Business Statesman or Shareholder Advocate? CEO Responsible Leadership Styles and the Micro‐Foundations of Political CSR

• Author: Thomas Maak,Nicola M. Pless,Christian Voegtlin
• DOI: http://doi.org/10.1111/joms.12195
• Date: 01 May 2016
• Published date: 01 May 2016

Business Statesman or Shareholder Advocate?

CEO Responsible Leadership Styles and the

Micro-Foundations of Political CSR

Thomas Maak, Nicola M. Pless and Christian Voegtlin

University of South Australia; University of South Australia; Universit€at Z€urich

ABSTRACT In this article we pursue two objectives. First, we refine the concept of responsible

leadership from an upper echelon perspective by exploring two distinct styles (instrumental

and integrative) and thereby further developing the understanding of the newly emerging

integrative style. Second, we propose a framework that examines the micro-foundations of

political corporate social responsibility (CSR). We explicate how the political CSR

engagement of organizations (in social innovation and multi-stakeholder initiatives) is

influenced by responsible leadership styles and posit that most CEOs tend to espouse either

instrumental or integrative responsible leadership approaches, based on perceived moral

obligations toward shareholders or stakeholders. We examine the moderating effects of

societal- and organizational-level factors (such as power distance and corporate governance),

and individual-level influences (such as cognitive and social complexity). We discuss both

approaches with respect to their effectiveness in dealing with political CSR challenges in a

complex environment and conclude that an instrumental responsible leadership style may be

effective in relatively stable settings with strong institutional arrangements, while the complex

and unstable context of a post-national constellation with weak institutions calls for an

integrative responsible leadership style. The latter can be expected to be more effective in

dealing with political CSR challenges in a global world, contributing to closing governance

gaps and producing sustainable outcomes for societies.

Keywords: CEO leadership, leadership complexity, political CSR, responsible leadership,

upper echelons

INTRODUCTION

In light of pressing societal problems, failing states, and the growing power of multina-

tional corporations (MNCs), there is increasing pressure from stakeholders (among them

Authors are listed in alphabetical order and have contributed equally.

Address for reprints: Professor Thomas Maak, Head School of Management, University of South Australia Business

School, GPO Box 2471, Adelaide, South Australia 5001, Australia (Thomas.maak@unisa.edu.au).

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C2016 John Wiley & Sons Ltd and Society for the Advancement of Management Studies

Journal of Management Studies 53:3 May 2016

doi: 10.1111/joms.12195

NGOs, consumers, and the broader public) on MNCs and their leaders to use their

power and influence to take on more active roles as global citizens, beyond charitable

action (Maak and Pless, 2009; Stahl et al. 2012; Voegtlin et al. 2012). Business leaders

are expected to fill the void left by weak governments and failing states in areas such as

regulation, public administration (health, education, and social security), or environ-

mental protection, and to practice self-regulation and contribute to the production of

global public goods (Gilbert et al., 2011; Matten and Crane, 2005; Rasche et al., 2013;

Scherer and Palazzo, 2008, 2011). At the same time, ‘neo-liberal’ reforms have led to a

privatization of former public services in areas such as education, health care, water,

and civic services (Crouch, 2009), blurring the boundaries between the political, civil,

and economic spheres of society (M€akinen and Kourula, 2012). Moreover, executives

are often confronted with unavoidable and difficult political corporate social responsibil-

ity (CSR) challenges (see Moody-Stuart, 2014) that require immediate attention and

need to be resolved competently to ensure organizational legitimacy. For example, the

leadership of Heineken, the Dutch-based global brewing company, was recently con-

fronted with the challenge of whether it should stop its long-time business operations in

war-torn Congo and was struggling to find a clear answer. The company contributes to

the civic infrastructure through its ‘brewing a better future’ programme and its invest-

ment in basic education, health programmes, and agricultural projects; on the other

hand, the company’s leadership faced mounting criticism that the soldiers’ excessive

beer consumption contributed to the violent conflict (Baaz and Stern, 2008).

For the purpose of this paper we define political CSR as activities that are tradition-

ally understood as governmental responsibilities (e.g., enforcing human rights, and pro-

viding public goods and services, such as education and infrastructure), and that

businesses undertake to contribute to public policies and global governance (Scherer

and Palazzo, 2011; Scherer et al., 2014). Political CSR involves multiple stakeholders

with different interests and demands, a high degree of local-global tension and thus con-

flicting norms and standards, or even moral dilemmas (Pless and Maak, 2011a,b). As a

consequence, political CSR in the global arena comes with higher levels of complexity

and ambiguity (Child and Rodrigues, 2011; Jones and Fleming, 2003; Kostova and

Zaheer, 1999) and its effectiveness also depends on responsible leadership from chief

executive officers (CEOs) (Moody-Stuart, 2014).

A unifying definition of responsible leadership has yet to emerge. However, there is

agreement among scholars that different understandings of responsible leadership exist

(Miska et al., 2013; Pless et al., 2012; Stahl and Sully de Luque, 2014; Waldman and

Siegel, 2008) and that interaction with stakeholders constitute an important part of

responsible leadership (Doh and Quigley, 2014; Pless and Maak, 2011a,b; Stahl et al.,

2012; Voegtlin et al., 2012). We define responsible leadership as a relational influence

process between leaders and stakeholders geared towards the establishment of account-

ability in matters pertaining to organizational value creation.

Further, we conceive of the responsible leadership style as observable leader behaviour

that reflects different degrees of such accountability in executive actions and decisions

(Pless et al., 2014). This behaviour can be evaluated by observers, such as subordinates

(‘classical followers’), peers, and external constituencies.

464 T. Maak et al.

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