Female CEOs and corporate social responsibility: effect of CEO gender on relational and rational CSR

Abstract

Purpose

The purpose of this research is to explore the impact of women in the C-suite on strategic marketing choices in general and CSR in particular is scant. To that end, this study explores whether and how firms led by female CEOs differ from those led by male CEOs with regard to the types of CSR they pursue. The study classifies CSR into two types: relational (i.e. related to employees, human rights, community and diversity) and rational (i.e. related to product, environment and corporate governance).

Design/methodology/approach

To create the sample, the authors combined four databases: Compustat, Execucomp, Center for Research in Security Prices (CRSP) and Kinder, Lydenberg, Domini and Co., Inc. (KLD). Data for the time period between 1992 and 2013 (both inclusive) were used for the investigation. The final sample comprised of 2,739 firms, for a total of 19,969 firm-year observations (an unbalanced panel).

Findings

Building on self-construal theory and theory of female ethics, the authors theorize and find evidence that while firms led by male and female CEOs are not significantly different with regard to rational CSR performance, firms led by female CEOs outperform those led by male CEOs with regard to their relational CSR performance. Furthermore, the authors also find that different types of CEO power (i.e. managerial power, legitimate power and formal power) moderate the link between CEO gender and types of CSR differently.

Research limitations/implications

This research contributes to research on CSR by introducing two new types of CSR: relational CSR and rational CSR. Further, the research contributes to the broader discussion of how senior managers inject their gender roles into their CSR choices. The authors provide important insights in this area by highlighting that at least some types of myopic management are also driven by CEO gender: female CEOs – to the extent that they are more likely to invest in CSR strengths which pay off in the long run – engage in less myopic management than male CEOs with regard to CSR choices.

Practical implications

To prospective managers, this research suggests that the gender of the CEO is an effective signal that can help them predict firms’ likely CSR behavior. More specifically, firms led by female CEOs are likely to outperform those led by male CEOs with regard to certain dimensions of CSR (higher relational and rational strengths and fewer relational concerns) and this effect of CEO gender on firms’ CSR behavior is likely to be more pronounced when the CEO exhibits certain kinds of power. Female CEOs may benefit by understanding their innate tendencies to focus on relational versus rational CSR, thereby taking advantage of the positive aspects of their tendencies.

Originality/value

This paper classifies CSR into two types: relational and rational. The findings indicate the benefits of this nuanced classification: female CEOs have a stronger impact on relational CSR compared to male CEOs, while the two types of CEOs do not show a significant difference with regard to their impact on rational CSR. The paper also shows that dividing the variable of CEO power into its sub-types, i.e. managerial power (CEO duality), legitimate power (CEO tenure) and formal power (CEO-TMT pay gap) has value as each of these power dimensions is found to impact the CEO gender-CSR relationship differently.