CSR Research: Responsible Corporate Leadership

A pair of studies from Deloitte and Ernst & Young examine changes in CFO involvement in their companies’ corporate citizenship. Both studies project deeper involvement by CFOs in corporate citizenship and offer advice on how they can do it most effectively.

A study of the connection between a CEO’s leadership style and a company’s corporate citizenship found that companies with leaders who intellectually stimulated managers around challenges and goals had higher levels of strategic corporate citizenship activity than those whose style was more charismatic.

Leadership is always challenging and the global nature of business today requires teams to transcend location and time and often involve multiple cultures and languages. The special leadership practices needed to manage virtually are outlined in the results of a recent study reported in the Academy of Management Perspectives.

This study explored how different types of groups perform under different kinds of leaders. Researchers found that proactive groups—composed of employees who actively participate in the work process—perform better under socially introverted leaders. More passive groups, in contrast, perform better under extraverted leaders.

Researchers investigated which types of leaders are best suited to initiating and implementing CSR practices in firms. They found that transformational leaders—inspirational drivers of change—are best suited to initiating CSR practices while transactional leaders—by the numbers efficiency experts—are best suited to deriving business benefits from these practices.

This study explored what happens when the outgoing CEO of a company stays on as board chair. Researchers found that this thorny dynamic obstructs organizational change and inhibits major changes in company performance, either positive or negative.

Organizations seeking to strengthen their environmental performance should appoint individuals with strong personal commitment to lead environmental efforts and provide budgetary and other forms of organizational support to emphasize their commitment.

The organizational structure at the top levels of a company impacts corporate philanthropy, which affects business outcomes like reputation, consumer loyalty, and employee engagement. CEO tenure, board size and centrality, and the percentage of female board directors and senior managers all affect corporate philanthropy.

Firm performance is improved by female representation in top management, especially in those organizations focusing on innovation.

Some boards may be better positioned to navigate complex environmental issues and prioritize the long-term benefits of environmental performance. Firms with larger, more independent boards comprised of directors that have specialized knowledge of potential environmental impacts (CEOs of other companies, lawyers) have better environmental performance.

Organizations that do an exceptional job at responding to ethical failures are viewed even more favorably by employees who witnessed wrongdoing than organizations that have not stumbled ethically.

CEO and CFOs who provide quality disclosure regarding their company’s financial performance may be rewarded with higher bonuses, as quality disclosure can serve as a signal of responsible management to a firm’s Board of Directors that is highly valued.