CSR strategy: Why narcissistic CEOs give and role of boards

Once Wanjala’s CSR donation hit the news wire, stakeholders immediately denounced the seemingly tactical charitable move, labeling it a cynical public relations stunt.

They wondered, how can an executive cause health problems through pollution one day but donate to health another day? The CEO's shallow attempt to gain public admiration backfired dramatically, which ended up costing the firm more crucial community trust and seriously damaging its reputational standing in the broader industry.

A brand new study released last week that is gaining much attention in academic circles dissects how a CEO’s narcissistic personality shapes their company's CSR activities. Tine Buyl, Boris Lokshin, and Christophe Boone posit that institutional contexts direct what external stakeholder audiences praise or dismiss in regards to corporate social actions.

The research develops an interesting model proving that a narcissistic CEO tailors his or her firm’s CSR activities to incessantly seek to achieve excellence and gain continuous approval within their specific market environment.

The study analyses panel data spanning a 21- year period across 18 different countries. In liberal market economies that champion strong shareholder primacy, narcissistic CEOs pursue greater corporate philanthropy.

Such tactical performative high-visibility giving provides rapid reputational returns that in turn secures immediate praise from key financial stakeholders.

Conversely, in coordinated market economies that focus on consistency of social norms and demand embedded long-term commitment from companies, narcissistic CEOs overwhelmingly favoured much more strategic CSR.

These latter CEOs implemented substantial resource commitments and organisational changes that resulted in stakeholder admiration for the firms deeper structural engagement.

Here in East Africa, do you work for a narcissist? How about your firm’s CEO? Companies must recognise the context-dependent nature of narcissistic CEO behaviour.

Boards of Directors now wield a proven mechanism to influence executive action. In so doing, they can oddly harness their CEOs narcissism and channel it toward desired CSR outcomes by formally emphasising and rewarding the appropriate type of social investment.

A board operating in a liberal market like Kenya, Zambia, and South Africa, for example, can prioritise investment transparency and clear short-term shareholder value thus promoting well-publicised philanthropic giving.

While a board in a coordinated market more similar to Tanzania, China, and Rwanda can demand measurable, embedded environmental and social policy changes, reinforcing strategic, long-term investments.

Multinational firms operating across borders can further utilise this research to formulate unique tailored global strategies. They should stop implementing a universal one-size-fits-all CSR approach across all subsidiaries.

The firm's leadership should adjust its CSR portfolio country by country to ensure that local actions match local institutional norms. Such strategic adaptation allows a company to gain legitimacy, avoid reputational damage, and secure essential stakeholder approval in every market it enters.

In short, boards must understand the OCEAN big five personality of their executives as well as the three dark personality traits that include narcissism.

CEOs have a higher rate of narcissism than the general population because that same narcissism coincides with their confidence and drive and therefore more get to executive roles.

But boards with narcissistic CEOs must structure executive compensation packages specifically designed for narcissistic leaders. In so doing, they can directly tie bonuses to excelling in the type of CSR activity most valued by their operating institutional context.

Have a management or leadership issue, question, or challenge? Reach out to Dr. Scott through @ScottProfessor on X or on email [email protected]