Founder CEOs, personal incentives, and corporate social irresponsibility

Abstract

This study integrates organizational identity (OI) theory and upper echelons theory to explore the impact of CEOs' founder status on corporate social irresponsibility (CSI). We theorize that compared with other CEOs, a founder CEO is more likely to generate a high degree of OI with the firm, which will drive the founder CEO to actively avoid CSI that may damage the positive image and long-term development of the firm. Furthermore, we argue that CEO duality and CEO ownership will strengthen the aforementioned relationship by increasing the possibility of founder CEOs generating a high degree of OI. Conversely, CEO underpayment will weaken the relationship between founder status and CSI by decreasing the possibility of founder CEOs generating a high degree of OI. We obtained empirical evidence in support of our arguments from a large Chinese private listed company dataset. Overall, this study's theory and evidence clearly show that founder status and personal incentives can jointly shape CEOs' CSI decisions, thereby providing useful insights for corporate shareholders and government agencies to better prevent and govern firms' CSI.

The impact of innovation aspiration shortfall and CEO origin on emerging economy firms' international expansion: evidence from China

“…Because of this, performance feedback theory-based studies continue to call for paying greater attention to the moderating role of CEO characteristics (Amore et al, 2021;Kolev and Mcnamara, 2020;Schumacher et al, 2020). On the other hand, as recent scholars have emphasized, a CEO's origin has a significant impact on their values, mindsets, and action orientations (Abebe and Tangpong, 2018;Chittoor et al, 2019;Lee et al, 2021;Zhong et al, 2022). Therefore, to gain a finer-grained understanding of the relationship between innovation aspiration shortfall and EEFs' international expansion, we further explore the moderating effects of founder-CEOs and outsider-CEOs.…”

“…In addition, founder-CEOs have more control over firms (Hendricks et al, 2019;Zhong et al, 2022) and are more likely to be supported by the board of directors who represent the interests of shareholders (Chittoor et al, 2019). Due to the board support, even if strategic investments fail to achieve aspirations or appear as deviations, the risk of founder-CEOs being fired due to investment failure is much lower than that of non-founder-CEOs (Chittoor et al, 2019), which makes them more likely to make or accept risky decisions (Deb and Wiklund, 2017;Lee et al, 2017).…”

“…Academics have largely agreed that the values, mindsets, and behavioral tendencies of CEOs at the top of the management hierarchy play a critical role in shaping whether and when firms respond to internal and external environment changes (Hambrick, 2007). Furthermore, scholars have recently recognized that CEO origin has a significant impact on CEOs' values, mindsets, and action orientations (Abebe and Tangpong, 2018;Lee et al, 2021;Zhong et al, 2022). However, the performance feedback theory-based research generally ignores the moderating role of CEO origin, which is not conducive to a comprehensive insight into how firms respond to innovation aspiration shortfall.…”

“…In order to deeply reveal the heterogeneity of the effect of innovation aspiration shortfall on EEFs' international expansion, so that we can generate a finer-grained understanding of EEFs' international expansion, in this study we introduce an important but hitherto underappreciated moderator at the CEO level, namely, CEO origin. The reason why CEO origin matters is that a CEO's decision-making and behavior are influenced not only by their own preferences and abilities, but also by who they are (Abebe and Tangpong, 2018;Lee et al, 2021;Zhong et al, 2022). In addition, different origins of CEOs mean different value orientations, thinking modes and behavioral tendencies in terms of risk-related decisionmaking (Abebe and Tangpong, 2018;Chittoor et al, 2019).…”

“…The reason why CEO origin matters is that a CEO's decision-making and behavior are influenced not only by their own preferences and abilities, but also by who they are (Abebe and Tangpong, 2018; Lee et al. , 2021; Zhong et al. , 2022).…”