Avoid or approach: How CEO power affects corporate environmental innovation

Yang Zhang · Yaling Deng · Yi Zheng

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Environmental Sustainability in Business Corporate Finance and Governance Political Influence and Corporate Strategies

Abstract

Chief executive officers (CEOs) play a key role in corporate strategic decisions. This study explores how power, as a prominent CEO characteristic, influences environmental innovation. Building on the approach-inhibition theory of power, the attention-based view (ABV), and the literature on strategic leadership, we propose that CEOs with stronger power are more likely to allocate their attention to environmentally-friendly innovation. Panel data on Chinese listed corporations during the period to 2008–2018 were constructed and used for the empirical analyses. The results support the positive role of CEO power in promoting environmental innovation. Moreover, this positive effect becomes even stronger when the firm has more independent directors and faces greater market competition. These findings contribute to research on the approach/inhibition theory of power, strategic leadership, and growing literature on environmental innovation.

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References

1976Theory of the firm: Managerial behavior, agency costs and ownership structure 2010Strategic management a stakeholder approach 1983Separation of Ownership and Control 1991Multitask Principal–Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design 1997Toward a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts 1997TOWARDS AN ATTENTION-BASED VIEW OF THE FIRM 2003Power, approach, and inhibition.1974Little Jiffy, Mark Iv

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