A recent study published in the Strategic Management Journal finds that appointing an immigrant CEO can dramatically reduce the incidence of corporate social irresponsibility (CSI) in their home countries. The research, led by Juan Bu, Associate Professor of International Business and Strategy at Indiana University Bloomington, highlights how a leader's personal ties and social networks abroad can influence where—and how often—multinational enterprises (MNEs) engage in harmful practices such as environmental pollution or human rights violations.
CSI incidents vary widely by region, and past research has focused primarily on macro-level factors, such as national regulations or cultural norms, to explain these differences. This new study takes a micro-level approach, examining how individual leadership characteristics—specifically, whether a CEO is an immigrant—affect corporate behavior across countries.
"CEOs are central drivers of corporate social performance," explains Bu. "With globalization and the rising number of immigrant CEOs, like Elon Musk of Tesla and Sundar Pichai of Google, it's critical to understand how their backgrounds influence corporate conduct internationally. Yet until now, we've known very little about this connection."
Bu and co-authors Stephanie Lu Wang, Yejee Lee, and Dan Li proposed that immigrant CEOs often have deeper emotional ties, cultural familiarity, and personal networks in their countries of origin. These connections, they argued, could reduce both the likelihood of irresponsible actions by the company and the related negative media coverage in those home countries.
To test this theory, the researchers analyzed data from U.S.-based multinational firms listed in the S&P 500 between 2007 and 2020. CEO biographical information was gathered from public sources such as Wikipedia and corporate websites, while data on CSI incidents came from RepRisk, a global database tracking corporate environmental, social, and governance (ESG) risks.
Using a rigorous statistical matching technique, the team compared 76 firms led by immigrant CEOs to 220 similar firms led by non-immigrant CEOs. The results were striking:
- In the four years following the appointment of an immigrant CEO, the number of CSI incidents in their home country dropped by 54.25%.
- By contrast, comparable firms without immigrant CEOs saw a 6.36% increase in incidents over the same period.
"The reduction was especially pronounced when the CEO immigrated as an adult, the firm had a high sustainability rating, and the home country had lower press freedom," notes co-author Yejee Lee, now an Assistant Professor at Auburn University.
These findings have important implications for both corporate strategy and public policy. For companies, the research suggests that CEO selection can be an effective lever for improving reputation and social responsibility in key markets. For policymakers, the results underscore the importance of transparency and press freedom in reducing corporate misconduct.
"Firms can use these insights to strategically select leaders who bring not only business expertise but also valuable cross-border social capital," says Wang, Associate Professor of International Business and Strategy at Indiana University Bloomington. "Meanwhile, governments can enact policies to increase media transparency and create opportunities for executives to maintain strong ties to their home countries."
Co-author Dan Li, Professor of International Business, adds: "Local governments can also foster conditions that deepen CEOs' emotional connections to their countries, helping prevent harmful business activities before they occur."
The study provides a fresh, nuanced understanding of how personal leadership characteristics shape global corporate conduct, moving beyond broad structural explanations to highlight the role of individual agency. As Bu concludes, "Our work shows that who leads a multinational company matters—not just for profits, but for the company's footprint across the world."
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