This week our research tidbits brings together research on the links between board appointments and drivers in sustainability performance.
Do Corporate Sustainability Officers influence performance?
The creation of a specialised executive position that oversees sustainability activities represents a distinct shift in the structure of top management teams and their approach for addressing sustainability concerns. However, little is known about these management team members, namely the corporate sustainability officers or CSOs.
The authors examine CSO appointments and their association with subsequent sustainability performance. The results indicate that the creation of a CSO position may represent more of a symbolic versus substantive governance mechanism. Further tests suggest that CSO expertise and the firm’s existing sustainability performance affect the association between the CSO and post-appointment sustainability performance.
The authors find no association between CSO appointments and subsequent sustainability performance for firms that were already poor performers, while firms possessing relatively higher levels of prior sustainability performance appointing a CSO begin to experience significant improvements to performance after 3 years. The authors further find that CSOs with prior sustainability expertise are associated with increases in sustainability performance in firms that were already strong performers, but not in firms with poor sustainability performance. Non-expert CSOs, on the other hand, are associated with initial decreases in performance for poor performing firms, whereas better performing firms hiring non-expert CSOs are able to rely on other sustainability attributes of the firm and benefit from improvements in performance in the long term.
The authors discuss the potential importance of these positions as it relates to symbolic versus substantive governance mechanisms through the lens of top management team literature streams.
Gary F. Peters, Andrea M. Romi & Juan Manuel Sanchez. 2019. The Influence of Corporate Sustainability Officers on Performance.
Journal of Business Ethics, 159(4), 1065–1087.
Board members and investor relations drive corporate sustainability
This paper examines the relationships between corporate governance and corporate sustainability by focusing on two main components of companies’ governance structure: boards of directors (BoDs) and investor relations officers (IROs). The authors propose an original empirical strategy based on the 120 biggest French capitalisations for the year 2013, allowing us to measure boards of directors’ independence and expertise, as well as investor relations officers’ convictions and communication on corporate sustainability.
The results show that corporate governance has an ambiguous impact on corporate sustainability because of opposing forces: internal, external and intermediate forces.
On the one hand, the higher the proportion of inside directors, the higher the company’s environmental and governance performance, while the higher the proportion of general experts in the board room, the lower the company’s governance performance.
On the other hand, investor relations officers’ beliefs that corporate sustainability is primarily driven by investors’ ethical values appear negatively related to companies’ governance performance. In sum, corporate sustainability appears positively related to internal forces (inside directors) and negatively related to external forces (general expert directors and investor activist engagement).
The results of this study demonstrate the need to carry out efforts to train BoDs (specifically inside directors) and IROs to respond to corporate sustainability and to take more of a leadership role in this area.
Patricia Crifo, Elena Escrig-Olmedo & Nicolas Mottis. 2019. Corporate Governance as a Key Driver of Corporate Sustainability in France: The Role of Board Members and Investor Relations.
Journal of Business Ethics, 159(4), 1127–1146.
Leaders’ stewardship behaviour and innovation success
As stated by previous researchers, in an increasingly competitive environment, organisations need to develop successful innovations to compete and survive in the long term. Furthermore, sustainability and social issues are gaining increasing importance, to the extent that they are now a matter of high concern for firms and for society. Therefore, organisations cannot improve their results at any price and must be responsible for the consequences of their activities, including innovation.
In these conditions, a growing demand for new leadership styles and behaviours arises to face this complex context. Stewardship is a leadership behaviour that shows great concern for the impact of the organisation’s activity on society. A quantitative study has been conducted with the purpose of providing empirical evidence of the relationship between leaders’ stewardship behaviour and innovation success, using radical innovation as an explanatory variable.
To confirm the hypotheses, structural equations were used on a dataset from a sample of 300 questionnaires from Spanish companies. The study empirically validates the proposed conceptual model. Results show how radical innovation fully mediates the relationship between leaders’ stewardship behaviour and innovation success.
Emilio Domínguez-Escrig, Francisco Fermín Mallén-Broch, Rafael Lapiedra-Alcamí and Ricardo Chiva-Gómez. 2019. The Influence of Leaders’ Stewardship Behavior on Innovation Success: The Mediating Effect of Radical Innovation.
Journal of Business Ethics, 159(3), 849–862.
Does self-serving leadership hinder team creativity?
Self-serving leadership is a form of unethical leadership behaviour that has destructive effect on its targets and the overall organisation. Adopting a social cognition perspective, this study expands our knowledge of its adverse effect and the way to mitigate the effect.
Integrating two sub-theories of social cognition (social information processing and social learning), the authors propose a theoretical model wherein self-serving leadership hinders team creativity through psychological safety as well as knowledge hiding, with task interdependence acting as a contextual condition.
Results from a sample of 107 R&D teams revealed that self-serving leadership not only reduced team psychological safety, but also induced team knowledge hiding, both of which ultimately affected team creativity. The presence of high task interdependence buffered the destructive effect of self-serving leadership on team creativity via team psychological safety as well as the indirect effect via knowledge hiding.
Jian Peng, Zhen Wang and Xiao Chen. 2019. Does Self-Serving Leadership Hinder Team Creativity? A Moderated Dual-Path Model.
Journal of Business Ethics, 159(2), 419–433.
Managers, environmental strategy, institutional force, and innovation capability
Despite the rising interest in environmental strategies, few studies have examined how managerial cognition of such strategies influences actual innovation capability development. Taking a managerial cognition perspective, this study investigates how managers’ perceptions of institutional pressures relate to their focus on proactive environmental strategy, which in turn affects firms’ realised innovation capability.
The findings from a primary survey and three secondary datasets of publicly listed companies in China reveal that managers’ perceived business and social pressures are positively associated with their focus on proactive environmental strategy, which consequently fosters innovation capability development. Moreover, state ownership and government administrative control weaken the impact of managerial focus on proactive environmental strategy on innovation capability.
These findings have important implications for how managerial cognition supports environmental strategy and organisational capability building under the influence of institutional pressures and government intervention.
Defeng Yang, Aric Xu Wang, Kevin Zheng Zhou & Wei Jiang. 2019. Environmental Strategy, Institutional Force, and Innovation Capability: A Managerial Cognition Perspective.
Journal of Business Ethics, 159(4), 1147–1161.
Ethical issues in the assurance of sustainability reports
The objective of this paper is to investigate, through a qualitative study based on 38 semi-structured interviews with agents who provide assurance of sustainability reports, how they perceive and manage ethical issues underlying the verification of sustainability reports.
Most of the ethical issues observed involve four interconnected aspects: the commercialism underlying sustainability assurance, the symbolic nature of the verification process, interdependency between auditing and consulting activities, and familiarity with the audited companies.
The findings shed light on the reflexivity of assurance providers on these issues and the legitimation strategies used to explain how they reconcile the independence and impartiality required for auditing activities with commercial aspects related to client-provider relationships. The study also shows the role of contextual variables in the ethics of assurance services. The paper contributes to the literature on the legitimacy of sustainability assurance and commercialism of the audit function. Practical implications and avenues for future research are also developed.
Olivier Boiral, Iñaki Heras-Saizarbitoria, Marie-Christine Brotherton & Julie Bernard. 2019. Ethical Issues in the Assurance of Sustainability Reports: Perspectives from Assurance Providers.
Journal of Business Ethics, 159(4), 1111–1125.