Abstract
Stakeholder management researchers have recently put a lot of effort into figuring out why organizations facing extensive pressure respond differently to social responsibilities. In particular, ethics researchers believe that senior management must drive corporate social responsibility since their attitudes toward such issues are so important. In line with this sentiment, our study develops a framework of management power, composed of CEOs’ power and the organizations’ power, and explores how managerial power heterogeneity affects the corporate social responsibility (CSR) performance of a firm. Using sample data from the largest emerging market—China—for the period 2010–2018, we submit that CEOs with structural power and shareholders with the highest concentration tend to show a lower commitment to CSR activities. On the other hand, we recognize that the ownership, expertise, and prestige power of CEOs’, the supervision, monitoring, and political power of the board can improve a firms’ CSR performance. These results are also validated by using a fixed effect model, two stage least square (2-SLS) regression, and the propensity score matching (PSM) technique. Our results imply that the implementation of social policies fundamentally results not only from powerful CEOs, but also from powerful boards and shareholders. Moreover, our study provides useful implications with regard to the social outcomes of power authorized by CEOs and the organizations.
Highlights
Social scholars have focused on understanding how managerial power determines corporate choices and outcomes
Model 4 shows the results for prestige power (PP), showing that Prestige power (PP) is significantly and positively (β = 0.878, p < 0.01) related to corporate social performance, which confirms that high educational careers encourage
Our findings suggest that Chief Executive Officer (CEO) with ownership power, expert power, and prestige power demonstrate a high level of corporate social responsibility (CSR) performance
Summary
Social scholars have focused on understanding how managerial power determines corporate choices and outcomes. The majority of work suggests that as top managers, the power of Chief Executive Officers(CEOs) significantly influences corporate outcomes such as a firms’ productivity [6], strategic change [7], a firms’ financial performance [8], debt financing [9], corporate social responsibility (CSR) [10], and environmental performance [3]. This line of work has only examined the power of CEOs, focusing on their power dimensions, while the role of heterogeneous sources of power remains relatively ignored [11]. Given the importance of managerial power in corporate outcomes, this study raises an important question: Does power heterogeneity matter for a firm’s CSR performance?
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