CEO Personality and Organizational Decoupling in the Context of Corporate Sustainability

Abstract

The gap between what firms say and what they do is referred to as organizational decoupling. Despite the fact that decoupling is a widespread phenomenon, there is a paucity of empirical studies that have examined individual level predictors of organizational decoupling, especially in the context of corporate sustainability. This paper examines the relationship between CEO personality and organizational decoupling in the context of corporate sustainability. Using the U.S. manufacturing firms in the S&P 1500 for a period of 10 years starting from 2009 to 2018, we find the support that the CEO personality traits of extraversion and neuroticism increase organizational decoupling. We explored the moderating role of board power on the above relationship but did not find any supporting evidence. This paper contributes to both the literatures on organizational decoupling and upper echelons theory. Examining CEOs' psychological characteristics as antecedents advances TMT research by moving beyond the reliance on demographic proxies that characterize most prior research.