Socially responsible leaders driving firm performance:Evidence from leading Chinese companies

Abstract

Using two-year database, the study reported in this article investigated the influences of socially responsible leaders on firms¡¯ CSR practices and organizational financial performance (i.e., ROA and ROE), an issue of growing importance in the global context of CSR theory, research, and practice. In doing so, it provides much-needed insights regarding the interplay of responsible leadership, CSR practices, and organizational outcomes, thereby enriching understanding of how leaders¡¯ socially responsible decisions impact upon CSR engagement and firm performance. About 85 CEOs¡¯ behaviors and their companies¡¯ performance were examined by the database from two NGOs. Effects of organizational characteristics on organizational performance were also investigated. Results showed that socially responsible leaders were positively related with the organizational performance of ROE. The aspects of integrity, morality, and stakeholder relationship aspects of responsible leadership are mainly assessed, which are closely related to CSR. However, the evaluation of CSR practices were negatively related to ROA and ROE, which represented that in China CSR activities could not improve the organizational performance in short term, at least in two years. Moreover, the investigation demonstrated that the relationship between socially responsible leaders and organizational financial performance of ROE was partially mediated by the evaluation of CSR practices.