The effect of CEO civic engagement on corporate social and environmental performance

Purpose - The purpose of this paper is to explore the relationship between a chief executive officer (CEO)’s personal engagement in broader societal causes (CEO civic engagement) and firm’s social and environmental performance. Design/methodology/approach - A theoretical framework was developed based on upper echelons and stakeholder theories to argue that CEOs’ professional background characteristics can be closely related to firm-level social and environmental performance. Hierarchical OLS analysis was conducted using data from 178 large, publicly traded large US firms between 2010 and 2013. Findings - Overall, the findings suggest that firms led by CEOs with active civic engagement are more likely to support various philanthropic efforts. Additionally, the findings suggest that firms led by civic-minded CEOs are more likely to support an active corporate environmental engagement by investing significant resources in various environmental causes. Contrary to the authors’ predictions, the level of CEO civic engagement was not a significant predictor of firm level community engagement activities. Research limitations/implications - The findings extend current scholarly work on executive determinants of corporate social performance by highlighting the important role of CEOs’ personal engagement beyond studying CEOs’ demographic characteristics. Specifically, the findings that the CEO-civic engagements lead to higher degrees of corporate philanthropy and environmental performance show that CEOs’ civic engagement can go beyond what is considered symbolic executive actions. Practical implications - The findings suggest that firms that seek to foster social and environmental performance in a meaningful way should recruit and retain CEOs that have a personal commitment to and engagement in various social and environmental issues and causes. Originality/value - By empirically examining the effect of CEO civic engagement on corporate philanthropy, community involvement and environmental performance, this paper seeks to contribute to the scholarly conversation on the effects of CEOs in shaping the firm’s social and environmental engagement and addressing external stakeholder concerns.