It’s comforting to think of character as intrinsic and unchanging. Good people do good things and bad ones need to be carefully watched. But new research suggests that, at least when it comes to companies’ social responsibility efforts, things are a lot more complicated than that.
The counterintuitive findings out of the London Business School and University of California Riverside were just published in the winter edition of Personnel Psychology. Professors Margaret Ormiston and Elaine Wang examined the social responsibility records of 49 often written about firms from the Fortune 500 list. What they found might surprise you.
Prior good deeds by a CEO didn’t make a company more likely to behave well going forward, as you might expect. Quite the opposite: prior good behavior actually made firms more likely to misbehave in the future. The effect was even stronger for CEOs who “who attempt to put forth a moral image,” i.e. maintain a public profile as do-gooders.
“The finding is very counterintuitive,” Wong acknowledges. “You wouldn’t think doing well by one’s stakeholders would set the stage for actions that harm stakeholders in the future.”
But that’s exactly what happens. The researchers speculate that do gooder CEOs feel as if they have built up “moral credit” with their socially responsible actions, creating the sense that they can relax their efforts going forward. The researchers even quantified the effect: roughly every five good deeds seems to equal out to license to commit one corporate sin, they found.
What’s the takeaway here? Basically, resisting the tug of the dark side is probably more difficult than many expect. Not slacking off on corporate social responsibility requires constant vigilance, and CEOs shouldn’t be given a free pass from monitoring based on a positive track record.
“These findings show that CEOs should be aware of this tendency so that they can prevent their companies from slipping into this pattern,” Wong said. “Additionally, corporate boards can’t allow CEOs to rest on their laurels. They need to be vigilant in monitoring CEOs.”
Photo credit: Kristina Alexanderson via Flickr.