Research: the chief executive of the investment social responsibility initiative risks working.


Research: the chief executive of the investment social responsibility initiative risks working.

A new study shows that chief executives who invest in corporate social responsibility programs face significant risk of losing their jobs.

Research: the chief executive of the investment social responsibility initiative risks working.

Erhui1979 / getty images.

David green, host:

Chief executives – of course, these are people who are hired to make money for the company’s shareholders. Some want the CEO to commit to another goal – to make money in a socially responsible way, or to give up money to help the community. So a new study suggests that ceos who support corporate social responsibility programs may actually put their work on the line. NPR’s social science correspondent Shankar Vedantam explains. Hey, shankar.

SHANKAR VEDANTAM, wired: hi, David.

Edward green: we can start with the thumbnail, Shankar. What is corporate social responsibility?

VEDANTAM: sure. Corporate social responsibility or corporate social responsibility, sometimes known, is anything that companies do not directly relate to the bottom line. So it could be an investment in the community. This could be an investment in security. This may be a helpful investment in the environment, an investment in diversity, and generally the company looks like a good citizen, but it doesn’t always have a direct relationship with the bottom line.

Edward green: do these good things, they can – they might be bad for the CEO.

VEDANTAM: well, it can, but it all depends on the context. I’m talking to Tim Hubbard. He is a professor of management at Notre Dame. He says investing in diversity or environmental issues or security procedures may favor the company’s workers and communities, but such investments may also attract attention.

TIM HUBBARD: many people believe that corporate social responsibility is a bad investment, the money may be in other parts of the company for more traditional investment types, such as research and development, the investment and the company have more clear link between the bottom line.

Green: that’s surprising, because many people focus on corporate responsibility, you made a very good media, community relations, better if you work in the diversified, industrial relations can be improved. But some people just look at the bottom line and say you should spend your money on something else.

VEDANTAM: yes. And, I think, in the long run, people will ask, are these investments good or bad for the company? So hubbard and his colleagues, Dane christensen and Scott graffen, decided to analyze whether the investment was net or net. They decided to use a very simple metric – what is the significance of these investments for the well-being and longevity of the chief executives who basically guide these investments? In other words, does investing in corporate social responsibility help ceos or hurt ceos?

HUBBARD: we see this double-edged sword. If the company does well, the investment in corporate social responsibility can ease the CEO’s dismissal. On the other hand, if the financial performance isn’t good, it can really put the CEO at risk of being terminated.

Green: well, listen, there shankar, I mean, the chief executive should only socially responsible thing have lessons, as long as convinced that their own companies in terms of financial performance is good?

VEDANTAM: well, that might be a lesson for ceos, David, because the board seems to be evaluating corporate social responsibility as a framework for evaluating chief executives. So, if a company is doing well, the board says, look, the CEO brings us a lot of Numbers, but it also shows that we’re a good citizen. That’s great. On the other hand, when companies are not doing well, the board says, why do we spend money on altruistic reasons when we lose money? So they started the chief executive, which made him more likely to be fired.

Edward green: it almost sounds like they can offer any account of their chief executive in this way.

VEDANTAM: exactly. It magnifies any content displayed in the financial picture.

Edward green: shankar, as always.

VEDANTAM: thank you, David.

Edward green: that’s Dan Dan. He often discusses social science research plans with us. You can find him on Twitter @hiddenbrain – when you’re here, you can follow this program @morningedition.

(” my only surprise “)


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