This summary is provided by the IPR Organizational Communication Research Center.
A growing number of corporate leaders have begun speaking up on controversial sociopolitical issues such as race relations, gender, and sexual orientation, immigration, and climate change. Considering that CEO activism is on the rise, its consequences on organizational stakeholders’ attitudes and behaviors have ignited debate. Despite increasing scholarly and practical interest in CEO activism, minimal empirical research has examined the effect of CEO activism from the employee’s perspective. Furthermore, because employees’ work experiences and attitudes are highly affected by a senior leader’s vision, communication, and leadership behaviors, CEOs’ leadership behaviors within an organization play a key role in determining the way employees respond to CEO activism.
Transformational CEO leadership has been associated with positive outcomes such as organizational performance, innovation, and employee engagement. In general, transformational leadership has been defined in terms of how leaders emphasize altruism and self-sacrifice for the long-term good of the larger group or collective. This study examined how employees’ expectations toward CEOs and CEOs’ transformational leadership behaviors are related to employees’ attitudinal and behavioral responses to CEO activism. In particular, the study aimed to provide strategic insights on how CEOs can better manage their actions and gain support from employees. Additionally, the authors explored whether employees’ expectations toward CEO responsibility (i.e., economic expectations versus ethical expectations) influence their perceptions of the perceived morality of CEO activism.
Through an online survey, researchers analyzed the responses of 417 full-time U.S. employees at different levels of job positions working in small, medium, and large corporations whose CEOs had engaged in activism behaviors. Participants in this study included 52.5% males and 47.5% females. The sample had an average age of 43 years. As for the CEOs’ demographic information, approximately 64.7% of the participants reported that their CEOs were male. About 66.6% had CEOs who were over 40. On average, these CEOs had worked for their companies for approximately 5.5 years. In terms of political affiliation, half of the participants (50%) described their CEOs as conservative.
1.) The perceived morality of CEO activism plays a critical role in not only eliciting internal stakeholders’ favorable attitudes toward such action but also encouraging them to engage in supportive behaviors toward CEO actions as well as the company externally.
2.) Employees who expect ethical behaviors from CEOs turn out to perceive CEO activism as moral behavior, regardless of the issues on which the CEOs choose to speak.
— By contrast, employees who expect economic achievement from their CEOs such as increasing revenues, sales, or firm performance do not necessarily view CEO activism as moral behavior.
3.) Transformational CEOs encourage employees to have a positive attitude toward the leaders’ external and socially responsible actions regarding social issues, and they support such actions. This result implies that transformational leadership can be an indicator of effective CEO activism because it significantly influences how positively employees view CEO activism.
Implications for Practice
Organizational leaders who are willing to take a public stance on controversial sociopolitical issues should 1.) emphasize the moral aspects of their activism action in their messages to employees, 2.) make efforts to practice transformational leadership style to increase their likelihood of being supported by their employees when taking a public stance externally, and 3.) identify employees’ expectations toward the CEO’s socially responsible actions.
Lee, Y., & Tao, W. (2021). Does perceived morality of CEO activism matter? Understanding employees’ responses to CEO actions on sociopolitical issues. Management Decision.
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