Out of character: CEO political ideology, peer influence, and adoption of CSR executive position by Fortune 500 firms

Abstract

Research Summary We consider the link between firms' decisions to adopt a CSR executive position and the political ideology of prior adopter CEOs. We theorize that firms are more likely to adopt a CSR executive position when it has been previously adopted by conservative‐leaning CEOs at other firms, as opposed to liberal‐leaning CEOs. This effect is due, we argue, to the increased perceptual salience and situational attributions associated with ideologically incongruent actions (i.e., actions that appear inconsistent with known political values). We further posit that these effects are stronger when the observing firms experience increased salience of CSR issues due to shareholder pressure and institutional equivalence between the referent and the observing firms. We find support for these ideas in a longitudinal sample of Fortune 500 companies. Managerial Summary How do CEOs' values affect industry‐wide appointments of senior executives in charge of Corporate Social Responsibility (CSR)? Prior research suggests that liberal political beliefs of CEOs predict their CSR commitments. Our study explores how the political beliefs of CEOs—in this case, CEOs who have created a new CSR executive position in their companies—influence the likelihood that peer CEOs will imitate their decisions. Specifically, we find that when conservative CEOs adopt a CSR executive position, other companies are more likely to follow than when liberal‐leaning CEOs do so. These effects are even stronger when companies are experiencing CSR‐related pressure from shareholders and when they belong to the same industry and community as the firms of the CEOs they are observing.

Development of a corporate university institution: strategic initiatives

“…The earliest in the use of distance learning were corporate universities, once again proving their flexibility and superiority over traditional educational institutions. A Web-based learning project, launched by 500 Fortune corporations in the United States, Gupta et al (2021), has been confirmed for the following benefits of "virtual" CU:  Significant cost reduction (there is no need to rent space for classrooms and organize travel / accommodation for students).  All tasks, as well as participation in seminars and listening to lectures, are performed at their workplace or in the evening at home, after work.…”

Ideological homophily in board composition and interlock networks: Do liberal directors inhibit viewpoint diversity?

“…A growing literature in strategic management examining the influence of decision makers' ideologies on firm outcomes shows that while conservatives view their responsibility towards shareholders as primary, liberals consider a broader range of stakeholder needs as relevant to the goals of the firm (Chin et al, 2013). Accordingly, there is a robust relationship between liberalism and CSR activities at both the top management and board level (Chin et al, 2013;di Giuli & Kostovetsky, 2014;Gupta et al, 2020), while conservative managers have been associated with higher financial performance (Hutton et al, 2014). More recently, the marketing literature has begun to explore the antecedents and consequences of corporate sociopolitical activism, where firms take a public stance on divisive political or social issues (Bhagwat et al, 2020).…”

“…Most research to date has examined situational factors, leading to a theoretical understanding of board composition and network formation that may understate the role of directors' cognitive and affective frames (Gupta & Wowak, 2017; Shropshire, 2010), despite longstanding recognition that the values, beliefs, and attitudes of decision makers affect firm‐level outcomes (Chin et al, 2013). Research on top management teams (TMTs) (Chin et al, 2013; Chin & Semadeni, 2017; Christensen et al, 2015; Gupta et al, 2020; Hutton et al, 2014; Kashmiri & Mahajan, 2017), and some notable exceptions to the situational focus in board research (di Giuli & Kostovetsky, 2014; Gupta & Wowak, 2017; Park et al, 2020), highlight a key dispositional factor: ideology . This refers to an individual's internally consistent belief system, comprising the attitudes and values that underlie thought and behavior (Jost, 2006; Tedin, 1987), and is observable and measurable by political orientations (Chin et al, 2013; Erikson & Tedin, 2003; Jost et al, 2009).…”

“…Gerber et al, 2010; Haidt, 2001). To date, however, there have been no studies of the influence of ideology on the structure of board interlock networks and the position of the firm within these (Gupta & Wowak, 2017), despite evidence that the ideologies of peer firms are salient to decision makers at the TMT level (Gupta et al, 2020). Similarly, the relationship between ideology and board composition has only been studied tangentially to the monitoring effectiveness of inside and outside directors (Kim et al, 2013).…”

“…Accordingly, there is evidence for effects of decision makers' ideologies on a range of firm outcomes. Liberal chief executive officers (CEOs) are more likely to engage in corporate social responsibility (CSR) (Chin et al, 2013) and appoint CSR executives (Gupta et al, 2020) and have a higher rate of new product introductions (Kashmiri & Mahajan, 2017). Firms with conservative managers have lower levels of debt, higher profitability, and less risky investments (Hutton et al, 2014), greater pay dispersion within the TMT (Chin & Semadeni, 2017), and lower rates of tax avoidance (Christensen et al, 2015).…”