he found his calling towards in-depth disinterested research that led him into academia.

Hence, after obtaining his PhD in business administration from the University of Minnesota, Twin Cities, Professor Say joined the Lee Kong Chian School of Business in December 2018.

Of stakeholders, shame and learning from failure  

Here at SMU, Professor Say has been happily researching on organizational failures, corporate social responsibility and divestitures. In particular, he is engrossed in two studies that feature novel yet poorly understood forms of failure. The first examines how corporations learn and respond to cybersecurity data breaches via divestitures and top management turnover. The second explores how portfolio firms respond, through enhanced corporate social responsibility efforts, to social divestments of their peers that are named and shamed by a prominent sovereign wealth fund.

Highlighting the motivation behind these two studies, Professor Say noted, “We know that failure is inevitable. And that it’s important that organizations learn from them. But while we know a lot about how organizations learn, we do not know how key stakeholders such as institutional investors and governments shape these failure learning.”

In the first study, Professor Say examined over 250 data breach incidents involving US-based publicly listed companies and found that companies respond to data breaches by divesting non-core business units to improve harmonization of practices. In contrast to sensationalized media reports, companies do not systematically fire their Chief Technology Officer. Both divestiture and turnover responses reduce companies’ risk of a recurrent breach, a useful finding which could guide companies’ technology strategy. His study also revealed a counter-intuitive finding – that regulatory stringency has little influence on how companies learn from a data breach. “It’s surprising that the tightening of laws may not help firms learn any better than from their own direct experience with a cyberhacking incident.”

His second study is on social divestments by Norway’s sovereign wealth fund, wherein the fund identifies and completely divests from companies within its portfolio for unethical behavior such as deforestation, producing of arms, growing of tobacco and labor rights violations.

“Social divestment encompasses a strong degree of naming and shaming because it is done very publicly – to the extent that even Norway’s finance minister releases a statement that delegitimizes the accused company. This is also a form of organizational failure whereby there is a breakdown in relationship between the company and its investor.”

The study found that when one company is named and shamed, its peers improve their behavior through more socially responsible actions. As the first study to examine both divestments and shareholder activism strategies in tandem, it also showed that companies’ improvement in behavior is enhanced when they experience a high degree of social activism.

Both studies are expected to be published over the next year.

Why SMU?

One question though: why SMU? Professor Say said he was honored to have received job offers from other universities in Singapore and the region, but for him, SMU stood out for its “very strong”, world-class strategy group which includes highly motivated and talented doctoral students.

“It is also young and nimble. The empowerment SMU gives the faculty to pursue research and teaching excellence is very exceptional.”

He knew he had made the right choice when his first five months with the university turned out to be highly fulfilling, said a buoyant Professor Say.

A message for stressed students

While research has been keeping Professor Say busy, he is also making a name for himself among his students as a rigorous but caring professor.

“I try to treat my students with empathy,” said Professor Say. “Students comment that I’m caring but I just think the world can do with a little more kindness.”

If there were one message he would like to give his students, it would be to tell them that it is alright to slow down or even pause and listen to their inner voices as they think about their future.

“There is short-term thinking among students, what I call a focus on small gains versus longer term personal growth. The latter path requires courage and oftentimes there is no easy justification without deep reflection that simply takes time.”

The world may have gotten a little kinder

“Companies used to perceive doing good as a cost of business. Some people might think of CSR as marketing and others more cynical might label it as wayang. However, this generation of students who will enter the workforce is very socially discerning. For corporations, the bar of authenticity has been raised considerably.”

“Today we see pressure for companies to actually integrate social values in what they do. They know their employees and the general public expect more, because with digitalisation, it is very easy to be called out for lip service or mediocre commitment. Companies that truly internalize and embrace their social responsibility will better attract and retain talent”, he pronounced.

He concluded, “It can take decades for this mindset shift to yield substantial change. Right now the trajectory is hopeful.”

Back to Research@SMU May 2019 Issue

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