Heads-Up, CEOs—Corporate Social Responsibility May Get You Fired, Study Finds
Investing in product safety, employee diversity and carbon footprint reduction are all examples of corporate social responsibility (CSR) that can result in high praise for a chief executive—or get them fired—according to new research from the University of Notre Dame.
"Higher Highs and Lower Lows: The Role of Corporate Social Responsibility in CEO Dismissal" is published in the current issue of Strategic Management Journal by Tim Hubbard, assistant professor of management in Notre Dame's Mendoza College of Business, Dane Christensen of the University of Oregon and Scott Graffin from the University of Georgia. The study found that when CEOs choose to invest in CSR, it changes the likelihood they will be fired based on the firm's financial returns.
"If a CEO has invested in CSR and the firm performs poorly, they are much more likely to be dismissed," Hubbard says. "On the other hand, if they have invested in CSR and the firm performs well, they are less likely to be fired. This shows that CSR investments can be a double-edged sword—do well and they'll buffer you from dismissal, do poorly and you're more likely lose your job."