Most organizations today have tapped into the zeitgeist for corporate social responsibility, albeit with varying levels of gusto and success.  New research from HEC Paris explores the key role the CEO can play in the success of CSR initiatives and finds that the boss can actually provide up to a 30% boost in CSR performance.

The researchers examined over 1,000 American firms to try and understand how influential CEOs were on the CSR outcomes of their firms.   The authors chose CSR because it’s an area that is more directly influenced by the boss, whereas areas such as finance can be heavily impacted by external factors.

Sizeable influence

Using statistical methods to gauge the role CEOs have in the CSR outcomes of their organizations, the researchers found a sizeable 30% swing between the CSR behaviors of firms that can be attributed to the bosses themselves.

“In this study, we look at CSR because organizational actions and policies in this area are voluntary and typically go well beyond what’s mandated by law or regulation,” the researchers explain. “CSR outcomes, in this sense, give us a clearer insight into how much leeway the chief decision-maker will have in a firm, given the voluntary nature of this kind of activity.”

The researchers examined the firms between 1993 and 2015 to calculate the variable average value, which illustrates the variance between the CSR outcomes of firms over that period of time.   They then compared this with the CEO at the helm at any particular time to try and understand the influence they’re having on their firm’s CSR performance.

Leading from the front

The researchers believe that their findings illustrate the influence leaders can have, not only on CSR, but on other aspects of the business.

“In terms of corporate citizenship, it sheds light on the importance of who you select to run your business: a Trump versus a Biden type, for instance, will impact your outcomes significantly in theory but as we show, also in practice,” they explain.  “But beyond CSR, our findings suggest it is likely that CEOs will exert quite a lot of influence on the firms they run in general, which has historically been something of a moot point for scholars and practitioners alike.”

It’s a finding that they believe should prompt organizations and boards to truly reflect on matters such as hiring and compensation to ensure they get the executives they want.

“CEOs matter, and they matter a lot. So maybe it is a good idea to ensure that they are appropriately compensated in their pay,” they conclude. “For example, if corporate citizenship is a priority, boards might want to think about tying CSR activities to financial incentives for their top executives.”