Responsible management and finance

Exploring the antecedents of responsible leadership behaviour at individual and organisational levels

Francesco Rizzi, Chiara Pellegrini, Eleonora Annunziata, Marco Frey

Research in environmental sociology and psychology has suggested that individual values play an important role in motivating responsible decision making and social change (Waters, 1980). For example, Stern and Dietz (1994) found that a biospheric-altruistic value orientations shapes environmentalist beliefs and behavioral intentions leading to the mobilization of strategies for social change. Karp (1996) found evidence that value systems combining self-transcendence and openness to change have positive influence on individual contribution to the collective good. Cameron (2011) argued that virtuousness conceived as the desire to creates social value that transcends self-interested benefit is a key value of responsible leadership. Freeman and Auster (2011) discussed the importance of authenticity to “acting on one’s values” and effectively implement responsible business logics. Waddock (2014) stress the centrality of values related to “the good, the true and the beautiful” as central tenants of responsible leadership. Maak et al. (2016) theorized fiduciary duty and social welfare orientation as key values characterizing the interaction between CEO and top managers leading to RL behavior. Although these studies focused on conceptualizing and investigating specific individual values, little research has empirically mapped the values characterizing individual value systems of RLs (Miska and Mendenhall, 2018). This is led to our first research question:

RQ1 What is the set of individual values that characterize responsible leaders?

Whereas individual values drive individual behavior, organization’s values are “socially shared cognitive representations of institutional goals and demands” (Rokeach 1979, p.50). They provide foundation for the purpose and goals of an organization, representing the guiding principles for interpreting internal and external signals, thus determining decision-making and strategy (Posner, 2010). They silently direct daily actions and decision-making at all levels of the organization. Values are the heart of organizational culture, identity and leadership (Schein, 2004). They shape, support, and filter individual action in ways that align it with the company’s distinguishing ethics (Vveinhardt and Gulbovaite 2017). Organizational values are paramount in responsible companies, whose sense of purpose and ethics are at the very heart of business activity. They need to be preserved and reproduced constantly through individual RL behavior that inspire authenticity, integrity and responsibility to all stakeholders (Freeman 2018) and promote strategy-making that is aligned to those values. Although literature on RL investigated individual values leading to RL behavior, not much is known about the organizational values that characterize RL as an organizational property. Furthermore, little attention has been devoted to the relationship between individual and organizational values in determining RL behavior. Extant literature stressed the importance of leaders’ individual values in creating and maintaining organizational values (Grojean et al. 2004) and recognized value congruency between individual and organizational values as a key condition for ensuring business success. However, this relationship can be investigated also from the opposite perspective. Organizational values might be transcendent, surpassing individual leadership behavior (Bunchko, 2007) and might influence individual values in ways that transform top executives in responsible leaders. In order to address this gap, we developed our second research question as:

RQ2 What are the organizational values that characterize responsible companies?

Socio-psychological mechanisms shape executives’ perceptions of organizational values and activate individual values in ways that trigger intrinsic motivation to act as responsible leaders (Kirkhaug 2008). Since RL is a relational property within groups of stakeholders (i.e., leaders exist because of followers and followers exist because of leaders), RL is influenced by ordinary social cognitive mechanisms associated with psychologically belonging to an organization (Hogg 2011) and identifying with its mission and purpose (Dutton et al. 1994; Carmeli et al. 2017). These mechanisms align individual and organizational values in ways that integrate personal motives and organizational objectives, spurring personal engagement and motivation that is functional to the effective implementation of RL behavior (Bingham et al., 2013). Since limited literature explains the mechanisms that influence executives to align their individual values with those of a responsible company in the context of RL theory, we formulated our third research question as:

RQ3 What are the mechanisms that align individual and organizational values in ways that trigger RL behavior?

Research on organizational values have stressed that the orientation of structures and systems within an organization is very much a function of the values embodied within them (Kirkhaug 2008). Thus, organizational values might influence individual RL behavior through the structures and practices that characterizes it. Although limited research in RL has investigated the relationship between organizational values and RL behavior (Bansal 2003), a number of studies have adopted a value-based perspective (Maak and Pless 2006) to investigated the linkages between RL behavior and various elements characterizing the organizational context. Codwell et al. (2012) analyzed RL behavior in the context of business crises and related it to responsible management. Doh et al. (2011) found responsible organizational culture, fair and inclusive HR practices, and managerial support as key practices for RL. Pless et al. (2011) explored the role of international service-learning programs in enabling executives to develop responsible mindset, ethical literacy, global mindset orientations, cultural intelligence, community building and self-development. Martiz et al. (2011) found that emergent strategy-making modes allow responsible leaders to act as change agents and ensure the long-term sustainability in changing environment. They found that flexibility of planning structures, tolerance to ambiguity and uncertainty and empowered autonomy in decision making contribute to RL. Overall, these studies specify the organizational structures and processes support executives to exhibit RL behavior. Although these studies provide valuable insights on the organizational practices that foster RL behavior, the focus on the meso-level of analysis. Interesting insights might emerge from a cross-level research on interactions among RL antecedents at the individual and organizational level in driving RL behavior (Miska and Mendenhall, 2015). Therefore, our forth research question attempt to fill this gap by asking:

RQ4 What are the organizational practices that align individual and organizational values in ways that trigger RL behavior?

#corporate sustainability #organizational identification #Responsible leadership #responsible leadership behavior #sustainable organizational practice #value congruence