QUESTION 3 (20 Marks) Read the case below and answer the questions that follow. In pursuit of sustainable corporate profitability (SCP), internationally leading companies, including Amazon and Apple are redefining the purpose of a corporation from that of profit maximisation to a commitment to environmental, social and governance sustainability (The Guardian, 2019). The former is consistent with the shareholder primacy model (SPM), and the latter, the stakeholder theory. The shareholder primacy model (SPM) advocates for corporate managers and company directors to make business decisions in the primary interest of shareholders (Smith and Ronnegard, 2016:463 Hung, 2020:5). Conversely, according to the stakeholder theory, the purpose of the corporation is to act as a vehicle for furthering the interests of stakeholders rather than merely maximising shareholders financial returns (Smith and Ronnegard, 2016: 474). According to Yosifon (2017: 464), corporates following SPM deliver products or services to make money while those complying with stakeholder theory, to some extent, make money to provide better, corporate, social or community, services. Under the current climate of changing societal expectations of the role of the firm, an organisational researcher is undertaking a study with the aim of examining the comparative impacts of shareholder-centric and stakeholder-centric strategies on organisational financial performance. Table 3.1, below, depicts the excerpt of the data on financial performance (i.e., return on equity) collected from 40 South African firms over the 2018-2022 period (20 of the firms follow the shareholder primacy model and the other 20, the stakeholder theory). Table 3.1: excerpt of data on return on equity from 40 firms over the 2018-2022 period. Firm ref # Strategic orientation of the firm Return on equity (%) 2018 2019 2020 2021 2022 1 Stakeholder-centric 12 13 12 10 10 2 Shareholder-centric 15 15 16 14 13 3 Shareholder-centric 14 13 13 14 12 4 Stakeholder-centric 13 13 12 12 11 5 Stakeholder-centric 11 10 11 11 12 6 Shareholder-centric 18 16 19 16 15 7 Stakeholder-centric 14 15 16 12 12 8 Shareholder-centric 12 13 14 11 10 9 Shareholder-centric 15 17 18 13 12 ... ... ... ... ... ... ... 40 Stakeholder-centric 10 12 12 10 9 Please note: for each firm, five data points (representing the five years) were collected thus a total of 200 data points were employed for the 40 firms surveyed in the study. Hence, the sample size, N = 200. The organisational researcher analysed the data using IBM SPSS Statistics version 25 and the output showed below in Figure 3.1 to Figure 3.3 was generated. Figure 3.1: Tests of Normality Strategic_orientation Kolmogorov-Smirnova Shapiro-Wilk Statistic df Sig. Statistic df Sig. Financial_performance Shareholder_centric .126 100 .200* .951 100 .264 Stakeholder_centric .193 100 .200* .975 100 .392 *. This is a lower bound of the true significance. a. Lilliefors Significance Correction Figure 3.2: Group Statistics Strategic_orientation N Mean Std. Deviation Std. Error Mean Financial_performance Shareholder_centric 100 15.035 2.54285 .17981 Stakeholder_centric 100 12.355 2.38061 .16833 Figure 3.3: ANOVA Financial_performance Sum of Squares df Mean Square F Sig. Between Groups 718.24 1 718.240 58.898 .000 Within Groups 2414.55 198 12.195 Total 3132.79 199

Required:

3.1 Formulate a suitable title for the study. (4 marks)

3.2 Specify the independent variable (IV) and dependent variable (DV) underpinning the study. (2 marks)

3.3 Formulate the null and alternative hypotheses for the study. (4 marks)

3.4 On the basis of the statistical decision tree, specify TWO (2) appropriate statistical tests for testing the hypothesis in question

3.3 and highlight their respective non-parametric equivalents. (4 marks)

3.5 Provide a meaningful interpretation of the output of the statistical analyses depicted in Figure 3.1 to Figure 3.4 and state the primary findings from the study. (6 marks)