CEO Greed, Corporate Social Responsibility, and Organizational Resilience to Systemic Shocks

Brief Abstract

This study investigates how CEO greed influences firms' engagement in Corporate Social Responsibility (CSR) and their ability to withstand and recover from systemic shocks, focusing on the 2008 global financial crisis. The authors argue that greedy CEOs, driven by personal wealth maximization, tend to underinvest in CSR, which undermines stakeholder relationships and long-term resilience. Analyzing data from 301 U.S. public firms, they find that CEO greed negatively impacts CSR, especially when compensation is tied to short-term incentives. Moreover, firms with greedy CEOs and low CSR investment experience slower recovery following the crisis, highlighting the long-term organizational risks posed by executive greed.

Key Findings

• CEO greed negatively impacts CSR, as a focus on short-term financial gain sets limitations for considering long-term stakeholder well-being.

• The negative effect of CEO greed on CSR is worse when executive compensation is heavily weighted toward short-term incentives like bonuses.

• Restricted stock, which promotes long-term thinking, does not significantly moderate the negative effect of greed on CSR.

• Greed and low CSR reduce organizational resilience. Firms led by greedy CEOs or with low CSR investments before the 2008 financial crisis took longer to recover afterward.

• CSR enhances resilience through stakeholder engagement. Firms with higher CSR investment before the crisis recovered faster, likely due to stronger relationships with stakeholders.

• Greedy CEOs tend to foster more individualistic, competitive cultures that reduce collaboration and information sharing—traits that can undermine resilience during systemic shocks.

• CEO greed not only hurts CSR but also jeopardizes long-term organizational performance, challenging the idea that short-term profit-focused leadership is beneficial.

Opportunities for Further Research

• Future work could examine interactions between different personality traits and their effects on long-term organizational outcomes.

• Investigate alternative forms of systemic shocks, such as pandemics, natural disasters, political or regulatory upheaval, and cybersecurity crises.

• A deeper examination of compensation structures, such as stock options, clawbacks, ESG-linked compensation, and their impact on firm willingness to participate in CSR.

• An exploration of how compensation structures influence non-financial outcomes or ethical decision-making.

• Comparative studies across countries or governance regimes could shed light on institutional and cultural moderators.

• The study assesses recovery in a relatively short post-crisis window. Future work could track longer-term organizational trajectories.

• More work is needed to understand how CEO values shape culture, especially regarding communication patterns, ethical climate, and middle-management behavior.

• Future research could examine CSR as a mediator between CEO traits and outcomes, or test when and how CSR buffers against various risks.

• Understanding stakeholder reactions and activism; how do stakeholders respond to CEO greed or low CSR?

Definitions

• CEO Greed: an extreme form of self-interested behavior, where the CEO prioritizes personal gain over the well-being of others. Greed is seen as morally charged and distinct from narcissism, which is more about self-image than material wealth.

• Corporate Social Responsibility (CSR): CSR includes voluntary initiatives in areas like environment, employee relations, diversity, and community engagement. It reflects a stakeholder-oriented approach rather than a shareholder-only focus.

• Environmental Social Governance (ESG): A framework by which investors and stakeholders can determine an organization’s sustainability and societal impact, prioritizing the management of environmental footprint, social responsibility, and corporate governance practices.

• Organizational Resilience: an entity's capabilities to ensure stability in withstanding immediate impacts (e.g., drop in stock price) coincided with a flexibility to adapt and recover over time.

• Stakeholder View: Firms have responsibilities to all parties affected by their actions, not just shareholders.

• Shareholder View: The sole responsibility of firms is to maximize profits for shareholders, within legal boundaries.

About the Authors

Dr. Miha Sajko is a scholar specializing in strategic management and organizational behavior. His research focuses on executive decision-making, corporate social responsibility (CSR), and organizational resilience. He has contributed to understanding how leadership traits, such as CEO greed, influence firm strategies and outcomes.

Dr. Christophe Boone is a Professor of Organization Theory and Behavior at the University of Antwerp, Belgium. His research interests include organizational ecology, upper echelons theory, and the dynamics of organizational change. He has published extensively on how organizational structures and leadership affect firm performance and adaptation.

Dr. Tine Buyl is an Associate Professor of Strategic Management at the University of Antwerp. Her research centers on upper echelons theory, focusing on how top executives' characteristics and team dynamics influence strategic decisions and organizational outcomes. She has explored topics such as executive compensation, leadership diversity, and corporate governance