Introduction
Upper echelons researchers have emphasized the pivotal influence of CEOs' personal values on firms' outcomes (Agle, Mitchell, & Sonnenfeld, Reference Agle, Mitchell and Sonnenfeld1999; Berson, Oreg, & Dvir, Reference Berson, Oreg and Dvir2008; Boone, Buyl, Declerck, & Sajko, Reference Boone, Buyl, Declerck and Sajko2022; Chin, Hambrick, & Treviño, Reference Chin, Hambrick and Treviño2013; Geletkanycz, Reference Geletkanycz1997; Hambrick & Mason, Reference Hambrick and Mason1984; Zheng, Shen, Zhong, & Lu, Reference Zheng, Shen, Zhong and Lu2020). However, it remains less clear how the influence of values shaped during CEOs' early life unfolds over time and changes under different contextual conditions. This lack of research is disappointing as extensive psychological research emphasizes early life as a critical formative period that shapes adult cognition and behavior (Elder, Reference Elder1974; Mannheim, Reference Mannheim1970). More importantly, when individuals enter adulthood, their susceptibility to enduring impacts declines (Immelmann, Reference Immelmann1975).
In terms of the sources of values, culture stands out (Finkelstein & Hambrick, Reference Finkelstein and Hambrick1996; Finkelstein, Hambrick, & Cannella, Reference Finkelstein, Hambrick and Cannella2009; Hambrick & Brandon, Reference Hambrick, Brandon and Hambrick1988). The influence of culture on a person's values is fundamental and enduring because it is imparted early in life and is usually beyond personal choice. For example, cultural values can shape leaders' view of the environment and their responses to it (Kluckhohn & Strodtbeck, Reference Kluckhohn and Strodtbeck1961; Schein, Reference Schein1985). Indeed, executives' cultural values affect firms' strategic choices significantly (Hambrick & Brandon, Reference Hambrick, Brandon and Hambrick1988; Schneider, Reference Schneider1989). Considering the diversity and heterogeneity of global value systems, we still need to understand how other values affect organizational strategy and outcomes.
We investigate how CEOs' values shaped by clan culture in early life affect firms' CSR performance. Clan culture is prominent in Chinese society (Hsu, Reference Hsu1963). A Chinese clan is a kinship-based community composed of patrilineal households that trace their origin to a (self-proclaimed) common male ancestor (Greif & Tabellini, Reference Greif and Tabellini2017; Hsu, Reference Hsu1963). Clan culture has evolved for thousands of years in China and affects the country's social, political, and economic activities profoundly (Greif & Tabellini, Reference Greif and Tabellini2017).
Studying the effect of clan values on CSR resonates with the fundamental debate about the dichotomy between tradition and modernity (Gusfield, Reference Gusfield1967). Culture has long been emphasized as a critical component of traditions (Dacin, Dacin, & Kent, Reference Dacin, Dacin and Kent2019), as ‘living social arrangements in organizations infused with value and meaning derived from interpretations of the past’ (Dacin & Dacin, Reference Dacin, Dacin, Greenwood, Oliver, Suddaby and Sahlin2008; Soares, Reference Soares1997: 16). CSR clearly reflects corporate practice in a ‘modern’ sense. The question of whether traditional values complement or conflict with modern corporate practice has attracted intense attention recently (Erdogan, Rondi, & De Massis, Reference Erdogan, Rondi and De Massis2020; Suddaby & Jaskiewicz, Reference Suddaby and Jaskiewicz2020). Our study contributes to this discussion by revealing the persistent influence of traditional values on CEOs' mentality as well as on firms' behavior.
We hypothesize that CEOs' clan values enhance their moral goal of bringing honor to their clan. CSR serves this purpose by enhancing a person's moral stance and social image effectively (Borghesi, Houston, & Naranjo, Reference Borghesi, Houston and Naranjo2014; Tang, Mack, & Chen, Reference Tang, Mack and Chen2018). Indeed, Zhang, Xue, Gao, and Liu (Reference Zhang, Xue, Gao and Liu2024) have insightfully shown a link between the clan culture of a family firm's registered location and its CSR performance. We extend this stream of work substantially by emphasizing CSR as a multi-faceted construct: each social dimension has idiosyncratic characteristics (Mishra & Modi, Reference Mishra and Modi2016) that are subject to different underlying motivations and dynamics (Lange & Washburn, Reference Lange and Washburn2012). CSR activities can generally be categorized into technical CSR that target primary stakeholders and institutional CSR that target secondary stakeholders (Godfrey, Merrill, & Hansen, Reference Godfrey, Merrill and Hansen2009; Mattingly & Berman, Reference Mattingly and Berman2006). Primary stakeholders (such as employees, suppliers, and consumers) are those who are essential to the operation of the business, while secondary stakeholders (such as the community) are those who can influence the primary stakeholders of the firm (Freeman, Harrison, & Wicks, Reference Freeman, Harrison and Wicks2007). Given that institutional CSR can produce more moral capital and attract more public attention for CEOs, we propose that the influence of CEOs' clan values on CSR is more prominent for institutional CSR.
Recent development in upper echelons theory has highlighted the role of contextual factors in moderating the influence of executive characteristics on firms' outcomes (e.g., Busenbark, Krause, Boivie, & Graffin, Reference Busenbark, Krause, Boivie and Graffin2016; Neely, Lovelace, Cowen, & Hiller, Reference Neely, Lovelace, Cowen and Hiller2020), as ‘moderating conditions have been a key focus of UET research over the past decade’ (Neely et al., Reference Neely, Lovelace, Cowen and Hiller2020: 1041). Investigating the contingencies allows better understanding of the mechanisms as well as the boundary conditions of upper echelons theory. In our context, when driven by bringing honor to their clans, CEOs may lead firms to engage in self-serving CSR rather than serving the best interests of shareholders. Thus, it is important to unravel any factors that either strengthen or weaken the impact of CEOs' clan values on CSR decisions.
Imprinting theory suggests that imprints does not necessarily persist and some contextual factors may either facilitate or hinder imprint decay over time (Marquis & Tilcsik, Reference Marquis and Tilcsik2013; Tilcsik, Reference Tilcsik2012). We apply this perspective and argue that certain contextual factors might either facilitate or hinder the decay of the influence of early-life exposure to clan culture. We focus in particular on two such factors: whether the CEO has any overseas experience and whether the firm is headquartered in the CEO's hometown. Using a longitudinal sample of Chinese publicly listed firms for 2010–2019, we find strong support for our hypotheses.
Our study contributes to the relevant literature as follows. Foremost, our research contributes to research on the relationship between CEO characteristics and CSR performance. Existing research has shown that CEOs' personal characteristics influence CSR significantly (e.g., Tang, Qian, Chen, & Shen, Reference Tang, Qian, Chen and Shen2015; Tang et al., Reference Tang, Mack and Chen2018). We underscore the asymmetric impact of CEOs' clan values on different forms of CSR. Our more fine-tuned approach shows that the ideological motivation of the CEO influences not only the extent to which a firm engages in CSR but also their prioritization of different types of CSR activity.
Second, this study resonates with the recent call to devote more attention to the role of contingency factors in moderating the influence of executive characteristics on firms’ outcomes (e.g., Neely et al., Reference Neely, Lovelace, Cowen and Hiller2020). The purpose of doing this is to reconcile inconsistent findings and improve understanding of the boundary conditions of upper echelons theory. This research reconfirms that different executive characteristics may interact to shape the processes by which executives' perceptions and decisions are formed (Hambrick & Mason, Reference Hambrick and Mason1984).
Last but not least, although burgeoning upper echelons research has done an excellent job in examining the effect of executives' values on strategic decisions, it mainly focuses on western values of political ideology, and largely ignored the generalizability challenges rooted in cultural diversity. Our alternative conceptualization and validation of Chinese corporate leaders' clan values as culturally embedded highlight the heterogeneity of global value systems. In this manner, this study provides theoretical refinement to existing western-centric perspectives on upper echelons' values and increases the precision of theoretical predictions with regard to how upper echelons might impact firm strategies.
Theoretical Background
Values, broadly defined as preferences for ordering consequences and alternatives, can exert a particularly important influence on strategic choices through two main channels. First, values can affect strategic choices directly, which is known as ‘behavioral channeling’ (England, Reference England1967). In this channel, CEOs deliberately choose actions that match their values. Second, values influence choices indirectly through the process of ‘perception filtering’ (England, Reference England1967). CEOs' values limit their field of vision, resulting in selective perception and interpretation and consequent strategic choices (Hambrick & Mason, Reference Hambrick and Mason1984). Through this ‘filtering’ process, CEOs not only develop certain views that largely reflect their underlying values, but also prefer strategic choices that are consistent with those values (Hambrick & Brandon, Reference Hambrick, Brandon and Hambrick1988).
Culture is the foundation that shapes our values (England, Reference England1975). Being a set of shared assumptions, culture presents a system of socially constructed meanings and preferences developed by a group as it collectively negotiates environmental forces and the complexity of internal integration (Hofstede, Reference Hofstede1980, Reference Hofstede1991; Schein, Reference Schein1985). Culture serves as a shared frame of reference or logic through which members of a society view organizations, environments, and their relationship to each other (Geletkanycz, Reference Geletkanycz1977). Views and assumptions embedded in a culture are reflected not only in individuals' attitudes and beliefs (Lodge & Vogel, Reference Lodge and Vogel1987), but also in their behavior irrespective of their roles (Jackofsky & Slocum, Reference Jackofsky, Slocum and Hambrick1988; Shane, Reference Shane1995).
CEOs' strategic choices may be influenced by values embedded in different cultures (Hambrick & Brandon, Reference Hambrick, Brandon and Hambrick1988). CEOs – socialized in early life to the values of their cultural heritage – bring these values into senior management roles (Hambrick & Mason, Reference Hambrick and Mason1984). Thus, we can infer a natural linkage between CEOs' cultural values and firms' CSR decisions.
Clans in China
In China, a clan is a kin-based community composed of patrilineal households whose origin can be traced to a (self-proclaimed) common male ancestor (Greif & Tabellini, Reference Greif and Tabellini2017; Hsu, Reference Hsu1963). Traditional Chinese clans usually include: a hall (ancestral temple) for worshiping ancestors; a genealogy that records the history of the clan; a code of conduct that guides and restricts clan members; a committee that manages clan affairs; and public properties used to help members in need (Feng, Reference Feng2013; Tsai, Reference Tsai2007). These cultural elements help to strengthen kinship ties between clan members, form community solidarity, and create group identities (Peng, Reference Peng2004). Hsien-Chin Hu, a prominent Chinese historian, has noted that a clan is based on the ‘idea of self-government and mutual reliance for the benefit of the group’ (Hu, Reference Hu1948: 13). In many European societies, the city is the main cooperative organization. However, for thousands of years, clans united by blood ties have been one of the most important and stable social communities in China (Greif & Tabellini, Reference Greif and Tabellini2017) and Chinese people have always relied on their clan as a platform for social interaction (Greif & Tabellini, Reference Greif and Tabellini2010).
Chinese clans trace their roots back to the Western Zhou Dynasty (11th century BC). Early clans were the preserve of the royal families and nobilities, and plebeian lineage activities were limited (Peng, Reference Peng2010). By the 16th century (1563), the Ming court issued a decree allowing commoners to build ancestral halls and to worship their ancestors, thus officially acknowledging that clan activities were already widespread. Over time, clan activities expanded from the powerful elite to the common people. During the Cultural Revolution of the 1960s, the clan was considered to contradict socialist ideology and was therefore strongly challenged. For example, the communist government confiscated the property of clans, deprived clan elders of power, and abolished clan codes. However, even during that period of adversity, clan activities did not die out. In 1979, China began an unprecedented reform and opening up. Since then, clan culture has been revitalized, and clan activities such as building ancestral halls, repairing genealogies, redecorating ancestral burial sites, and worshiping ancestors have revived quickly (Peng, Reference Peng2004). A county-level survey in 2000 showed that 70 of 99 surnames (40 villages) have updated their genealogies since 1981, and 41 surnames have built ancestral halls since 1991 (Liangqun & Murphy, Reference Liangqun and Murphy2006). Despite dramatic changes in their long history, for a lot of Chinese, loyalty to their clan and the sacrifice of personal interests in favor of the clan remain prominent (Whyte, Reference Whyte1995, Reference Whyte1996). Figure 1 presents a map of clan culture across different regions in mainland China.
Spatial distribution of clan culture in Mainland China
Culture is maintained and transmitted through socialization, which affects individuals' values (Guiso, Sapienza, & Zingales, Reference Guiso, Sapienza and Zingales2006). Akerlof (Reference Akerlof1983) suggests that as people gather experience, their values tend to change and even their dispositional values may have some socially derived elements (Rokeach, Reference Rokeach1973). Individuals learn values that are consistent with their roles through socialization, and after socialization, their value system tends to adapt to new elements. Moreover, research into clans also provides substantial support for the premise that clan culture shapes individuals' values (Freedman, Reference Freedman1958; Hsu, Reference Hsu1963; Peng, Reference Peng2004, Reference Peng2010; Zhang, Reference Zhang2020). For example, Greif and Tabellini (Reference Greif and Tabellini2017) suggest that the value system of clan culture is kin based and collectivist. In fact, clan culture emphasizes responsibility and moral obligation to clan members internally, and externally emphasizes the moral obligation to honor ancestors (Hsu, Reference Hsu1963; Peng, Reference Peng2010).
Although clans have long played an important role in Chinese society, only recently have clans attracted attention from scholars of economics and management. This stream of research has mainly focused on the role of clans in rural areas, such as public goods financing (Xu & Yao, Reference Xu and Yao2015), village committee elections (Su, Ran, Sun, & Liu, Reference Su, Ran, Sun and Liu2011), birth control policy (Peng, Reference Peng2010), and private rural enterprises (Peng, Reference Peng2004). Some recent research has also shown that clans may have a significant influence on individuals' values and corporate behaviors. For example, clans may encourage personal values that stimulate entrepreneurship (Zhang, Reference Zhang2020). Liu, He, and Wang (Reference Liu, He and Wang2023) found that firms are more likely to internationalize their business when their executives have a background in clan culture. Using a sample of Chinese publicly listed firms for 2006–2012, Du (Reference Du2019) found that clan culture, reflected by auditors and CEOs sharing the same surname, may lead to financial misstatements. Moreover, Xiong, Wang, Cui, and Wang (Reference Xiong, Wang, Cui and Wang2021) found that clan culture affects the business performance of Asian enterprises. Zhang et al. (Reference Zhang, Xue, Gao and Liu2024) found a positive relationship between corporate clan culture and family firms' CSR performance. Though Zhang et al. (Reference Zhang, Xue, Gao and Liu2024) mainly focused on the effect of firm-level clan index on CSR performance, taking into consideration that CSR is a multi-faceted construct, it remains unclear how clan culture influences different types of CSR.
Insightful as these studies are, the clan values that are shaped during a CEO's early life have attracted less attention. Being an important informal institution, culture exerts a prominent effect on individuals' cognition and behavior (Alesina & Giuliano, Reference Alesina and Giuliano2015; Hofstede, Reference Hofstede1991). In addition, as an emerging market country, China is still improving its legal, financial, and other formal institutions, leaving room for traditional Chinese culture to play a role in social lives. In particular, clan culture will shape a CEO's value significantly and this influence persists after the CEO has arrived at the top of the career ladder.
CEOs' Clan Values
Research in developmental psychology indicates that individuals' cognitive system and values are largely determined by the environment they experience in early life (Barnett, Reference Barnett1995). Hence, if CEOs were born and grew to maturity in a clan environment, their understanding of the world will be shaped by it. In particular, clans expose their members to an environment that glorifies the clan through activities such as building ancestral halls, compiling genealogies, and decorating ancestral burial sites (Wang, Reference Wang1991). Indeed, Chinese clan society expects members to bring honor to their clan (Freedman, Reference Freedman1958; Hsu, Reference Hsu1963; Peng, Reference Peng2004). In Chinese society, bringing honor to the clan is a pervasive value that shapes individuals' desire for achievement and success. Chinese people often associate their own success with their clan's and their lives are incomplete if they fail to contribute to the clan (Hsu, Reference Hsu1963). For example, Chen (Reference Chen1990) found that because of Chinese people's motivation to honor their clan, the clan shapes their work ethic and desire for achievement.
Just as the concept of heaven can encourage righteous and honest behavior, bringing honor to one's clan can be a powerful incentive for moral action. Although reputation derives from the activities of a few members, all members of the clan share the honor (Hsu, Reference Hsu1963). In fact, in an environment featuring a strong clan culture, individuals share the prosperity and disgrace of the entire clan. Clan culture always emphasizes moral reputation (Greif & Tabellini, Reference Greif and Tabellini2017), and clan morality is a central component of clan culture. The responsibilities and obligations of clan members are usually recorded in the genealogy. If an individual engages in immoral behavior, that individual will be punished socially by other clan members and may even be expelled from the clan. If a clan member contributes to society, the entire clan will be proud (Xu & Yao, Reference Xu and Yao2015) and may praise the member's deeds in the genealogy. Individuals with higher status attract more attention and exert greater influence than their peers (Flynn & Amanatullah, Reference Flynn and Amanatullah2012). As a holder of a high social position, CEOs may consider themselves to be a role model for their clan members. Taking this into consideration, clan CEOs may feel more obliged to bring glory back to their clans.
Hypotheses Development
CEOs can achieve glory for their clan through active engagement in CSR. CSR provides an effective way for CEOs to enhance their moral reputation (Borghesi et al., Reference Borghesi, Houston and Naranjo2014; Tang et al., Reference Tang, Mack and Chen2018). Defined as ‘actions that appear to further some social good, beyond the interests of the firm and that which is required by law’ (McWilliams & Siegel, Reference McWilliams and Siegel2001: 117), and as contributing to social well-being (Margolis & Walsh, Reference Margolis and Walsh2003), CSR is value-loaded and generally considered to be socially desirable by stakeholders (Freeman, Reference Freeman1984). CEOs' participation in CSR may be highly acceptable to and supported by various stakeholders. For example, CSR practices are regarded as pro-social behavior by Chinese executives (Li & Liang, Reference Li and Liang2015; Ren, Sun, & Tang, Reference Ren, Sun and Tang2022). Because the CEO usually has ultimate authority over and responsibility for determining the firm's response to social and ethical issues (Wood, Reference Wood1991), there is growing recognition of the importance of CEOs as the primary driver of CSR practices (Tang et al., Reference Tang, Qian, Chen and Shen2015). Therefore, a CEO's active participation in the firm's CSR can bring about significant benefits such as enhanced reputation and status for the CEO. As firms' CSR can reflect applause and positive affirmation on the CEO, CEOs who inherently desire to bring honor to their clansmen will consider engaging more actively in CSR.
We move one step beyond the baseline positive relationship between CEOs' clan values and CSR and examine the boundary conditions that govern this relationship. The influence of CEOs' clan values on CSR should be affected by different contextual factors. Driven by the motivation to bring honor to their clans, CEOs may engage in CSR activities that do not align with the best interests of the firm, resulting in damage to the firm's fundamental interests. Thus, it is very important to investigate any contingent factors that either strengthen or weaken the influence of CEOs’ clan values on the firm's CSR activities. Specifically, we introduce different types of CSR (considering that different types of CSR are subject to different motivations) and CEOs' characteristics (since the interaction between different executive characteristics shapes executives' perception and decisions) as prominent contingent factors of the baseline relationship between CEOs' clan values and CSR. Investigating these different contingent factors can add nuances to our understanding of the influence of CEOs’ clan values.
Contingent Factor of CSR Type
CEOs can achieve glory for their clan through active engagement in publicly visible CSR activities that will improve their moral reputation and attract public attention more effectively. CSR involves various stakeholder groups, including employees, consumers, suppliers, environment, and community. Each stakeholder group has unique preferences and different demands. An overall CSR score may not depict a firm's CSR activities precisely. Based on the target stakeholder groups, CSR activities can generally be categorized into technical CSR (including responsibilities for employees, suppliers, and consumers) and institutional CSR (including environmental and community responsibilities) (Godfrey et al., Reference Godfrey, Merrill and Hansen2009). Different CSR behaviors are subject to different underlying motivations and dynamics (Lange & Washburn, Reference Lange and Washburn2012). When integrated with insights from clan culture literature, we describe how the relationship is probably predominantly manifested by institutional CSR behavior.
Although both technical CSR and institutional CSR behaviors shape stakeholders' evaluation of a firm and its executives, institutional CSR behavior may produce more moral capital and garner greater public attention. Institutional CSR activities directed toward secondary stakeholders are more likely to be seen as voluntary acts of social benevolence, because these stakeholders lack both power and urgency to assert their demands on the firm (Godfrey et al., Reference Godfrey, Merrill and Hansen2009). Moreover, as environmental and community CSR may attract more media coverage (Tang et al., Reference Tang, Mack and Chen2018), this type of CSR is often used as a tool to improve executives' image. For example, Yin, Li, and Ma (Reference Yin, Li and Ma2023) suggest that award-winning CEOs tend to engage in publicly visible CSR because these activities can further attract public attention and affirm their social status. Institutional CSR activities, such as corporate philanthropy, are more visible to the public than technical CSR activities, such as improving employee welfare; thus, they are more helpful to clan CEOs seeking a positive social reputation (Hawn & Ioannou, Reference Hawn and Ioannou2016). There is abundant evidence that Chinese CEOs who grew up in a region with a strong clan culture tend to devote more effort to institutional CSR. For example, in the Forbes China Charity list over the years, philanthropists who give in the name of their families tend to come from regions such as Quanzhou, Zhongshan, or Foshan, where clan culture is very strong; moreover, those who have been listed are usually followed closely by the hometown media and applauded by various hometown stakeholders. Thus, institutional CSR may be impure altruism, as even corporate donation is likely to enhance executives' self-interests (Xu & Ma, Reference Xu and Ma2021).
By comparison with institutional CSR, technical CSR offers fewer personal benefits to CEOs aspiring to enhance their moral reputation. Technical CSR, targeting primary stakeholders, aims to generate more exchange capital – the potential for more advantageous interactions between the firm and its primary stakeholders. Because these actions can be perceived through the lens of power exchange, they may be seen as entirely consistent with the profit-seeking interests of the firm. When compared with institutional CSR, technical CSR is often regarded as an integral management tool and benefits the focal firm more (Opoku-Dakwa, Chen, & Rupp, Reference Opoku-Dakwa, Chen and Rupp2018). Therefore, both the public and media are less attentive to the technical CSR activities of a firm than to its institutional CSR activities that address societal needs (Barnett, Reference Barnett2016).
Given that institutional CSR behavior can produce more moral capital and attract more public attention, we infer that CEOs with strong clan values are more likely to focus on this dimension of CSR predominantly. Based on the above discussion, we expect that the relationship between a CEO's clan value and the firm's CSR performance is mainly driven by institutional CSR rather than technical CSR.
Hypothesis 1 (H1): The positive relationship between a CEO's clan value and the firm's CSR performance is stronger for institutional CSR than for technical CSR.
Contingent Factor of CEO Overseas Experience
A CEO can accumulate overseas experience by working or studying in a foreign country (Sambharya, Reference Sambharya1996). Foreign experience molds personal values (Slater & Dixon-Fowler, Reference Slater and Dixon-Fowler2009; Suutari & Makela, Reference Suutari and Makela2007) and provides social resources for CEOs (Carpenter & Fredrickson, Reference Carpenter and Fredrickson2001). Overseas experience thus can affect the way CEOs manage their firms (Carpenter, Sanders, & Gregersen, Reference Carpenter, Sanders and Gregersen2001; Sambharya, Reference Sambharya1996; Slater & Dixon-Fowler, Reference Slater and Dixon-Fowler2009).
Overseas experience requires individuals to adapt to new cultural environments and interact with people from different cultural backgrounds. During this process, individuals may gradually adopt certain aspects of the external culture or adjust their beliefs to fit into the new environment. Thus, cross-cultural integration may weaken CEOs' identification with and reliance on clan culture. In addition, the experience of living in a foreign country with a different cultural environment and value system often leads CEOs to reflect on their own experience and revisit their goals and values (Suutari & Makela, Reference Suutari and Makela2007). As overseas experience gives CEOs greater insight into the different cultures and value systems of other countries, they may be exposed to new information that conflicts with their clan values. For instance, western societies value individualism deeply in their self-definition (Triandis, Reference Triandis1995); but that value is incongruent with clan values that define self through clan membership (Hsu, Reference Hsu1963). Such a conflict probably triggers cognitive dissonance within deep information processing, requiring CEOs to reconsider the relationship between themselves and their clan. Any resulting cognitive dissonance may weaken the influence of clan values instilled in the CEO. Therefore, CEOs with overseas experience are more likely to be influenced by foreign cultures, which will affect their cognitive framework and thus weaken the influence of clan culture. We thus predict:
Hypothesis 2 (H2): The positive relationship between a CEO's clan value and the firm's CSR performance is weaker when the CEO has overseas experience.
Contingent Factor of CEO Hometown Identity
Some firms are headquartered in the CEOs' hometown. Hometown carries a special meaning that can elicit strong emotions and influence individuals' cognition and behavior (Scannell & Gifford, Reference Scannell and Gifford2010). This is particularly prominent in China where, because of the rigid household registration (hukou) system, the hometown is usually where an individual was born and raised. Individuals will establish continuous emotional bonds with their hometown through their daily life (Vaske & Kobrin, Reference Vaske and Kobrin2001), which provides individuals with emotional satisfaction and promotes emotional preferences (Proshansky, Reference Proshansky1978). The special relationship evokes hometown identity, which is defined as the emotional link between individuals and their hometown. Hometown identity extends individuals' sense of identity from a place to their hometown and fellow townspeople. Research has suggested that hometown may have a significant influence on individual decision making (Hodler & Raschky, Reference Hodler and Raschky2014; Ren et al., Reference Ren, Sun and Tang2022).
In our setting, CEOs who live and work in their hometowns may demonstrate a strong alignment between their personal attributes and the external environment in terms of values, goals, and interactive patterns, reflecting a complementary fit (Edwards, Reference Edwards2008). These similarities facilitate their engagement with clan culture and enhance its impact. The hometown, the place where an individual was born and raised, influences the early development of an individual's cognitive and psychological systems and can have a lasting influence (Moore, Reference Moore2000). The hometown has a special significance for the individual, and can satisfy needs for security, comfort, and consistency (Scannell & Gifford, Reference Scannell and Gifford2010). Individuals invoke their hometown as a social category to establish self-identity, identify with members of the group (fellow townspeople), and define their behavior in a specific context (Hogg, Terry, & White, Reference Hogg, Terry and White1995). This emotional connection and identification encourage individuals to uphold and promote the clan cultures of their hometown. When CEOs work in their hometown, they have greater interaction with their clans. Through such social interactions, the CEOs' clan values are repeatedly stimulated and reinforced, deepening their understanding of and identification with their clans. Moreover, individuals working in their hometowns typically receive more support and encounter greater expectations from members of the local clans, who hope that these individuals will contribute to the development and prosperity of their clans. In order to gain recognition from the clan groups, CEOs may strive to adhere to and uphold the clan's values. For example, hometown CEOs may feel a greater obligation to meet the expectations of their clan groups and act for the common interests of their clan. As a result, hometown CEOs may be more sensitive to the clan and value clan honor.
In addition, by comparison with hometown CEOs, although non-hometown CEOs can also integrate into a local clan, their sense of identification with clans outside their hometowns is weaker; they are also less subject to the moral values of the local clan because they lack verifiable blood ties. We thus predict:
Hypothesis 3 (H3): The positive relationship between a CEO's clan value and the firm's CSR performance is stronger when the firm is headquartered in the CEO's hometown.
Methods
Data
Our initial sample consists of all Chinese firms listed publicly between 2010 and 2019. We excluded firms in highly regulated industries such as insurance and finance because their performance is not comparable with that of other industries because of different accounting criteria (McGahan & Porter, Reference McGahan and Porter1997). We only included CEOs who had been with their firms for at least 2 years to ensure they had the opportunity to influence their firms' CSR decisions (Chin et al., Reference Chin, Hambrick and Treviño2013). We obtained data from multiple sources. We hand-collected information about CEOs' hometown from executives' resumés disclosed by the China Stock Market Accounting Research (CSMAR) database. The clan information is based on the genealogical data for a CEO's hometown, which we obtained from the General Catalog of Chinese Genealogies (Wang, Reference Wang2008) compiled by the Shanghai Library and published in 2008. CSR data were obtained from the Hexun website (http://www.hexun.com), which provides scores for the CSR activities of Chinese listed firms. Other corporate governance information and financial data were obtained from the CSMAR database, which is a leading database used widely in management studies (Li, Shi, Connelly, Yi, & Qin, Reference Li, Shi, Connelly, Yi and Qin2022; Marquis & Qian, Reference Marquis and Qian2014; Shi, Cai, Wajda, & Jiang, Reference Shi, Cai, Wajda and Jiang2023; Shi, Connelly, & Li, Reference Shi, Connelly and Li2022). After deleting observations with missing values, the final sample includes 5,880 firm-year observations with 1,150 unique CEOs and 1,083 unique firms.
Dependent Variable
CSR performance
We obtained CSR data from the Hexun website, an authoritative third-party rating agency for CSR in China. The Hexun CSR data has been used in many studies of Chinese firms' CSR (e.g., Ren et al., Reference Ren, Sun and Tang2022; Xu & Ma, Reference Xu and Ma2021). Using listed firms' annual reports, CSR reports, official websites, and social media news, Hexun generates scores for listed companies' CSR performance. A firm's CSR performance is assessed in four dimensions: employee, supplier and customer, environment, and community responsibility. We excluded the shareholder category, because it focuses primarily on the firm's shareholders. In addition, it includes factors such as R&D expenditure that are not directly related to firms' social activities. The four dimensions have 8 secondary and 19 third-level indicators. For example, employee-oriented CSR includes performance, safety and care for employees, customer and supplier-oriented CSR incorporates product quality, after-sale service, integrity and reciprocity, environment-oriented CSR consists of environmental governance, and community-oriented CSR includes contributing value. The higher the score, the better the CSR performance is. Corporate social performance (CSR) is measured by summing the four dimensions of CSR. Institutional CSR includes environment and community responsibility, while technical CSR includes responsibility towards employees, supplier, and consumers (Godfrey et al., Reference Godfrey, Merrill and Hansen2009).
Independent Variable
Following existing research (Chen, Kung, & Ma, Reference Chen, Kung and Ma2020; Greif & Tabellini, Reference Greif and Tabellini2017; Liu et al., Reference Liu, He and Wang2023; Zhang, Reference Zhang2020), we measured the strength of a CEO's clan value by the natural logarithm of (one plus the number of genealogies/local population in millions). A genealogy is a book that records the history of a clan and is an important physical carrier by which clan culture is passed from generation to generation (Peng, Reference Peng2004; Tsai, Reference Tsai2007). It covers the lives, marriages, and deeds of clan members, as well as the clan-specified code of conduct. Genealogies are a valid measure of the strength of clan culture because the genealogy is essential to the existence of the clan (Bol, Reference Bol2008; Feng, Reference Feng2013). Clans tend to revise their genealogies frequently to reinforce the sense of belonging and honor (Watson, Reference Watson1982).
Specifically, we first collected the CEO's hometown information manually at the city level. In China, because of the rigid household registration system, an individual's hometown is generally the place where the individual was born and grew up. We then identified the genealogical volumes in the CEO's hometown manually. The data for genealogies were obtained from the General Catalog of Chinese Genealogies (Wang, Reference Wang2008). This catalog includes 52,401 clans, which is the largest collection of Chinese genealogies. For each genealogy, the catalog records the date it was written or updated and the location of the clan. Next, we obtained population data for the CEO's hometown in the year when the CEO was 18 years old from the China Statistical Yearbook, as at 18 years old individuals enter a critical period during which they form their worldviews, beliefs, and values, and this period is characterized by heightened sensitivity to environmental influences (Ashforth & Saks, Reference Ashforth and Saks1996; Krosnick & Alwin, Reference Krosnick and Alwin1989; Marquis & Qiao, Reference Marquis and Qiao2020).
Boundary Condition Variables
We obtained biographical information about CEOs' overseas experience from CSMAR. A dummy variable was set to one if the CEO was employed or received education or training outside China and otherwise zero. The sample mean of CEO overseas experience is 0.09, showing that 9% of the firm-years in our sample had CEOs with overseas experience.
A dummy variable was set to one if the CEO's hometown is the same city as the firm's headquarters and otherwise zero (Ren et al., Reference Ren, Sun and Tang2022). The sample mean of CEO hometown identity is 0.52, showing that 52% of firm-years in our sample had CEOs who work in their hometowns.
Control Variables
In order to rule out alternative explanations for the relationship between a CEO's clan value and CSR, we controlled for a number of individual-, firm-, and regional-level factors. First, we controlled for CEO tenure, CEO duality (the CEO also serves as the board chair), CEO female, and CEO age. We controlled for the potential impact of CEOs' compensation incentives by including CEO stock ownership. Second, firms' size and financial performance may influence CSR. We thus controlled for Firm size, measured by the natural logarithm of the book value of total assets. We controlled for firms' performance by ROA. We also controlled for R&D, measured as the ratio of research and development expense to the book value of total assets. About 22% of our sample firm-years do not report R&D expenses. For these firms, we set R&D to zero and set R&D dummy to one (Fama & French, Reference Fama and French2002: 21; Flannery & Rangan, Reference Flannery and Rangan2006: 477). We controlled for Leverage, measured as the ratio of the book value of debt to the book value of total assets and for Tobin's Q, measured as the market value of assets over the book value of assets. We also included Firm age, measured as the number of years since the date the firm was first listed. We controlled for Independent director ratio, measured as the ratio of the number of independent directors to the total number of directors. Previous research has suggested that the corporate ownership structure can affect CSR (Marquis & Qian, Reference Marquis and Qian2014). Therefore, we controlled for SOE (state-owned enterprise), which was set to zero if the firm was owned by dispersed private shareholders, and to one if the ultimate owner was the Chinese government and its agencies. Third, recent studies have found that the values of the residents of the region where the firm is located influence CSR (Du, Jian, Du, Feng, & Zeng, Reference Du, Jian, Du, Feng and Zeng2014). Building on previous studies (Du et al., Reference Du, Jian, Du, Feng and Zeng2014; Zhou & Wang, Reference Zhou and Wang2020), we controlled for a region-level density of Buddhist temples and Confucian temples, which is coded as the number of Buddhist temples and Confucian temples within 200 km of the location of the headquarters of the listed firm. We controlled for Market development of the region where the firm is headquartered, which is measured by the well-established marketization index developed by the National Economic Research Institute (Wang, Fan, & Hu, Reference Wang, Fan and Hu2021). We also controlled for per capita GDP (Per capita GDP) of the place where a listed firm is located.
We winsorized all the continuous variables at the 1st and 99th percentiles to minimize the influence of outliers. We included industry, year, and province fixed effects. Detailed definitions of all variables are in the Appendix.
Estimation Methods
We tested our hypotheses using generalized estimating equations (GEEs; Liang & Zeger, Reference Liang and Zeger1986) derived from maximum likelihood estimates. This technique suits our purpose given the nonindependent nature of the observations in our panel data (Liang & Zeger, Reference Liang and Zeger1986). GEE is commonly used in longitudinal research into time-invariant personal characteristics such as CEOs' narcissism, political ideologies, and birth order (Campbell, Jeong, & Graffin, Reference Campbell, Jeong and Graffin2019; Chatterjee & Hambrick, Reference Chatterjee and Hambrick2007, Reference Chatterjee and Hambrick2011; Chin et al., Reference Chin, Hambrick and Treviño2013; Petrenko, Aime, Ridge, & Hill, Reference Petrenko, Aime, Ridge and Hill2016). We did not use a fixed-effects model because it is not suitable when models include time-invariant variables (such as CEO clan value). Specifically, we used the xtgee module in Stata 15. We specified a Gaussian distribution with an identity link function for our GEE models. Finally, we used robust variance estimators (White, Reference White1980) in all the models.
Results
Table 1 presents descriptive statistics and correlations for all the variables. A further check on the variance inflation factor (VIF) of the variables indicated that the mean VIF is 1.95, suggesting that multicollinearity is not a serious issue in our data.
Descriptive statistics and correlation coefficients
Notes: N = 5,880. Correlations greater than |0.03| are significant at p < 0.05.
H1 predicts that the relationship between a CEO's clan value and the firm's corporate social performance is stronger for institutional CSR than for technical CSR. To test this hypothesis, we estimated three regression models: CSR, Institutional CSR, and Technical CSR. The results are reported in Table 2. Models 1–3 include only controls. In Model 4 of Table 2, the coefficient of Clan is positive and statistically significant (β = 0.491, p = 0.050), suggesting that a one standard deviation increase in CEOs' clan values is associated with firms' CSR performance increasing by 4.93% of a standard deviation. For institutional CSR, the coefficient of Clan is positive and statistically significant (β = 0.291, p = 0.013), suggesting that CEOs' clan values increase the institutional CSR behavior of firms they lead. The estimates suggest that a one standard deviation increase in CEOs' clan values is associated with an increase of 6.0% of a standard deviation in firms' institutional CSR behavior. For technical CSR, the coefficient of Clan is not statistically significant (β = 0.199, p = 0.167). This suggests that CEOs' clan values are more related to institutional CSR activities, supporting our proposition in H1: that CEOs with clan values are more likely to participate in publicly visible CSR activities that can improve their moral reputation and effectively attract further public attention.
The effect of CEOs’ clan values on corporate social performance
Note: Standard errors are in parentheses (se).
H2 predicts that CEOs' overseas experience weakens the positive relationship between a CEO's clan value and the firm's CSR performance. To test this hypothesis, we regressed each of the three measures of corporate social responsibility on CEO overseas experience and its interaction with Clan in Table 3. The coefficient of Clan * CEO overseas experience is negative and statistically significant (β = –1.449, p = 0.052) in the CSR equation. The coefficient of Clan * CEO overseas experience is negative and statistically significant (β = –0.688, p = 0.069) in the institutional CSR equation. The coefficient of Clan * CEO overseas experience is negative and statistically significant (β = –0.830, p = 0.046) in the technical CSR equation. Collectively, these results suggest that if a CEO has studied or worked in a foreign country, the effect of a CEO's clan value on the firm's CSR performance weakens, supporting H2.
The role of CEO overseas experience in the CEOs’ clan values–corporate social performance relationship
Note: Standard errors are in parentheses (se).
H3 predicts that being a hometown CEO strengthens the positive relationship between a CEO's clan value and the firm's CSR performance. We regressed each of the three measures of corporate social responsibility on CEO hometown identity and its interaction with Clan in Table 4. For CSR, the coefficient of Clan * CEO hometown identity is positive and statistically significant (β = 0.710, p = 0.089). For institutional CSR, the coefficient of Clan * CEO hometown identity is positive and statistically significant (β = 0.322, p = 0.098). For technical CSR, the coefficient of Clan * CEO hometown identity is positive and statistically significant (β = 0.392, p = 0.096). Collectively, these results suggest that being a hometown CEO has a positive moderating effect on the relationship between a CEO's clan value and the firm's CSR performance. H3 is also supported.
The role of CEOs' hometown identity in the CEOs’ clan values – Corporate social performance relationship
Note: Standard errors are in parentheses (se).
To illustrate the patterns of the significant interaction effects that supported the hypotheses, we plotted the interaction plots in Figures 2 and 3. In Figure 2, the slope of the solid line is upward, whereas that of the dotted line is downward, indicating that the firm's CSR performance increases with CEO's early-life exposure to clan culture when the CEO has no overseas experience, whereas the firm's CSR performance decreases with CEO's early-life exposure to clan culture when the CEO has more overseas experience. Specifically, when a CEO has no overseas experience, a one standard deviation increase in the CEO's early-life exposure to clan culture increases the firm's CSR performance by 7.4% of a standard deviation. When the CEO has overseas experience, one standard deviation increase in CEO's early-life exposure to clan culture would decrease firm's CSR performance by 5.4% of a standard deviation. The difference suggests that the positive effect of CEOs' early-life exposure to clan culture on CSR is only observed when they have no overseas experience. In Figure 3, the slope of the dotted line is steeper than that of the solid line, which shows that the main effect is stronger when the firm is headquartered in the CEO's hometown. When the firm is not headquartered in the CEO's hometown, a one standard deviation increase in the CEO's early-life exposure to clan culture corresponds to an increase in firm's CSR performance of 3.8% of a standard deviation. The number increases to 11.0% when the firm is headquartered in the CEO's hometown.
Moderating effect of CEO overseas experience
Moderating effect of CEO hometown identity
Supplementary Analysis
To validate the mechanism of our findings and to gauge the robustness of our results, we performed extensive supplementary tests. We provide a brief description of these tests below.
Heckman two-stage model
We considered the possibility that our findings are driven by factors related to the likelihood of a CEO being included in the sample and the firm's CSR. For example, hometown information is more likely to be disclosed to the public for the CEOs of larger, more prominent firms, indicating that these firms are more likely to be in our sample. As discussed in the methods section of the article, we began our search with the CEOs of all Chinese publicly listed firms – large and well-established firms. As both CEOs that remain in our sample and CEOs with missing hometown information are from large and prominent firms, the probability of a CEO remaining in our sample is unlikely to be related systematically to these firm attributes.
However, we still adopted the Heckman two-stage model to further assess the susceptibility of our findings to potential nonrandom sampling biases. Our first-stage probit model predicted the presence of CEO hometown information. We included firm age, firm size, ROA, and independent director ratio in the first stage. Further, the appropriate application of Heckman's two-stage model is to identify exclusion restrictions that are associated with the dependent variable in the first-stage regression but not with CSR in the second-stage model. The instrumental variable is the industry-level likelihood of CEO hometown information being available (excluding the focal firm) (e.g., Li, Luo, Sisto, & Bartram, Reference Li, Luo, Sisto and Bartram2021). Following Lennox, Francis, and Wang (Reference Lennox, Francis and Wang2012), we added Industry likelihood of having CEO hometown information into the second stage and it is not significant, thus suggesting that this instrumental variable is exogenous. In Panel A of Table 5, the correlation between Industry likelihood of having CEO hometown information and The presence of CEO hometown information is 0.115; in Panel B, the coefficients on Industry likelihood of having CEO hometown information is significant and positive (p = 0.000). The above results all show the validity of our instrumental variable. We included the predicted inverse Mills ratio from the first-stage regression in the second stage of the model. In Models 1–3 of Table 6, our results are still valid after controlling for the sample selection bias.
Heckman first-stage regression results
Note: Correlations greater than |0.02| are significant at p < 0.05.
Heckman second-stage model
Note: Standard errors are in parentheses (se).
Instrumental variable analysis
We use instrumental variable (IV) and two-stage least squares estimation (2SLS) to address potential omitted variable and simultaneity concerns. Clans are social organizations formed by people living together (Freedman, Reference Freedman1958; Watson, Reference Watson1982). First, in the plains, there is a large amount of land available for farming and people can migrate more easily, thus people live in relatively scattered locations. By contrast, in mountainous areas, the arable area is small and it is difficult for people to migrate. Second, people living in regions with steep terrain face a more severe natural environment, with less cultivated land and frequent invasion by bandits and wild animals. Therefore, people in mountainous areas have a stronger need to live close together to defend against external threats. Third, since the Song Dynasty, people from the north have often migrated to mountainous areas to avoid military invasions. The special historical conditions also make the formation of clan culture more likely in mountainous areas. Thus, a region with a greater slope probably has a strong clan culture. The terrain slope is unlikely to affect the firm-level CSR performance directly. We obtained slope data from the Resource and Environmental Science Data Center of the Chinese Academy of Sciences. The lower the value, the flatter the terrain. Freedman (Reference Freedman1966) argues that intensive agricultural production methods, such as rice cultivation, typically require small social communities as the basic unit, thereby providing natural conditions for the formation of clan culture. Therefore, in regions more suitable for rice cultivation, there is a greater likelihood of a strong clan culture developing. At the same time, the per capita rice cultivation area in the region in 1990 was predominantly shaped by the natural environment and did not influence the current governance patterns of listed firms directly. Therefore, the per capita area of rice cultivation in 1990 at the city level of the CEO's hometown is a suitable instrumental variable.
The results of the 2SLS instrumental regressions are reported in Table 7. In Model 1, the first-stage estimation shows that the coefficient of the instrumental variable (i.e., Slope and Rice) is both positive and significant, which indicates that slope and rice are predictors of the CEO's clan values. The F-value is greater than 10, which suggest that the instrumental variables are strong. It also passed the instrumental variable overidentification test (Sargan statistic = 0.082, p = 0.774). In Model 2, the second-stage regression results indicate that the coefficient of Clan is positive and significant (β = 1.474, p = 0.000). These results provide evidence that our results are still valid after controlling for endogeneity issues.
Two-stage least squares estimation result
Note: Standard errors are in parentheses (se).
When faced with poor financial performance, might CEOs with clan values reduce their investment in CSR?
Given that we find that CEOs' desire to bring honor to their clans can influence their firms' engagement with CSR activities, a logical extension is to link our framework of antecedents to its potential consequences. For example, even in the face of poor financial performance, clan CEOs may still engage in CSR with the aim of enhancing clan prestige.
To test this prediction, we examined the moderating effect of CEOs’ clan values on the relationship between performance gap and CSR when facing poor performance. Following Cyert and March (Reference Cyert and March1963: 123) and Greve (Reference Greve2003), we computed aspiration level (A) as a mixture of social and historical aspiration levels. The social aspiration level (SA) is the average of other firms' performance, calculated as the mean ROA of all firms in the same industry except the focal firm. The historical aspiration level (HA) is the previous performance of the focal firm measured by the ROA. The formulae are: ${\rm Ati} = a_1{\rm SAti} + ( {1- a_1} ) {\rm HAti}$
. In this formula, a 1 represents a weight with a value of 0.5. Further, a dummy variable I 1 is created such that when the actual performance is lower than the expected performance, it is set to 1; I 1 (P–A) < 0 indicates the performance gap when the expected organizational performance is not met, with values all <0. The dummy variable 1–I 1 is set to 1 when the actual performance exceeds the expected performance; (1–I 1) (P–A) ≥ 0 represents the performance gap when organizational expected performance is met, with values all greater than 0. The results are shown in Table 8. In Model 1 of Table 8, the coefficient of (I 1 (P–A) < 0) is positive and significant (β = 5.986, p = 0.096), which suggests that the performance gap is positively related to CSR when actual performance falls below organizational expected performance. In Model 2, the coefficients of (I 1 (P–A) < 0 * Clan) are negative and significant (β = –5.122, p = 0.003), which indicate that CEOs' clan values weaken the positive relationship between the performance gap and CSR when actual performance falls below organizational expected performance. This means that even when facing poor financial performance, firms led by CEOs with strong clan values may not reduce investment in CSR.
The moderating effect of CEOs’ clan values
Note: Standard errors are in parentheses (se).
CEOs' different overseas experience
Overseas education generally occurs in early life, which is a sensitive period that shapes cognition and behavior (Elder, Reference Elder1974; Mannheim, Reference Mannheim1970). However, overseas employment usually occurs in adulthood, when a person's values are already formed. Consistently with this view, Immelmann (Reference Immelmann1975) suggested that when people move beyond early-life, their susceptibility to external influence declines. Hence, unlike overseas employment experience, overseas education experience occurs during a highly formative period and thus has a greater impact on the decay of CEOs' clan values. Specifically, CEO overseas education experience is set to one if a CEO received education outside China, and zero otherwise; CEO overseas employment experience is set to one if a CEO has received training or was employed outside China, and zero otherwise. In Model 1 of Table 9, the coefficients of Clan * CEO overseas education experience is negative and significant (β = –2.240, p = 0.027), whereas the coefficients of Clan * CEO overseas employment experience in Model 2 is negative and nonsignificant (β = –0.544, p = 0.463). These results suggest that the decay in CEOs' clan values mainly arises from experience of overseas education, which has a stronger influence than CEOs' experience of overseas employment.
Different types of CEO overseas experience
Note: Standard errors are in parentheses (se).
Discussion
The key aim of this study is to establish the boundary conditions governing the influence of CEOs' clan values on firms' CSR performance. Using longitudinal data for Chinese publicly listed firms between 2010 and 2019, we find the positive relationship between CEOs' clan values and CSR is stronger for institutional CSR, is weaker when the CEO has overseas experience, and is stronger when the firm is located in the CEO's hometown.
Theoretical Implications
Our findings stimulate the relevant field at last in three ways. First, our research enhances our understanding of the relationship between CEOs' characteristics and CSR. Insightful as previous studies of the relationship between CEO characteristics and CSR performance are (Chin et al., Reference Chin, Hambrick and Treviño2013; O'Sullivan, Zolotoy, & Fan, Reference O'Sullivan, Zolotoy and Fan2021), our study emphasizes the distinction between different stakeholder groups, providing a more comprehensive understanding of the relationship between CEO characteristics and CSR performance by considering separately social responsibility behavior targeted at different stakeholder groups. More relevantly, Zhang et al. (Reference Zhang, Xue, Gao and Liu2024) provide preliminary evidence of a link between the clan culture of firm's registered location and family firm's CSR performance. Our finding indicates that an individual's values that are associated with clan culture are primarily reflected in CEOs' pursuit of self-serving CSR behavior. This finding provides new opportunities for CSR research. In this regard, we resonate with a recent call to develop a better understanding of the individual motivation behind CSR and future research needs to take a more balanced view of CSR (Wang, Gibson, & Zander, Reference Wang, Gibson and Zander2020). Overall, our findings highlight that institutional CSR and technical CSR are distinct constructs influenced by different dynamics (Mattingly & Berman, Reference Mattingly and Berman2006) and inform research decomposing CSR performance into different categories (Godfrey et al., Reference Godfrey, Merrill and Hansen2009; Lange & Washburn, Reference Lange and Washburn2012; O'Sullivan et al., Reference O'Sullivan, Zolotoy and Fan2021; Tang et al., Reference Tang, Qian, Chen and Shen2015).
Second, our findings call for more attention to specifying theoretical and empirical contingent factors that moderate the effect of executive characteristics on firm behaviors (Neely et al., Reference Neely, Lovelace, Cowen and Hiller2020). Considering the interaction between executive characteristics can add nuances to our understanding of CEO influence (e.g., Campbell et al., Reference Campbell, Jeong and Graffin2019; Kish-Gephart & Campbell, Reference Kish-Gephart and Campbell2015). However, existing studies have not emphasized the moderating role of different characteristics of executives on their cultural values. In our research, we offer novel insights into persistence of an individual's values by highlighting the interplay between an individual's past cultural environment and different individual characteristics. Most existing studies of individual's values have taken the persistence of values for granted but have rarely focused on the conditions under which the values may be strengthened or weakened. We argue for and find that extended exposure to value-shaping stimuli reinforces values, while exposure to incompatible environments reduces their influence. Our findings show that the interaction between different executive characteristics is crucial to understanding the function and evolution of cultural values. Collectively, we thus make a significant contribution to understanding why values, although they may be persistent, do in fact change over time and have different intensities.
Third, upper echelons research has made significant progress, particularly in exploring the impact of executives' values on firm strategies and outcomes. However, these studies predominantly focus on western context, emphasizing political ideology like conservativism and liberalism. Recently, a few studies have started to investigate the executives' values in different cultural context. Notable exceptions include the research by Marquis and Qiao (Reference Marquis and Qiao2020) and Wang, Du, and Marquis (Reference Wang, Du and Marquis2019), who have attempted to extend their perspectives to non-Western countries like China. However, the current research remains insufficient, considering the diverse cultural backgrounds and value systems globally. In this research, we propose an alternative conceptualization method, focusing on the clan values of Chinese CEOs, which are deeply rooted in Chinese culture and historical context. Clan values emphasize collectivism and intergenerational inheritance, which contrast with Western individualism and independence. By systematically investigate these values, we reveal the diversity and heterogeneity of value systems worldwide. In this way, we provide theoretical refinement to existing western-centric perspectives on upper echelons' values.
Managerial Implications
Our findings are also informative to practitioners. First, upon recruiting executives, boards usually focus on a candidate's work-related experience and professional achievements. We show that certain types of cultural values will shape executives' cognition and beliefs, which in turn will influence their decisions. Therefore, in addition to work-related experiences in candidates' resumes, boards should also pay heed to their early-life experience. In our study, we find that firms led by CEOs with clan values engage in more CSR. Thus, if the firm prioritizes social performance, the board may need to consider candidates' clan cultural background when recruiting executives.
In addition, as CSR investments driven by a CEO's self-serving motivation may not always benefit the firm, the board should be vigilant toward such CSR activities. It is useful to have effective corporate governance measures in place to curb CEOs' from diverting corporate resources for individual gain. Moreover, the board should be aware that the influence of clan values is likely to be weakened by overseas experience and strengthened by hometown identity.
Limitations and Future Research
Our results should be interpreted within their limitations, which pave the way for future studies. First, our study examines clan culture in China. The idiosyncratic nature of China's social and cultural contexts may limit the generalizability of our findings. It is possible that our findings may be more applicable to Asian economies that have been strongly influenced by traditional Chinese ideologies, such as those of Singapore, Korea, and Thailand. In these regions, we suspect that clans have an influence on people's values. Chinese clans may also be prevalent among verseas Chinese communities. Overseas Chinese communities may establish clan associations to enhance a sense of identity, to provide communal support, and to strengthen social cohesion. We call for more research in settings other than China to reconfirm and extend what we have found in this study.
Second, given the intricacy of clans and their associated culture, our measure of CEOs' clan values is inevitably an imprecise measure of their clan background. We have built our approach for assessing clan background and the associated genealogical variables mainly on objective observations. Nevertheless, much work is needed to improve our measure. We believe that our genealogy-based measurement provides a meaningful indicator of the clan background of executives. We also encourage further research to improve our measurement or use additional data sources. For example, a direct survey of CEOs' clan values or ideologies may be useful.
Third, our key argument resides in CEOs' incentive to bring honor to their clans, leading to their firms' engagement in CSR activities. However, we do not assess such a motivation directly because of a lack of data. We have worked to validate this mechanism by examining the boundary conditions of the baseline relationship. Our key premise is that if our hypothetical mechanism holds, the main effect should vary according to diverse proposed boundary conditions. Future research could adopt a multi-method approach to assess CEOs' motivations to participate in CSR, such as interviews, surveys, or text analysis of public or private information.
Last, our focus on CEOs can be extended to the top management team (TMT) level. In the seminal formulation of Hambrick and Mason (Reference Hambrick and Mason1984), the analytical unit is at the team level. However, follow-up empirical investigation tends to sample individual CEOs. Indeed, Hambrick (Reference Hambrick2007) has noted that the entire TMT may predict organizational outcomes better than the CEO alone. Some recent work on executive political ideology has started to take this route (e.g., Gupta & Wowak, Reference Gupta and Wowak2017). Future studies may test clan culture of TMTs and boards. It is equally interesting to see how CEOs' values interact with other corporate leaders' values.
Data Availability Statement
The data that support the findings of this study are available via Open Science Framework at https://osf.io/jak32, upon reasonable request.
Acknowledgements
We would like to thank Senior Editor Professor Wei Shi and two anonymous reviewers for their constructive comments. We gratefully acknowledge the support from the National Natural Science Foundation of China (Grant No. 72172107), the National Social Science Fund of China (Grant No. 23VRC029), and Hong Kong Research Grants Council General Research Funds (Grant No. 17504423).
Appendix
Variable definitions
Yue Wang (wangyue1995@whu.edu.cn) is a PhD candidate of Economics and Management in the School of Marketing at Wuhan University. Her research interests include non-market strategy, firm misconduct, and upper echelons theory. She has published papers in Business Strategy and the Environment and Entrepreneurship & Regional Development.
Yi Tang (msytang@hku.hk) is currently an Associate Professor (with tenure) in Strategy for the Department of Management, HKU Business School. His research and teaching interests reside in the areas of strategic leadership, firm innovation, corporate social responsibility, and interfirm social networks. His research output has been published in leading management journals, including the Academy of Management Journal, Strategic Management Journal, Organization Science, Journal of Management, Journal of Management Studies, and Journal of Business Venturing.
Tao Wang (wangtao@whu.edu.cn) is a Professor of Economics and Management for the School of Marketing at Wuhan University, where he also serves as Director of the Research Center for Organizational Marketing. He has more than 20 years of experience in industry and academia. His research focuses on brand management and international business management. He has published numerous papers in leading international journals, including the Journal of Business Research, Asia Pacific Journal of Management, Industrial Marketing Management, and Journal of Service Management.
