From Stabilizer to Enhancer: Effective Engagement Strategies for Secondary Stakeholders in Corporate Social Responsibility

Corporate social responsibility (CSR) initiatives targeting primary stakeholders are recognized for their potential to increase shareholder value (i.e., value enhancers). In contrast, CSR initiatives aimed at secondary stakeholders, such as local communities, are often regarded as value stabilizers—reducing variability in value without significantly boosting it. Drawing on instrumental stakeholder theory, we argue that community development initiatives (CDIs), an important CSR practice directed at secondary stakeholders, can enhance shareholder value when combined with effective engagement strategies. We posit that firms can strengthen positive shareholder value by engaging in long-term or business-related CDIs. Additionally, we propose that firms with strong social management capabilities can achieve greater increases in shareholder value through CDIs. Our findings suggest that secondary CSR, traditionally seen as a stabilizer, can be developed into an enhancer through effective stakeholder engagement strategies, providing clear and actionable guidance for managers to engage in secondary CSR in a financially effective way.