Are firms with foreign CEOs better citizens? A study of the impact of CEO foreignness on corporate social performance

This study examines whether firms’ corporate social performance (CSP) varies when local firms have foreign CEOs. Building on the social identity perspective, we argue that because foreign CEOs are perceived as outgroup (or nonprototypical) leaders by the local firms’ stakeholders, local firms with foreign CEOs need to achieve a higher level of CSP than do local firms with local CEOs to enhance their legitimacy and trustworthiness. Furthermore, we propose that the predicted difference in CSP between foreign and local CEO-led firms will be larger (a) for more authentic and thus trust-enhancing CSR activities and (b) in those socio-economic environments where the salience of CEO foreignness and thus the need to build trustworthiness with locals is more pronounced. In a sample of 1001 local firms across 18 developed countries during the period between 2003 and 2015, our empirical results support most of our predictions.