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Executive personality and sustainability: Do extraverted chief executive officers improve corporate social responsibility?

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  • Karel Hrazdil
  • Fereshteh Mahmoudian
  • Jamal A. Nazari

Abstract

We utilise IBM's Watson Personality Insights service to infer chief executive officers' (CEOs') Big Five personality traits and examine whether CEO extraversion, an important personality trait associated with assertive behaviour, decisive thinking, and desire for social engagement, is associated with firms' corporate social responsibility (CSR) practices. Using a longitudinal dataset of Standard & Poor 500 firms for 2008–2016, we find that firms led by extraverted CEOs' experience higher CSR performance (both environmental and social), even after controlling for other personality traits and other CEO‐ and firm‐specific characteristics. In addition, we find that the relationship between CEO extraversion and CSR performance is more pronounced among industries with higher environmental impact. Consistent with upper echelons theory, our results suggest that firms' strategic environmental and social decisions are significantly influenced by the personal characteristics of corporate executives.

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  • Karel Hrazdil & Fereshteh Mahmoudian & Jamal A. Nazari, 2021. "Executive personality and sustainability: Do extraverted chief executive officers improve corporate social responsibility?," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 28(6), pages 1564-1578, November.
    • Handle: RePEc:wly:corsem:v:28:y:2021:i:6:p:1564-1578
    DOI: 10.1002/csr.2116
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