How does the reputation of top executives influence the effect of pro-social CSR initiatives on the perception of prospective job applicants?

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How does the reputation of top executives influence the

effect of pro-social CSR initiatives on the perception of

prospective job applicants?

Master thesis

Business Administration

Leadership and Management

Shirin Joemmankhan |10598979

Date of submission: June 29th₂₀₁₅ Institution: University of Amsterdam

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Statement of Originality

This document is written by Shirin Joemmankhan, who declares to take full responsibility for the contents of this document.

I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.

The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.

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Acknowledgements

This thesis is the final phase of my master Business Administration; track Leadership and Management at the University of Amsterdam. By writing this thesis I have been able to delve deeper into the world of corporate social responsibility and the influences of leadership behaviours on people’s perceptions of organizations. I could not have written this thesis without the support of a variety of people. Many thanks to all of you, a few I will thank here specifically. First I would like to thank Merlijn Venus, thank you for your guidance and help along the road. I also want to thank my parents for enabling me to do this study without worrying about anything else except for my grades. Without them I would not have come so far.

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Abstract

Over recent years, corporate social responsibility initiatives have received a lot of attention from the media, researchers and economists. Corporate Social Responsibility is an umbrella term for an environmental, economic or social corporate investment and is generally abbreviated as CSR. Even though it is a commonly discussed topic, research on CSR and its effects on recruitment are limited, and people’s responses to publicity regarding corporate social behaviour and CEO reputation are in need of more in-depth research. This study seeks to meet that need by investigating how potential applicants respond to CSR information and how they evaluate congruent or divergent leadership behaviours. The results of the experiment, done for this research, indicate that there is no significant effect of CSR information on people’s evaluations of the attractiveness of a company. However, information about senior executive behaviour in the media with regard to CSR practices, significantly and positively influenced those results. With that a partially significant interaction effect was found between CSR information and leadership behaviour. This interaction did not meet the initial expectation in the sense that the results showed that leadership behaviour did not determine the acceptance of CSR information. Nevertheless, leadership behaviours did positively influence a prospective applicants’ opinion of a company’s integrity, which in turn has been proven to influence the perceived attractiveness of that company.

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1. Introduction

The majority of the literature concerning corporate social responsibility (CSR) is written from the perspective of the competitive advantage it creates. A competitive advantage comes in all shapes and sizes, but for this research the focus was placed on the image and organizational attractiveness of a company. Attracting the highest quality of applicants is already getting more acknowledged as a necessity to achieve organizational success (Offermann & Gowing, 1990). This is due to the fact that organizations that can attract more qualified applicants have a larger pool to pick from, which increases the utilization of organization's selection systems and helps in creating a potential competitive advantage (Lado & Wilson, 1994). Empirical studies on employee recruitment have shown that an organization’s corporate social responsibility influences its attractiveness as an employer. However, the underlying principles and conditions through which this process occurs are poorly understood (Jones, Willness & Madey, 2013). Research is needed to understand what influences applicants' initial attraction to an organization, which in turn can affect their desire to work for that company (Gatewood, Gowan, & Lautenschlager, 1993)

Fombrum and Shanley (1990) suggest that firms have a tendency to compete for reputations. Their research showed that organizational reputation is directly connected to a firm’s communication about their charitable activities. Nowadays, approximately 80% of the Fortune 500 companies acknowledge CSR activities on their company websites (Bhattacharya & Sen 2004) and as many as 90% of these companies already actively engage in CSR initiatives (Luo & Bhattacharya 2006). This reflects the popular belief that engaging in CSR initiatives leads to a better reputation and contributes to the growing awareness that business value also consists of intangibles such as intellectual capital, goodwill, reputation, talent and trust (Logsdon & Wood, 2002).

A company’s reputation tends to be affected by the signals that are communicated to the different stakeholder groups. Research done by Ferns, Emelianova, & Sethis (2008) indicates that the majority of the readers of the content of CSR-reports find executive behaviour very important in formulating their opinion about the company. Other empirical researchers also focused on researching the relationship between CSR and being considered as an attractive employer for

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evidence to support that CSR information can positively contribute to organizational attractiveness, the reasons for that relationship are scarcely researched. That is why the primary focus of this paper is to fill that knowledge gap by analysing the influence of CSR information, in combination with the behaviour of representative company leaders with regard to social responsibility.

Previous studies suggest that the most harm can be done to a company’s public image through CEO scandals (Bragues, 2008; Svensson & Wood, 2008). The question that then follows is ‘why is corporate reputation so tightly linked to that of the CEO?’ The answer can be found in the two-sided role of the CEO within the organization. Corporate executives are expected to be professionals and experts of a specific knowledge area (Sama & Shoaf, 2008). This level of competence makes them deserving to fill the highest positions. Secondly, CEO’s are required to supervise and provide guidance to the employees (Ferns et al, 2008). This influence is also expected by people outside of the firm, which can explain why leader behaviour greatly affects people’s opinions of the organization and their motivation to apply to a job there. Jobseekers tend to compare their values to those that they perceive to be held by the companies, when making job selection decisions. They apply only to a selected few jobs in which they are interested and typically accept only one job offer (Cable & Judge, 1996; Judge & Bretz, 1992). Companies can therefore benefit from communicating CSR initiatives on their websites and other recruitment resources.

This research is going to focus on analysing the effects of the leadership behaviours of company leaders on the perception of CSR information, on job seekers during job selection. This will then lead to further analysing whether or not inconsistencies between leadership behaviour and CSR communication harm the perceived integrity of a company, and as a result affect the opinions of potential applicants. This research will therefore contribute to the available body of literature by explaining how this interaction between CSR and leadership behaviours takes place and what mediates its relationship with perceived organizational attractiveness. If it is shown that CSR information contributes to the perceived organizational attractiveness by jobseekers, it can provide incentives for addressing CSR during employee recruitment on a regular basis.

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2. Literature review

2.1 Corporate social responsibility

During the 1970’s corporate social responsibility started to really become an integral part of everyday business strategies. Ackerman (1973) and Murray (1976) argued that it wasn’t necessarily an issue that companies were all of a sudden assuming a certain corporate responsibility, but that they were now responding to issues of the social environment. According to Carroll (1991) corporate social responsibility can be defined as a business entity’s focus on and fulfilment of economic and philanthropic responsibilities to various stakeholders. There are two sides to analysing CSR, the classical and the modern approach. Classical social responsibility states that managers of the company are only responsible to the shareholders of the company. Modern social responsibility approach states that organizations function best when they voluntarily take responsibility to solve the problems of the society (Abdullah, & Rashid, 2012).

Frederick (1994) emphasised another distinction by separating the concept of corporate social responsibility (CSR1) from corporate social responsiveness (CSR2). CSR1 focuses on companies assuming a socially responsible standpoint, whereas CSR2 is focused on the actual act of responding to societal problems. Consequently an emphasis on CSP (corporate social performance) started to emerge. CSP combined the importance of both CSR1 and CSR2, but the focus was on actually achieving results (Carroll 1979; Wartick & Cochran 1985; Wood 1991). CSR has been linked to creating a competitive advantage gained from a favourable reputation and as a result attracting the competitive job seeking population (Turban & Greening, 1997). For the purposes of this research the CSR initiatives used for analysis only focus on actively engaging in philanthropic issues and its effects on recruitment and organizational attractiveness.

2.2 Influence of CSR on Recruitment

Research on employee recruitment has highlighted several factors that have an effect on prospective employee’s attraction to a particular organization (Breaugh, 2008; Chapman, Uggerslev, Carroll, Piasentin, & Jones, 2005). This includes the

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organization’s commitment to values, principles, and practices related to its social responsibility (Wood, 1991). Previous studies suggest that organizations with strongly established CSR programmes would attract more job applicants. This attraction is created through the form of signals that are sent from an organization to prospective applicants. Recruitment researchers have argued that job seekers often have little information about recruiting organizations, so they rely on signals that they receive from whatever information they do have to make inferences about working conditions and other organizational characteristics (Rynes, 1991; Rynes & Miller, 1983). Signalling theory (Rynes, 1991) states that a firm’s CSR sends signals to prospective job applicants about what it would be like to work for that firm. This is complemented by social identity theory (Ashforth & Mael, 1989), which suggests that job applicants have higher self-perception when working for socially responsible firms than for companies that don’t engage in CSR. (e.g., Greening & Turban, 2000).

Jones, Willness & Madey (2013) argue that these signals are categorized in three mechanisms that influence organizational attractiveness. These consist of jobseekers’ pride from being connected to a prestigious organization that actively engages in CSR, the expected value- fit between the organizational values demonstrated by the CSR communication and the expected treatment by the organization, knowing its efforts to enhance the well being of others through its CSR. The objective of this study is to analyse the communication of CSR programs and its impact on people’s perceptions of organizations, given the behaviour of the corporate executive is consistent with the company’s values. Based on the literature it can be assumed that having a positive opinion of a company’s attention to societal issues, will positively affect their perception of that organization. Which brings us to the first hypothesis:

Hypothesis 1: Individual perceptions of a company’s CSR initiatives are positively related to organizational attractiveness among job applicants.

The growth in CSR-reporting indicates that sustainability reports are becoming more important in communicating the corporate message. It is also recognized that public perception of the credibility of corporate messages have a large impact on a company’s ability to attract and retain talent in order to create and sustain a competitive advantage (Ferns et al., 2008). A substantial body of literature describes

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the leadership role of the executives in communicating values of the company (Sama and Shoaf, 2008; Svensson and Wood, 2008; Thomas et al., 2004). This leads to the conclusion that the CEO can be considered the spokesperson for the values of that company, meaning that the CEO’s conduct and commitment to corporate norms and morals contributes to the overall image of the organization. However, the actual effects of leadership behaviour in combination with CSR communication should be investigated further with regards to its influence on perceptions of job applicants.

2.3 Leadership behaviour in relation to CSR

An organization’s reputation has been defined as one of the most important competitive advantages for companies (Deephouse, 2000; Fombrun, 1996, 1998). According to Brown and Logsdon (1999, p. 169) ‘Reputation is the long-term combination of outsiders’ assessments about what the organization is, how well it meets its commitments and conforms to stakeholders’ expectations, and how effectively its overall performance fits with its socio-political environment’. When a company is caught violating moral commitments to society its actions can possibly be explained, however not justified, by external forces that could have influenced that decision (Ferns et al., 2008). In this situation the company can then correct its actions by becoming more assertive towards being socially and environmentally compliant. This is different when it is about immoral behaviour of the company’s top executives. A 2006 survey taken by 950 executives from 11 different countries proved that CEO’s themselves believe that executives deserve a large share of the blame when an organization’ reputation has been damaged (Shandwick, 2007). The CEO’s ethical conduct is directly connected to the company’s reputation and record of public trust. This leads to the presumption that the behaviour of the CEO can strongly influence the effect that CSR initiatives have on organizational perceptions of potential applicants. Negative actions of CEO’s are not proven to be pressured by external factors, but are caused by personal misjudgement that still tend to reflect corporate actions in the eyes of the public (Reinstein et al., 2006; Leap, 2008). This implies that an interaction exists between the CEO’s conduct and the information a company gives about their philanthropic activity, that has a hand in influencing a company’s reputation (Ferns et al., 2008). Research has already shown that the communication of

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CSR information positively influences perceived organizational attractiveness. However it still needs to be empirically tested if CSR communication will have the same or a different influence when it is combined with either divergent leadership behaviour or CSR-supportive behaviour.

The expectation of this study is that having a CEO that behaves in a socially responsible way will strengthen the positive effect of CSR information on job decisions of potential jobseekers. Oppositely it is expected that when CSR information is given, but the leader acts in a socially undesirable manner, this will decrease the perceived organizational attractiveness in the eyes of the jobseeker. The underlying assumption is that if a CEO’s behaviour does not comply with the CSR initiatives and the values that an organization communicates, the company will be considered hypocritical and will be less favoured by job seekers. This introduces the second hypothesis to be tested:

Hypothesis 2: Individuals’ perceptions of the leadership behaviour of the CEO positively moderate the relationship between CRS initiatives and organizational attractiveness as experienced by job applicants, such that the relationship between CSR initiatives and organizational attractiveness is stronger when the CEO exhibits positive behaviour as opposed to negative behaviour.

2.4 Mediating influence of perceived integrity

The remaining question is why the behaviour of the CEO has such a large influence on job applicants. To investigate this further we need to analyse how this relationship is mediated. The presumption that dictates this research is that individual perceptions of the company’s credibility are influenced by the perceived integrity of the company. People tend to feel attracted to companies that advertise themselves as CSR advocates and they care whether leaders of these companies behave in a manner that is consistent with what that company communicates. The key component of this interaction is in the combination of CSR communication and leadership behaviour and its resulting effects on the perceived integrity of a company. Researchers Palanski & Yammarino (2007, p.17) state that integrity can be defined as the ‘consistency of an acting entity's words and actions’. This definition is practically identical to Simons' (2002, p.19) definition of Behavioural Integrity (BI) as the ‘perceived pattern of

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alignment between an actor's words and deeds’. Simons (2002) indicates that integrity is based on both the perceived fit between communicated and incorporated values, and the perceived degree of honesty by the observer. This includes the perception of behavioural compliance to corporate communications such as mission statements and value statements. The Random House College Dictionary (1975, p. 692) defines integrity as “adherence to moral and ethical principles.” However the concept of integrity, that will be used for this research does not consider to what extent communicated principles are moral, but rather analyses if these principles are aligned with the company leader’s actions. This perceived alignment or the absence thereof influences the credibility of the organization as a whole.

Credibility, as discussed in popular literature, is an assessment of believability of an individual or entity (O’Keefe, 1990). While everyday use of the word implies that credibility is attributed to the one who sends the message, communications researchers think of it as an attitude of the receiver towards the message sender (McCroskey &Young, 1981). If the company is deemed not credible due to a lack of fit between espoused and enacted values, a prospective applicant can consider this organization to be hypocritical. Hypocrisy (Brunsson 1989, p. 205) is ‘inconsistency between talk and action, presentation and results’. Most literature does not acknowledge the role of the receiver in establishing the presence or absence of ‘word-deed alignment’ (Simons, 2002). If there is a sense of word-‘word-deed alignment this could result in people considering that company to have integrity.

Unfortunately nowadays perceived integrity is rare, which can be concluded when you follow the many recent business scandals (e.g., Enron, Arthur Andersen, WorldCom and CSFB). When executives put their personal interests above those of the corporation or its stakeholders, they compromise more than their own integrity; they compromise the integrity of the business itself. A company can be considered to have integrity when the communicated CSR initiatives are closely correlated with the leadership behaviour and the resulting reputation of that respective organization. The expectation is that CSR information and its relationship with either supporting or conflicting leadership behaviour will affect a company’s integrity, which will then contribute to the attractiveness of that company. This leads to the third hypothesis:

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Hypothesis 3: Perceived integrity of the company positively mediates the moderation effect of leadership behaviour on the relationship between the CSR information and organizational attractiveness, as experienced by job applicants.

People tend to feel attracted to companies that advertise themselves as CSR advocates. However, as stated in the literature, potential job applicants also care whether leaders of these companies behave in a manner that is considered ethical or positive in nature. The intention of this research is to answer the questions and topics that have been described in the literature review.

3. Methodology

3.1 Research model

Figure 1

According to the research model displayed above, the communication of CSR information in job advertisements is positively related to the attractiveness of a particular organization (from the prospective of potential job applicants). This relationship is moderated by the CEO’s behaviour and whether or not it is consistent with the CSR initiative they choose to communicate. Leadership behaviour influences organizational attractiveness to the extent that it is either conducive to the company’s

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CSR reputation or has an adverse effect. If the CEO behaves in accordance with the company’s CSR initiatives, the jobseeker will consider the company to have integrity. The extent to which people perceive a company to have integrity, will then mediate the interaction between CSR information and leaders behaviour on job attractiveness. If the potential applicant considers the company to have integrity, they will consider a company to be more attractive than a company that does not seem to have integrity. The assumption is that this is an interaction effect that represents the combined effects of 2 distinct variables, CSR communication and leadership behaviour. This research is going to build on this model and establish grounded theory about the different elements that influence organizational attractiveness.

3.2 Data collection

This experiment was conducted as a cross-sectional study, meaning it only measured data from one point in time. It is an extension on a previously conducted experiment done by Jones et al. (2014), which acted as the pilot study because certain parts of that research have been replicated. Data for this experiment was collected by sending a mass e-mail to a database of existing personal contacts with a link that directed the participant to an online survey. Invited participants were asked to review advertisements, supposedly from a company's website and newspaper articles about that company’s CEO. Each of these respondents was asked to pretend as though they were currently looking to apply for a job and that they were eligible for at least one of the job openings advertised by that company. Several vacancies were listed for the company, which included a large array of positions in merchandising, retail and marketing, making the advertisement suitable for many different job seekers. The advertisements and newspaper article were designed to appear as realistic as possible by researching existing media and creating a similar format.

3.3 Procedure

For this study a 2 (leadership behaviour: positive behaviour vs. negative behaviour) x 2 (CSR: communicated vs. not-communicated) between-subjects experimental design was used. This particular design was needed in order to examine the impact of CSR in combination with CEO leadership behaviour on individual’s evaluations of a

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company and the resulting perceived attractiveness of a company. The experiment consisted of four scenarios about a hypothetical company, all of which emphasise the company’s involvement in CSR initiatives as well as the CEO’s leadership behaviour. It was necessary to create four treatments when designing this experiment, because a combination of independent variables had to be tested. In order to analyse the effects of CSR information in job advertisements in combination with leadership behaviour, you first have to check for separate effects before you combine them. The absence of effects is important in order to really show the change in job applicant behaviour when these interactions come into play. Using the same information about the company for every one of the 4 treatments makes for a controlled experiment. The only difference in each scenario is in the information given in the job advertisements about the two independent variables.

It is acknowledged that there are many types of CSR initiatives, such as employee volunteerism and environment support programs. However, for this research charitable giving and community involvement were used as examples of CSR initiatives. This experiment will explore how people react to CSR-engaging companies when they observe leader behaviours that support or violate the companies’ statements about CSR activities. The scenarios (as depicted in figure 2) will be presented by showing the respondents job advertisements that vary in terms of information about CSR activities and CEO behaviours. The treatments that were used in the experiment were:

Condition 1: Participants will be shown advertisements of a company that clearly engages in CSR activities and has a CEO who engages in behaviours that are positively related to the values that the company communicates.

Condition 2: Participants will be shown advertisements for companies that don’t communicate any CSR initiatives but are informed about the CEO who engages in behaviours that are philanthropic in nature.

Condition 3: Participants will be shown advertisements where the company clearly engages in CSR but that highlight leaders who engage in behaviours that do not comply with the CSR initiatives.

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Condition 4: Participants will be shown advertisements for a company that doesn’t communicate any CSR initiative and that focuses on leaders who engage in behaviours that can be considered negative in nature.

Figure 2

The four fictitious scenario’s describing a non-existent retail company were created based on previously done research about this subject, but was adapted to fit the context of this research. Dubinsky (1981) found that a large percentage of students seemed to have a favourable image of retail or sales jobs. This led to the selection of a retail company for the survey because it was assumed that undergraduate students would pay more attention to this type of company. All scenarios were written in a website job advertisement format, and each started with general information about the company (e.g., its history and business condition), followed by different descriptions of leadership behaviour (positive or negative) and CSR (present or absent) activities. Prior to initiating the online survey, the population was controlled for age, gender, years of study and work experience, number of working hours, tenure at current job and total job experience.

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3.4 Sample

Prospective job applicants were the target group for this experiment. Undergraduate students were chosen as the population of this study as well as currently employed individuals. Only students in the final stages of their program were eligible to take part in this experiment because these students tend to have more work experience and were more likely to be seeking employment at the time, making the study more relatable. 150 respondents started the survey, however a large number of those respondents did not finish. The first step towards data analysis was to run a frequency test for all variables to examine if there were any errors in the data. There were no errors found. All variables under investigation were checked for missing data and the amount of missing data was >10% for all variables except for the demographic questions. After removing the missing data there remained 100 respondents equally distributed between the 4 treatments. The missing data was removed because they all contained information that was necessary to give an accurate answer to the questions, making them unusable. There was also data removed from respondents that took over 5 hours to finish the survey because they started it but continued at a later moment, thereby decreasing the reliability. The one hundred remaining participants had already been randomly assigned to the four different experimental conditions of the study.

3.5 Measures

Dependent variable

All items in this experiment used 5-point Likert-scales with anchors of 1 (strongly disagree) to 5 (strongly agree). For this research the dependent variable, ‘Organizational attractiveness’, was measured using Highhouse et al.’s (2003) five-item response scale. Some of the questions that were used to test for the presence of that variable were “For me, this company would be a good place to work”, “I would not be interested in this company except as a last resort”, “This company is attractive to me as a place for employment”, “I am interested in learning more about this company” and “A job at this company is very appealing to me”. The recoding of counter-indicative items was applied to only one item of the dependent variable

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‘organizational attractiveness’. These were items that are phrased in such a way that an agreement with the item represented a low level of the construct.

Independent variables

The two independent variables used in this research were ‘Corporate responsibility information’ and ‘CEO leadership behaviour’ within an organization. These variables were incorporated in the scenarios in order to measure their influence on the organizational attractiveness as perceived by the potential job applicant. To test the 3 hypotheses these two variables were coded so that they could be tested in the regression analysis later on. The interaction effect between these two variables was made into a new variable as well, due to the fact that this research is not only focused on the separate effects but also on the combination. For each treatment a different coding sequence had to be integrated to test the different effects. This entails that both CSR and Leadership have 2 different values for either the ‘CSR low’ and ‘CSR high’ condition (0/1) or the Leadership low’ or ‘Leadership high’ condition (-1/1). Participants with the ‘CSR high’ condition received a small piece of information within a job advertisement that detailed a company’s CSR initiatives, while the ‘CSR low’ condition contained no CSR information and only specifics about the job vacancy. Additionally, participants with the ‘Leadership high’ condition had to read a small newspaper article, which stated that the CEO of that company organized a charity event, while the ‘Leadership low’ condition contained an article that described that same CEO refusing to attend the charity event.

Mediating variable

The mediation variable ‘perceived integrity’ was measured by focusing on the perceived integrity of the leader of the company. For this, five items of the 8-item scale from the Simons and McLean-Parks’ (2000) behavioural integrity scale were used. The 4 items that were used were: “There is a match between the company’s words and actions’, “This company practices what it preaches”, This company does what it says it will do”, “This company conducts itself by the same values it talks about”, “This company shows the same priorities that it describes”.

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Reliability

Reliability checks were run for the variables of ‘organizational attractiveness’ and ‘perceived integrity’. The reliability of variables examines the consistency of measurements. These were the only variables needed to test the hypotheses. The Cronbach’s alpha, which represents the estimator of the internal consistency, has been tested to verify if all the items in one scale measure the same thing, or if some questions should not be used for analysis. The variable ‘perceived integrity’ initially had a Cronbach’s Alpha > .7, which indicates high level of internal consistency. Organizational attractiveness’ had a Cronbach’s Alpha of .469, making it an unreliable scale. The Item-total Statistics table showed that if the second item of that variable were deleted (which is the only recoded value in this dataset), the Cronbach’s Alpha would be .817. The control question was interfering with the reliability of the scale, so that item was removed in order to get a Cronbach’s Alpha that was over .7.

Manipulation checks

For the manipulation five check-items were embedded to test the respondent’s ability to accurately assess the given scenario. Used items were “The company contributes positively to the communities in which it does business”, “This company has been in existence for a long time”, “This company is active in helping its community”, “The CEO of the company recently contributed positively to the communities in which it does business”, “This company must have a lot of employees” and “The CEO of this company was recently active in helping the community”.

Normal distribution

When checking if the model was normally distributed an SPSS-analysis was conducted for normality. If skewness is between -1 and -0.5 or between 0.5 and 1, the distribution is moderately skewed. Here skewness was -.274. The values for asymmetry and kurtosis between -2 and +2 are considered acceptable in order to prove normal univariate distribution. Here kurtosis was -.294 Therefore it can be concluded that the dependent variable is near a normal distribution so the model is acceptable enough to be tested.

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4. Results

The correlation matrix for all of the combinations of variables as well as the means and standard deviations is displayed below in table 2.

*Correlation is significant at the 0.05 level (2-tailed)

Table 2: Means, Standard Deviations and Correlations

4.1 Correlation analysis

The table shows no significant correlation between the variables ‘CSR information’ and ‘organizational attractiveness’ nor with the variable ‘perceived integrity’. Both had a p > 0.05. This is in contrast to the first hypothesis that states that CSR information directly influences the organizational attractiveness of a company. The variable ‘CEO leadership behaviour’ does show a significant positive correlation with ‘perceived integrity’ with an r = .58 and a significance level of p =. 00. This is not the case for its correlation with organizational attractiveness (p =. 09). This indicates that leadership in fact has an influence on the perceived integrity, but it has no direct correlation with organizational attractiveness.

There is a significant positive correlation between perceived integrity and organizational attractiveness with r =. 34 and p = .00. This indicates that the mediation with perceived integrity is probably necessary in order to observe a significant relationship between leadership and the organizational attractiveness of a company. This has to be investigated further with a regression analysis.

4.2 Manipulation testing

Experiments such as this one have conditions to which subjects are randomly assigned to different levels of manipulation. A regression analysis observes whether a variation in the manipulated variables caused a different effect on the dependent variable. This

M SD 1 2 3 4

1. Perceived integrity 3.06 .65 1

2. Organizational attractiveness 3.13 2.81 .34* 1

3. CSR information .50 .50 -.01 .04 1

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concerns the variable ‘Manipulation check 1’ because it consists of questions that check the respondents’ understanding of the CSR information and leadership behaviours, as a result of the manipulated condition. To test the effectiveness of the manipulation checks a regression was run for both independent variables (CSR information and CEO leadership behaviour). The results of this regression showed that CSR information had no effect on the manipulation checks, with a p>0, while leadership behaviour did have a significant effect on a 5% level with a p=0. This means that the CSR manipulations were not effective and were not strong enough to effectively show how CSR information influenced the perceived organizational attractiveness by potential applicants.

4.3 Hypothesis testing, e.g. regression; mediation; moderation

In order to test the three hypotheses a regression was used where the model was split up in five steps:

Hypothesis 1 Variable B Std. Error Beta t p Step 1 CSR .044 .102 .044 .431 .667

DV: Organizational attractiveness

Hypothesis 2 Variable B Std. Error Beta t p Step 2 CSR .044 .100 .044 .441 .660

Leadership .176 .071 .348 2.493 .014*

Step 3 CSR*Lead -.180 .100 -.252 -1.803 .075**

Hypothesis 3 Variable B Std. Error Beta t p

Step 4 CSR .047 .096 .047 .495 .622 Leadership .066 .076 .130 .858 .393 CSR*Lead -.172 .096 -.241 -1.799 .075** Integrity .279 .090 .391 3.093 .003*

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Step 5 CSR -.012 .108 -.009 -.111 .912 Leadership .396 .077 .605 5.170 .000* CSR*Lead -.028 .108 -.030 -.258 .797

DV: Perceived integrity

* Correlation is significant at the .05 level (2-tailed) ** Correlation is marginally significant at the 0.1 level

Table 3

CSR influence on Organizational attractiveness

In the first step of the regression, only one predictor of organizational attractiveness was entered: ‘CSR information’. This model was not statistically significant F = (.186), p > .05 and explained none of the variance in organizational attractiveness, seeing as the adjusted R² was -.008 (table 4). A negative Adjusted R² indicates an insignificance of explanatory variables. This results in the conclusion that giving information about CSR in job advertisements has no influence on an individual’s perception of the attractiveness of that company. According to this information, hypothesis 1 was rejected. This was not the expectation before conducting this research due to the results of others researchers who did similar research. These findings can provide a different perspective for future researchers to start from.

Model Summary R Adj. R-sq F Df1 Df2 p 1. .044 -.008 .186 1 98 .667 2. .176 .011 1.545 1 97 .219 3. .250 .033 2.137 2 96 .101 4. .385 .113 4.138 1 95 .004* 5. .455 .199 25.594 1 98 .000* * Correlation is significant at the .05 level (2-tailed)

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Leadership influence on Organizational attractiveness

The second step (table 3) used two variables, namely ‘CSR information’ and ‘leadership behaviour’ in order to test the effects on the outcome variable ‘organizational attractiveness’. After adding the variable of leadership behaviour, the total variance explained by the model was 1% (Adj. R² = .011) and p <. 05, indicating the relationship is in fact statistically significant. This shows that leadership behaviour has a significant and positive effect on the relationship between CSR and organizational leadership. What this means is that if applicants receive positive information about the behaviour of that company’s CEO, they will consider that company to be more attractive than if they would not have received this information. This does not yet answer the question whether or not the second hypothesis is supported. For that the effects of the interaction between ‘CSR information’ and the variable ‘leadership behaviour’ on ‘organizational attractiveness’ needed to be analysed. That is why in step 3 the interaction effect between CSR information and leadership behaviour was added to the regression.

Interaction effect analysis

The addition of this interaction effect in the regression analysis caused a 3% increase of explained variance (Adj. R² = .033), but there was a barely detectable statistically insignificant p (p=0.075) on a 5% significance level. It was, however, significant on a 10% level and this indicates that the hypothesis can be partially supported if the direction of the interaction followed the initial expectation. This needed to be further investigated by looking more closely at the relationship between that interaction effect and organizational attractiveness. While the partially significant effect on the organizational attractiveness of a company signifies that hypothesis 2 is refuted on a 5% significance level, it is worth looking into the nature of that interaction due to the fact that it is marginally significant.

Figure 3 (displayed on the next page) is a visual representation of how this interaction effect actually takes place (low CSR indicating the absence of information and high CSR indicating the presence of CSR information + low leadership indicating negative leadership behaviour and high leadership indicating positive leadership behaviour). The lines are not parallel, proving that there actually is an interaction

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between the two variables. The chart shows that when a CEO shows behaviour that was not conducive to the company’s communicated corporate responsibility values in the condition that CSR is high, the company will be perceived equally attractive as when that CEO behaved in a way that supported the CSR initiatives.

Figure 3

When analysing the interaction itself, it can be seen that positive leadership behaviour induces a higher degree of attractiveness than negative leadership behaviour, when there isn’t any CSR information. The level of attractiveness stays the same when there is CSR information present. The chart also indicates that there is a bigger increase in organizational attractiveness with negative leadership behaviour than with positive behaviour, when moving from a condition where CSR information is absent to a condition where CSR information is present. So giving CSR information is more influential in increasing organizational attractiveness when the CEO is conducting bad behaviour than when the leader behaves in a socially responsible manner. From this it can be concluded that leadership behaviour only influences organizational attractiveness when it is not affected by extra information surrounding the organization’s charitable activities. This is not consistent with initial expectation that positive leadership behaviour will interact with CSR information in such a way that it positively influences the perceived attractiveness of that company. From this we can conclude that we can say that hypothesis 2 is rejected.

1 1,5 2 2,5 3 3,5 4 4,5 5

Low CSR information High CSR information

O rgan iz ati on al attr ac ti ve n es s _Low Leadership behaviour High Leadership behaviour

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Perceived integrity as a mediator

In the fourth step the mediator ‘perceived integrity’, was added and showed to be statistically significant, with a p < .05. The introduction of perceived integrity explained additional 8% variance in organizational attractiveness, (R² Change = .086). This means that perceived integrity showed a significant positive effect on organizational attractiveness and explains more variance than if this was not used as a mediating variable. This information indicates that people will view that company to be a more attractive employer, because they consider that company to have integrity. Hypothesis 3 seeks to prove mediation between the interaction effect of CSR information and leadership behaviour and organizational attractiveness. This means that that interaction effect needs to have a significant relationship with the mediator ‘perceived integrity’ and that the mediator needs to have a significant relationship with ‘organizational attractiveness’ in order to prove the presence of mediation in this case.

It can be seen from step 5 in table 3 that there is no significant relationship between the interaction effect (CSR*Leadership behaviour) and perceived integrity with a p of .79, while perceived integrity does have a significantly positive relationship with the degree to which people consider a company to be attractive (p=. 003). Therefore it can be concluded that hypothesis 3 is rejected. The expectation was that people needed to perceive the organization to have integrity for them to think that company could be an attractive prospective employer, when reading CSR and leadership information.

5. Discussion

Even though previous research has proven a link between giving CSR information and the perceived attractiveness of a company, the results of this research show no clear evidence for this relationship. The initial expectation, that CSR would make people consider an organization to be more attractive than when they did not receive information about that company’s social investments, was not met. The results did show that leadership behaviour of top executives does have a significant impact on organizational attractiveness. When asking a select 10 of the respondents why they responded in such a way that lowered the significance of CSR information and

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solidified the importance of leadership, they stated that they considered CSR information to only serve a promotional purpose due to its deliberate communication, while real CEO behaviour showed a more honest view of the company’s position.

This study also started with the assumption that there was an interaction between CSR information and CEO leadership behaviour that would intensify the perceived integrity of an organization. Findings indicate that CEO leadership behaviour by itself positively influences perceived integrity, but that the interaction between the two variables does not. That same interaction effect did however, have a marginally positive influence on the perceived attractiveness of that company, meaning that even though interaction between CSR and leadership information did not directly affect the integrity of the company, it did make the company seem more attractive in the eyes of a job applicant.

The interaction took another direction than anticipated. It was hypothesized that having a CEO that behaves in a socially responsible way would strengthen and negative leadership behaviour would weaken the positive effect that CSR information has on the perceived organizational attractiveness. According to this research, negative CEO conduct seemed to have a stronger influence on perceived attractiveness when CSR information was not given than when it was communicated. The reduction in the attractiveness when the experiment moved from positive leadership behaviour to negative leadership behaviour leads to believe that bad behaviour is only detrimental for a company’s reputation when they don’t already engage in CSR.

There was evidence for a main effect, which was that when the CEO conducted behaviour that was conducive to the company’s values, the influence on the company’s perceived attractiveness was much greater than when the CEO behaved in a way that was morally frowned upon. Bad leadership behaviours and CEO scandals have a large impact on a potential applicant’s view of the company. Organizations can therefore benefit from communicating CSR behaviour, when they lack leaders that effectively embody organizational values.

5.1 Theoretical implications

This paper has several conceptual implications that can contribute to the expansion of theoretical concepts concerning the role of CSR in corporate reputations. Past

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empirical studies gave insight into the role of CSR information in the context of organizational attractiveness (e.g. Jones et al., 2013). This research goes against their theory that CSR information has a direct impact on people’s opinions of organizations, and adds on to it by taking leadership and the perceived integrity of that company into consideration. That being said, results do comply with research that argues that corporate integrity can lead to positive outcomes for companies (Waldman and Siegel, 2008). This study builds upon that research by acknowledging the influences of leadership behaviours on perceived integrity, which in turn sends signals to prospective job applicants about the possible attractiveness of that company. This incorporates Rynes et al.’s (1991) signalling theory, which indicates that when applicants don’t have all necessary information about an organization to form an opinion, they recognize all available information as signals about the organization’s attractiveness as an employer.

Before conducting this research, the expectation was that there would be an interaction effect that would lead to higher organizational attractiveness when the leader conducted good moral behaviour and less organizational attractiveness when the leader conducted bad behaviour. However, relying on the results, it would look as if a company would function successfully by just communicating CSR activities, regardless of how the leader acts. This does not sound plausible and contradicts anecdotal evidence that the effects of CEO behaviour increase the awareness of organizations, as well as organizations' attractiveness, among external stakeholders (Ashforth & Mael, 1989). Likely these contrasting results were caused by the fact that the data showed that CSR info did not have any effect at all. These contradicting results and the fact that the manipulation checks failed, point to a flaw in the experiment that needs to be perfected trough future research by paying more attention to manipulating the CSR information.

This does not yet explain why CEO behaviour did not seem to have any significant influence when CSR information was given, especially since past research concluded that moral leadership behaviours might actually be a vehicle for CSR to create a strategic benefit to organizations (Waldman and Siegel, 2008). Despite partial support and failure of manipulation, it is still important to study the interaction effect between CSR and leadership. Research on this topic is virtually non-existent and theoretical support for the significance of this interaction would be a unique

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contribution to the field. The limitations section below will shed light on the potential reasons for these results.

5.2 Practical implications

From a managerial perspective, the study also provides many important implications, in particular for communications managers and public relations officers. Providing the public with information about the CEO and his or her contributions to the social environment can create a crucial organizational advantage in terms of being considered as a top employer (Turban & Greening, 1997). That is why the main expectation was that negative leader behaviour would be harmful for attractiveness especially when the company espouses these values in advertisements. However, the results of this research did not indicate that CSR had any influence on job applicants’ attraction to a company, when CSR information was given to the respondents. When there was no CSR info given there was a difference in attractiveness when the leader supported those values vs. when he or she did not. Based on these findings corporations would be good to avoid situations where they don’t engage in CSR (or at least don’t communicate it) and have a leader that engages in less than exemplary behaviour. They have to make sure that they place an individual in the position of CEO that has a reputation that is beneficial to the company’s image. When they do communicate CSR either in the media or only for recruitment purposes, the pressure to find a leader that behaves in a socially responsible manner is lower. This is very peculiar due to the contrasting results of past researchers, and is probably caused by shortcomings of the experiment itself. Chances are that if the experiment was done again with alterations in the information given about the CSR activities, the results would point towards a different view.

Companies should start acknowledging the power of their perceived integrity and its impact on getting a larger quantity and higher quality of applicants. This research also shows that reputation should be a concern of any organization and that there should be strategy to publicize the leaders of the firm (Ferris et al., 2003), because the results indicate that leadership behaviours are a strong indicator of a company’s integrity and allure. It can be suggested that CEO’s should focus on

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engaging stakeholders before the media takes over that task in order to create a morally sound corporate image.

5.3 Limitations

As with any research, this research has some limitations. Firstly, although an experimental design with a fictitious company was chosen to maximize internal validity, this research design still yields the issue of low external validity. This limitation was reduced as far as possible by conducting the experiment in the context of commonly known job descriptions that people would recognize. Nevertheless one has to be careful to generalize the results. A rather small sample size further intensifies this limitation. A hundred respondents is not a small number, but when trying to generalize the results to an entire population of potential applicants, that is probably not enough. Also due to convenience sampling, there is limited variation in participants’ demographics.

Another large limitation was that a lot of participants did not finish the experiment, which was most likely due to the time it took to read the CSR information and the news article about the CEO. In future research, respondents might be awarded with some kind of compensation to motivate them to finish the experiment. A lot of data had to be deleted due to this problem, which could have altered the results of this research. This could have been further influenced by the fact that the manipulation checks showed not to be effective. A new study could improve the CSR manipulation or take away aspects from this study that hindered effectiveness.

The final identified limitation was that with this research, the effect of all given information was measured right after exposure, while concepts such as company attractiveness and perceived integrity are based on more than one moment (Cornelissen, 2008). Including a follow-up study or a longitudinal approach could have been beneficial. All of these limitations could have contributed to the resulting data that indicated that CSR information had no effect on organizational attractiveness, which in turn could have altered the effects of leadership behaviour on this relationship.

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5.4 Recommendations for future research

This study is the first to research the interaction effect between CSR information and CEO leadership behaviour and its effects on perceived attractiveness of a company. The previous sections highlighted that flaws in the manipulations of each condition could have caused the insignificance of that interaction in this research. A new study on that same interaction between CSR and Leadership needs to be done, where CSR information is given in a way that seems more credible. This is especially important because public perception of the credibility of social responsibility messages has a large influence on the attraction and attrition of quality employees (Ferns et al., 2008). One example would be to test this interaction by investigating a real case. This can be done by analysing an existing media communication on CSR initiatives of a real company to see the effect of the CSR communication strategy on different age categories of respondents. This could direct the results in an entirely different direction because then the CSR history of that company will be taken into account, because it has been proven that the communication of CSR information is more effective for companies with a long CSR history than for those with a short one (Vanhamme, & Grobben, 2009). This can also result in a different effect of leadership behaviour on CSR, because past actions of leaders can play a role as well. Real life settings and companies can make leadership influences on CSR information stronger due to the holistic understanding that is gained from a specific case. Participants can then get more familiarized with the CEO and his actions, which may impact their opinions of a company.

Future research could also add to this study by including aspects such as people’s scepticism towards CSR to find out whether this can offer additional explanations. The source of the information through which both CSR information and leadership behaviour is given, may serve to be a strong determinant of the perceptions of the reader. It is necessary to research which outlets are most effective and also how to create an approach for reaching prospective applicants without creating scepticism of CSR information. The reason why this is important is because this research showed that people did not perceive the company as attractive when reading CSR information, because it was explicit CSR communication through a corporate source. Additional research about the different communication channels through which information

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organization can communicate its CSR activities on its corporate website and diffuse the information explicitly, but they can also promote CSR information in commercials

or billboard advertisements (Du, Bhattacharya & Sen, 2010). The influences of these

different mediums on individual scepticism can prove to be an interesting complement to past research.

More research can analyse the factors that align with either ‘explicit CSR’ (formally publicizing organizational values by reporting them externally and internally) versus ‘implicit CSR information’ (informal discussion of CSR issues that are not intentionally publicized or promoted). The latter is the most effective in gaining perceived attractiveness from potential jobseekers (Angus-Leppan, Metcalf & Benn, 2010). This should be researched through an open-ended exploratory study, asking 'how' and 'why' CSR information affects peoples’ opinions. A qualitative research in the form of interviews leaves space to respond and play into emotions and perceptions that might otherwise have gone unnoticed in a standardized survey. This can help with understanding the underlying psychological mechanisms that influence the effectiveness of CSR communication and can therefore have a large impact on future CSR communication strategies.

6. Conclusion

Today CEO’s are seen as rock stars and are slowly becoming to be the only face that represents a company (Treadway, Adams, Ranft, & Ferris, 2009). Twenty years ago it may not have been possible to see the kind of popularity that we experience now with the Steve Jobs and Mark Zuckerburgs’ of the world. This development could explain why the results indicate that people attribute a higher value to leadership behaviours of CEO’s than of communicated CSR information. Being involved in CSR is almost obligatory now and seems like a trend then won’t be going anywhere anytime soon. However positive this development is, it can leave job applicants and consumers to think that companies are just socially or environmentally involved because they have to keep up with their competitors (McGuire, Sundgren & Schneeweis, 1988). This research set out to investigate the influence of the behaviour of organization’s top leaders on the effects that CSR information can have on perspective applicants that seek information before applying for a job there.

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The research question: “How does the reputation of top executives influence the effect of pro-social CSR initiatives on job selection of prospective job applicants?” is therefore answered by saying that the reputation of top executives has a large impact on the perceived attractiveness of that company and that it had a large influence on the perceived integrity of that company, because people attribute positive leadership behaviour to virtuous morals of an organization. However, it has no proven influence on the relationship between receiving CSR information and forming an opinion about a company’s appeal. These findings suggest that recruiters should be very mindful about how they are publicizing their company concerning its CEO’s lifestyle and the way they give information about their corporate social responsibility initiatives. If they fail to do so, potential applicants will predominantly form their opinions about that company through forces that are beyond that company’s power, risking their position as a preferred potential employer

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How does the reputation of top executives influence the effect of pro-social CSR initiatives on the perception of prospective job applicants?