An empirical analysis of the complementarities and substitutions between effects of ceo ability and corporate governance on socially responsible performance

Existing empirical and theoretical literature provides excellent insight into many aspects of CEO-relatedphenomena. However, so far, no study has explored the interrelation between corporate governance andCEO ability in influencing corporate social responsibility practices. From resource-based view perspec-tives, this research examines the complementarities/substitutions that may exist between social re-sponsibility oriented corporate governance mechanisms and CEO ability in affecting corporate socialresponsibility performance among United Statesfirms. This research documents that CEO ability is aunique resource that can helpfirms reduce agency problem associated with social and environmentalperformance. The analysis of data for the period of 2006e2015 reveals several fact-basedfindings. Thisresearchfinds strong complementarities between CEO ability and internal social responsibility orientedgovernance mechanisms (i.e., board independence, the presence of a sustainability committee, and socialperformance-related incentives for managers) in enhancing socially responsible performance within afirm. Conventionally, it is considered that CEOs are less likely to engage in socially responsible activities,whilefindings of this paper shed light on the brighter side of CEO ability.