CEO gender influences corporate social responsibilty priorities

Businesses are under growing pressure to do more than just make money. Employees and customers alike are increasingly paying more attention to how businesses are giving back to the community.

New research finds that the gender of a company's CEO typically influences the path taken by those businesses to make the world a better place.

What the researchers say: "In order to understand why some companies are more socially responsible than others, one of the factors that we need to focus on is the composition of the leadership team or the background of CEOs," The lead author told us.

Corporate social responsibility, or CSR, refers to a company's efforts to act in ways that benefit society, the environment and its stakeholders, beyond just making a profit. That could be sponsoring a new community center, reducing waste or even championing staff benefits.

And female CEOs seem to be doing more in these fields than their male counterparts.

"In this case, we do find that female CEOs perform better versus male CEOs with regards to at least one sub-dimension of CSR," he added.

The researchers created two CSR categories:

• Relational CSR – initiatives directly involving people, such as those focused on community, diversity, employees and human rights

• Rational CSR – initiatives indirectly involving people, such as those focused on environmental sustainability and corporate governance.

Published in the European Journal of Marketing, the study analyzed more than 19,000 annual reports from 2,739 large U.S. companies. It found that female CEOs significantly outperform males in the relational category.

This finding aligns with psychology studies that show women tend to be more nurturing, interdependent and focused on building relationships than men, the researchers said.

"This is not to say that relationships are not important to men, but on average, men tend to be more independent," They explained. "They tend to focus more on their own progress and value more independent achievement.

"On those dimensions of CSR, like employee relations, which deal primarily with one-to-one relationships with stakeholders – particularly internal stakeholders – we expected companies led by female CEOs to perform better.”

The study found no significant gender differences comparing rational CSR.

However, the researchers also studied how three different types of power affect the relationship between chief executive gender and CSR behavior.

They found the gender gap in corporate behavior was more pronounced when CEOs had a longer tenure in their role. The same is true when CEOs held more control over the company by taking on the dual role of the board chair.

That gap shrank when a large pay disparity existed between the CEO and the top management team.

"CEOs who are paid significantly more may face resistance from their top management team, stemming from the disparity in pay," the researchers said. "This friction often prevents or complicates the CEOs ability to implement their CSR goals effectively.

"If you are choosing a female CEO, giving her the responsibility of the chairperson will only increase that connection between female CEO and relational CSR."

This latest research may help guide board members aiming to hire or promote a CEO, the lead author said. It also could serve as a resource for prospective employees wanting to work for a company that values socially responsible behavior.

"For an employee who's making that choice, … maybe they could consider the gender composition of the top management team or the gender of the CEO as a signal, which could help them predict the kind of CSR the company is likely to take part in," he said.

"Similarly, there are some investors who feel that they want to invest in companies which are socially responsible, or they want to invest in companies which are particularly strong in some areas of CSR. CEO gender can serve as a signal for these investors as well, helping them make more well-informed stock trading choices"

So, what? The findings of this team of researchers are not that novel, in that prior research, as they admit, has come to roughly the same conclusions. The issue of pay differential between the CEO and the executive team is, however novel, and needs more research especially in a time when pay differentials and corporate inequality generally are becoming hot button issues.