Paper 3

S Y M P O S I U M

RESPONSIBLE LEADERSHIP AND STAKEHOLDER MANAGEMENT: INFLUENCE PATHWAYS AND

ORGANIZATIONAL OUTCOMES

JONATHAN P. DOH NARDA R. QUIGLEY Villanova University

The construct of responsible leadership has gained considerable traction in contem- porary management scholarship. Yet defining and operationalizing how responsible leadership manifests in organizational outcomes has posed challenges. In this paper, we draw from stakeholder theory to offer a more fully formed view of how responsible leadership influences organizational processes and outcomes. We provide descriptions of two distinct pathways through which leaders and their organizations exhibit and project their responsible leadership behaviors and actions: psychological and knowl- edge-based. We suggest that these two pathways constitute process mechanisms that advance and disseminate specific signals and messages and, ultimately, actions and outcomes. We provide brief illustrations of three companies and their leaders to underscore the potential of our framework. We conclude with implications for re- search and practice.

The construct of responsible leadership has gained considerable traction in contemporary man- agement scholarship (e.g., Doh & Stumpf, 2005; Miska, Stahl, & Mendenhall, 2013; Pless, Maak, & Waldman, 2012; Stahl, Pless, & Maak, 2013; Voegt- lin, Patzer, & Scherer, 2012; Waldman & Siegel, 2008). Responsible leadership presents an attrac- tive and potentially useful integration of research on leadership and corporate social responsibility (CSR) and offers the opportunity to provide mean- ingful advances in the field of leadership. Yet de- fining and operationalizing how responsible lead- ership affects organizational outcomes has posed

challenges. For example, Siegel (in Waldman & Sie- gel, 2008) suggested that truly responsible leader- ship must include the strategic use of CSR, such that leaders leverage CSR instrumentally to benefit shareholders. Waldman (also in Waldman & Siegel, 2008) argued against such “rigid instrumentality,” suggesting instead that responsible leadership must involve multiple stakeholder groups in decision making because doing so supports the firm’s long- term sustainability. These two contrasting perspec- tives underscore the nascent condition of the re- sponsible leadership construct and the need to further elaborate the processes through which re- sponsible leadership manifests in organizational outcomes.

In this paper, we seek to partially reconcile these divergent perspectives (and others) by drawing from stakeholder theory (cf. Cragg, 2002; Donald- son & Preston, 1995) to contribute to a more fully developed theory of responsible leadership. Prior research suggests that a stakeholder approach to management is positively associated with long- term performance (e.g., Cragg, 2002; Rowley & Ber- man, 2000). Indeed, the ongoing viability and sur-

The authors thank symposium co-editors Günter Stahl and Mary Sully de Luque and AMP co-editor-in-chief Don Siegel for their advice and guidance on the devel- opment of this article, and David Waldman and an anon- ymous reviewer for their helpful feedback on earlier ver- sions of the manuscript. We also acknowledge ongoing financial support from the Villanova School of Business Center for Global Leadership, Rammrath Chair in Inter- national Business, and summer research support pro- gram. Both authors contributed equally to the develop- ment of this manuscript.

� The Academy of Management Perspectives 2014, Vol. 28, No. 3, 255–274. http://dx.doi.org/10.5465/amp.2014.0013

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vival of firms may hinge on the influence of diverse stakeholders (Hart & Sharma, 2004; Harting, Harmeling, & Venkataraman, 2006; Hillman & Klein, 2001). We extend research on stakeholder theory (Jones, 1995; Mitchell, Agle, & Wood, 1997) and responsible leadership (Ciulla, 2005; De Hoogh & Den Hartog, 2008; Doh & Stumpf, 2005; Maak, 2007; Maak & Pless, 2006; Miska et al., 2013; Pless et al., 2012; Voegtlin et al., 2012; Waldman & Gal- vin, 2008; Waldman & Siegel, 2008) to offer a more fully formed view of the pathways through which responsible leadership influences organizational processes and outcomes.

We consider multiple levels of analysis as we build our argument. In particular, we examine how responsible leaders can effectively leverage the stakeholder approach in influencing others through two specific pathways: a psychological pathway and a knowledge-based pathway. We look at these pathways at four distinct levels: micro/individual, team, organizational, and societal.

• At the micro/individual level, we note that re- sponsible leaders consider their followers to be important stakeholders, and as such may be able to leverage their unique perspectives to generate both motivation and creativity (e.g., Zhang & Bar- tol, 2010).

• At the team level, a responsible leader considers and encourages diverse perspectives in her or his approach to stakeholders, which may lead to team-level psychological safety and learning, both linked to team performance (e.g., Edmond- son, 1999) and improved decision options and accuracy (e.g., Stasser & Titus, 1985).

• At the organizational level, leaders with a stake- holder approach may help build an open, inclu- sive, and diverse internal culture by sharing and disseminating knowledge while fostering strong ties with external stakeholders, all of which could lead to firm growth, innovation, and per- formance (e.g., Thomas, 2004).

• At the societal level, leaders who are able to consistently apply a stakeholder approach might be better able to manage across cultural bound- aries (Miska et al., 2013) and identify and antic- ipate critical economic and societal problems and trends so that they can respond more appro- priately (Stahl et al., 2013).

As noted above, we provide descriptions of two distinct pathways through which responsible lead- ership behaviors and actions influence outcomes: psychological and knowledge-based. We suggest

that these two pathways constitute process mecha- nisms that direct and disseminate specific signals and messages and, ultimately, actions and out- comes. We provide brief illustrations of three com- panies and their leaders to underscore the potential of our framework. We conclude with implications for research and practice. This approach should be viewed as a complement that can augment the clas- sic “do no harm” and “do good” dimensions of the responsible leadership construct that have ap- peared in prior literature. Before addressing the two pathways, we first review recent research that has explored the relationship between responsible leadership and stakeholder management.

RESPONSIBLE LEADERSHIP AND STAKEHOLDER ORIENTATION

Stakeholder management has garnered substan- tial scholarly attention since the introduction of R. Edward Freeman’s book Strategic Management: A Stakeholder Approach, which sought to describe the potential advantages of viewing and formulat- ing strategic management from a stakeholder per- spective (Freeman, 1984). Since that time, there have been numerous attempts to advance stake- holder theory and to demonstrate its practical im- plications for business management and organiza- tions more broadly (Mitchell et al., 1997). Stakeholder management may be viewed as both broader than and also a component of CSR, which itself has taken on a range of meanings and appli- cations (Wood, 1991).

Stakeholder Theory and Leadership

An attractive feature of stakeholder management is its elemental simplicity. It also offers the poten- tial of a comprehensive and unifying framework for understanding the complex interactions between firms and their internal and external constituen- cies. A “stake” in an organization rests on “legal, moral, or presumed” claims or on the capacity to influence an organization’s “behavior, direction, process, or outcomes” (Mitchell et al., 1997, p. 858). Somewhat ironically, early management scholars had already recognized the fundamental interdependencies that firms and their stakehold- ers shared in the political and social arenas. For example, Barnard (1962) introduced the notion of business firms as “cooperative” organizations built on rational thinking, and incorporated a range of

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perspectives and influences in his understanding of the roles and responsibilities of business.

Schwartz and Carroll (2008) and Jones and Wicks (1999) maintained that stakeholder theory assumes a network of connections and linkages between corporations and their various constituencies, and stakeholder theorists have explored the nature of these relationships, focusing on antecedents, pro- cesses, and outcomes (Freeman, 1984). Importantly for our discussion, some variants of stakeholder theory include a strong normative element that pre- sumes that the interests of all (legitimate) stake- holders have intrinsic value, and no set of interests is assumed to dominate the others (Clarkson, 1995). At the same time, however, stakeholder scholars have consistently argued that the theory is—or should be—practical, and should have the ability to inform managerial decision making (Donaldson & Preston, 1995).

Although stakeholder theory has many attractive features, applying it in a practical setting poses a challenge: The list of potential stakeholders of most modern corporations is potentially limitless. Prior- itizing among these stakeholders—which may in- clude investors (shareowners and lenders), employ- ees, suppliers, governments, customers, unions, regulatory authorities, joint venture and other alli- ance partners, private organizations (NGOs and, occasionally, the media), local communities and citizens, and even future generations—can be daunting (Post, Preston, & Sachs, 2002). Further, in the global setting in which contemporary leaders operate, the stakeholder relationships may now ex- tend to second-, third-, and fourth-order suppliers and customers, creating obvious practical chal- lenges to managing relationships across geographic space and through dense and elaborate supply chains.

To address the increasingly challenging task of both identifying and managing the range of poten- tially relevant stakeholders, Post and colleagues (2002) suggested that leaders find a way to narrow the focus to those stakeholders whose relationships with the firm really matter. They presented a sim- ple depiction of stakeholders in three concentric circles around the company that correspond to the strategic settings of the firm, with progressive de- grees of importance from those closest to the firm to those more distant. Of more instrumental rele- vance, Mitchell and colleagues (1997) proposed a model of stakeholder salience based on the relative power, urgency, and legitimacy of stakeholder

claims, which can be used to better understand nonmarket stakeholders.

In considering stakeholder theory and its poten- tial implications for leadership, several relevant insights emerge. First, theories of “strategic” lead- ership have naturally acknowledged and encour- aged the consideration of stakeholders, reflecting the role of leaders in considering all contextual dimensions of their options and strategic priorities (Hitt, Ireland, & Rowe, 2005; McWilliams & Siegel, 2001). Second, other theories of leadership that have emphasized the leader as “servant” similarly acknowledge the obligations, commitments, and re- sponsibilities leaders have to their various constit- uencies (e.g., Greenleaf, 1970; Laub, 1999; Mittal & Dorfman, 2012). Finally, an emerging stream of lit- erature (the focus of this symposium) has sought to leverage and integrate perspectives from CSR and leadership studies to develop a vision of the re- sponsible leader. This stream has emanated from both scholarly advances and an acknowledgment of the realities of change in the global business envi- ronment and organizations themselves (e.g., Sch- neider, 2002).

Responsible Leadership Scholarship: A Stakeholder Perspective

An emerging stream of literature has attempted to integrate studies in ethics, leadership, and CSR to triangulate the relatively loosely defined concept of responsible leadership (e.g., Ciulla, 2005; De Hoogh & Den Hartog, 2008; Doh & Stumpf, 2005; Maak, 2007; Maak & Pless, 2006; Pless et al., 2012; Voegt- lin et al., 2012; Waldman & Galvin, 2008; Waldman & Siegel, 2008). An increasingly visible trend in this literature is to incorporate some kind of stake- holder consideration in the conceptualization of responsible leadership, perhaps in response to re- cent major world events (e.g., the global financial crisis, environmental catastrophes, ethical scan- dals, and globalization). As Miska and colleagues (2013) pointed out, these events have resulted in an increased focus on ethics across the business world, and expectations have risen with respect to the roles that corporations and business leaders take on as participating members of society.

In addition, the research stream on responsible leadership—in particular that which addresses the broader global context within which leaders oper- ate—has increasingly focused on understanding what the concept of “responsible” means with re- spect to outcomes. For example, work on the triple

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bottom line (economic, environmental, and social value) has indicated that leaders who are truly “re- sponsible” attempt to have a positive influence across all three types of impact (e.g., Elkington, 1997; Savitz & Weber, 2006), while other research has considered two separate sets of responsible be- haviors as outcomes of responsible leadership: “do good” and “do no harm” (e.g., Brown & Trevino, 2006; Crilly, Schneider, & Zollo, 2008; Waldman & Galvin, 2008). Some of this literature argues that responsible leaders must go beyond doing no harm to actually doing good (e.g., Waldman & Galvin, 2008). The approach we take below is in line with the latter perspective; our conceptual model and case illustrations underscore this emphasis on the value of adopting a broad, inclusive approach to stakeholder identification and consideration.

Relatedly, Stahl and colleagues (2013) described the need for responsible global leaders to consider, act in accordance with, and respond to the needs of both global and local stakeholders; they noted that four significant leadership challenges arise in the do- mains of diversity, ethics, sustainability, and citizen- ship. As another example, Miska and colleagues (2013) linked intercultural competencies from the Global Competencies Inventory (Bird, Mendenhall, Stevens, & Oddou, 2010) to three CSR approaches to decision making (globally standardized, locally adapted, and transnational), and found that only globally standardized approaches to decision mak- ing are not associated with intercultural competen- cies. Some intercultural competencies, however, are associated with effective stakeholder manage- ment when the locally adapted CSR approach to decision making is used, and more intercultural competencies are relevant when the transnational approach is used.

Consistent with Miska and colleagues (2013), other research has considered the responsible lead- er’s interaction with stakeholders to arrive at a more clear understanding of what constitutes lead- ership responsibility given the increasing complex- ity of conducting business in a global, intercon- nected world (e.g., Pless et al., 2012; Voegtlin et al., 2012). As Voegtlin and colleagues (2012, p. 2) asked, “[W]ho is responsible for what and toward whom in an interconnected business world?” Voegtlin and colleagues (2012) took a process-oriented, normative approach to these questions, incorporating Haber- mas’s theory of deliberative democracy (Habermas, 1999, 2001) as a philosophical foundation from which to shed light on responsible leadership. In line with this approach, they conceptualized re-

sponsible leadership as leadership that is open to a broader target group (the stakeholders) with the aim of ensuring the legitimacy of the organization and developing symbiotic relationships with stakeholders.

As Voegtlin and colleagues (2012) noted, how- ever, a leader who successfully undertakes the above steps would be considered “responsible,” but there is likely a continuum of responsibility, leaving a gray area between the responsible leader at one end of the spectrum and the self-interested, egotistical, instrumental leader at the other end of the spectrum. This conceptualization of responsi- ble leadership clearly accounts for the role and consideration of affected stakeholders, but it is less clear on exactly how leaders would manage the diverse, sometimes conflicting demands of the var- ious groups affected.

Voegtlin and colleagues (2012) also considered the outcomes of a responsible leadership approach across multiple levels of analysis. In particular, they considered responsible leadership’s positive influence on macro-, meso-, and micro-level out- comes, which they proposed all lead to the ability of the leader to tackle the challenges of globaliza- tion. At the micro level, they noted that responsible leaders play an important part in organizations as role models and involve employees in decision- making processes. As a result, followers of respon- sible leaders are likely to have higher levels of job satisfaction, motivation, commitment, and organi- zational citizenship. While Voegtlin and colleagues (2012) were clear that responsible leaders generate positive outcomes, they did not explicate in detail exactly how leaders understand and balance the diverse views of different stakeholders.

Pless and colleagues (2012) also considered in- teractions with stakeholders to be a critical part of their conceptualization of responsible leadership. They used a qualitative analysis of 25 business leaders and entrepreneurs to build a descriptive taxonomy of a concept they called “responsibility orientation.” In this framework, leaders can be cat- egorized along two dimensions: the extent to which they differ in terms of breadth of constituent group focus (narrow versus broad) and the extent to which they differ on the degree of accountability toward others (low versus high). With respect to the former, business leaders with a narrow focus hone in on a single specific constituent or stakeholder group (this could be shareholders/owners, for ex- ample), while leaders with a broad focus attend to

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the needs of multiple constituents or stakeholder groups.

With respect to the degree of accountability di- mension, Pless and colleagues (2012) defined the low-accountability end of the spectrum as leaders who direct accountability toward shareholders/ owners. As they noted, with this end of the dimen- sion, the assumption is that the business’s objective is to maximize profit in the short and/or long term; this accountability to shareholders is viewed as actually benefiting society (Pless et al., 2012). Lead- ers with a high degree of accountability, in contrast, perceive their accountability to go beyond the shareholders/owners. These leaders may be skepti- cal of the ability of the market and government to provide socially optimal outcomes, and therefore may believe that considering the needs of nonbusi- ness stakeholders is legitimate and morally rele- vant. Mapping these two dimensions together cre- ates a matrix of four orientations toward responsible leadership: (1) the traditional econo- mist (low accountability, narrow breadth of stake- holder focus); (2) the opportunity seeker (low ac- countability, broad breadth); (3) the integrator (high accountability, broad breadth); and (4) the idealist (high accountability, narrow breadth).

In further explicating each of the responsible lead- ership orientations, Pless and colleagues (2012) noted that each orientation is likely to have a different ap- proach to CSR. Because of the traditional economist’s emphasis on short-term value creation targeted to- ward shareholders, leaders with this orientation are likely to exhibit little commitment to CSR and would, at best, follow industry standards and norms regarding CSR activities (Pless et al., 2012). The opportunity seeker is likely to engage in CSR if there are instrumental reasons for doing so—for example, if the leader believes that social respon- sibility could be part of a strategy of longer-term value creation (e.g., Orlitzky, Schmidt, & Rynes, 2003). Both of these orientations focus clearly on the idea of accountability toward shareholders/ owners.

In contrast, the integrator proactively engages with a broader range of stakeholders and attempts to deliver results along multiple bottom lines by integrating objectives across these groups (Pless et al., 2012). This particular orientation toward re- sponsible leadership is also likely to be perceived by others as visionary or transformative (e.g., Sully de Luque, Washburn, Waldman, & House, 2008). Last, Pless, Maak, and Waldman (2012) noted that the idealist orientation toward responsible leader-

ship is most likely to occur among social entrepre- neurs—those individuals who believe that the pur- pose of their business is to create innovative solutions to societal problems (Mair & Marti, 2006; Nicholls & Cho, 2006) while maintaining some level of self-sustainability (rather than necessarily profits).

These leaders must balance their emotional con- cern for a targeted group of stakeholders who are in need with the rational demands associated with running the organization, which often proves to be difficult. In any case, the idealist’s approach tends to be very servant-based, in that he or she is serving the needs of a set of targeted stakeholders (e.g., Mittal & Dorfman, 2012; Sendjaya, Sarros, & San- tora, 2008; Van Dierendonck, 2011). Interestingly, Pless and colleagues (2012) did not explicitly tie the different orientations toward responsible lead- ership to leadership effectiveness, likely because there are few empirical studies to support this con- nection. Moreover, the literature to date has not fully specified the pathways through which re- sponsible leaders exert their unique abilities to in- fluence organizational processes and outcomes.

Beyond Shareholders: The Responsibilities of Responsible Leaders

In considering the emergent work on the connec- tion between responsible leadership and stake- holder management, the literature is converging on the idea that responsible leaders have a view of their personal accountability that goes beyond serv- ing the needs of shareholders/owners alone. Re- sponsible leadership also likely requires a proac- tive dialogue with other stakeholders who will be affected by the actions of the organization. This kind of an approach requires a particularly open, transparent, and confident leadership orientation, such that the leader is able to both interact with and prioritize stakeholders effectively and detect cues and emergent trends so that they can be incorporated into firm strategy and organizational processes. In the next section, we discuss how responsible leaders may influence organizational dynamics and, in so doing, shape organizational outcomes.

RESPONSIBLE LEADERSHIP, INFLUENCE PATHWAYS, AND ORGANIZATIONAL

OUTCOMES

Leaders clearly can influence multiple levels of analysis in and around organizations (e.g., Yukl,

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2012). While Voegtlin and colleagues (2012) con- sidered the positive outcomes associated with re- sponsible leadership at the macro, meso, and micro levels, here we explicate how leaders may influ- ence such outcomes through stakeholder engage- ment. We highlight two pathways through which responsible leaders using a stakeholder approach may engender positive outcomes: psychological and knowledge-based (see Figure 1).

Pathway 1: Psychological Benefits of Responsible Leadership

While research that explicitly examines how the stakeholder approach works at the individual level is scarce—for the simple reason that the literature on stakeholder theory has tended to be more macro in nature (e.g., Donaldson & Preston, 1995)—a re- sponsible leadership approach that is more inclu- sive of the needs of various stakeholder groups is likely to resonate psychologically at the individual level, resulting in higher levels of engagement with the organization. The broader leadership literature within organizational behavior has much to add to our understanding of why a stakeholder-oriented approach may be particularly effective in terms of psychologically motivating and influencing em- ployees. Sully de Luque and colleagues (2008), for example, using a cross-cultural sample of CEOs and their followers, provided convincing evidence that when leaders assign a greater level of importance to stakeholders, subordinates perceive them as more visionary (rather than autocratic). This, in turn,

motivates followers to exert extra effort, which then positively influences firm performance. In contrast, they noted that leaders who place more economic emphasis on values (more of a stockholder/owner prioritization approach) are more likely to be per- ceived by followers as autocratic, a leadership style that may have short-term benefits in terms of effi- ciency but likely erodes employee motivation and engagement over time (e.g., Appelbaum et al., 2004; Bass, 1990; Gastil, 1994).

The research stream on empowering leadership has also emphasized the motivational and individ- ual performance benefits of a leadership style that is inclusive of various employee perspectives, par- ticularly with respect to influencing individual cre- ativity. Zhang and Bartol (2010), for example, noted that empowering leadership creates conditions that enable employees to become more engaged with their work, perhaps through delineating the signif- icance of the job, providing autonomy in decision making, expressing confidence in the employee’s capabilities, and removing barriers to performance. Empowering leadership, by definition, is a leader- ship style that is inclusive and welcoming of dif- ferent employee perspectives—clearly related to the idea of a responsible leader trying to meaning- fully engage various stakeholders within the organ- ization. Logically, a leader who embodies this kind of open approach is likely to create a climate of psychological trust and respect, which in turn has many positive benefits for affected stakeholders. Indeed, Zhang and Bartol (2010) found that em- powering leadership was positively related to

FIGURE 1 Proposed Model: Responsible Leadership, Pathways, and Outcomes

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higher levels of employee creativity, operating in part through the mediating mechanisms of psycho- logical empowerment, engagement in the creative process, and intrinsic motivation.

The literature on servant leadership also suggests a link between the consideration of stakeholder needs and psychological benefits to followers. While there are many recent definitions and inter- pretations of servant leadership, as with the litera- ture on responsible leadership, scholars have yet to converge on a single consensus regarding its pre- cise definition and theoretical framework (Mittal & Dorfman, 2012). The first empirical study to mea- sure the servant leadership concept was Laub (1999); subsequent work has validated many of the dimensions found in that piece. Most pertinent to the discussion of responsible leadership is the ser- vant leadership dimension of “creating value for the community”—a natural point of integration. As Mittal and Dorfman (2012) noted, this involves building strong personal relationships both inside and outside the organization by working collabora- tively with others (and valuing their differences; Goffee & Jones, 2001). From a normative perspec- tive, this dimension of servant leadership also re- quires the leader to recognize that “organizations have a moral duty not only to consider the impact of organizational action on the larger communities in which they operate, but also to constructively improve those communities as well (Reed, Vidaver- Cohen, & Colwell, 2011)” (Mittal & Dorfman, 2012, p. 557).

Van Dierendonck’s (2011) review piece on ser- vant leadership noted that empirical (though cross- sectional) support exists for the positive relation- ships between servant leadership and employee satisfaction, commitment, and performance. The main theoretical mechanisms through which this process occurs are the development of a high-qual- ity leader–follower relationship and the develop- ment of a psychological climate of trust and fair- ness (Van Dierendonck, 2011). Although this literature is in its infancy, it lends some logical support for the idea that a stakeholder-oriented ap- proach in which a leader is cognizant of the broader community in which his or her organization oper- ates (and cognizant of the organization itself as a community) would lead to positive individual- level outcomes through psychological mechanisms such as trust and ownership. In this regard, Car- meli, Gilat, and Waldman (2007, p. 972) linked employee identification to actions on the part of the firm pertaining to CSR, finding that perceived so-

cial responsibility and development had a larger effect on organizational identification than per- ceived market and financial performance, which “in turn resulted in enhanced employees’ work out- comes—adjustment and job performance.”

This review of transformational/visionary, em- powering, and servant leadership styles, while not exhaustive, lends some level of support to the idea that leadership that is more inclusive of various stakeholders within and outside the organization has important individual-level effects through var- ious psychological pathways. Stakeholders with higher levels of trust, psychological ownership in the organization, and commitment to the organiza- tion are likely to engage more with the organization at the individual/micro level, which is likely to have important long-term individual-level benefits for all involved.

At the team level, the literature on psychological safety in work teams (e.g., Edmondson, 1999) sug- gests that when team members share a belief that the team is safe for interpersonal risk taking, teams may be better able to learn and perform. Recent work by Nembhard and Edmondson (2006) sug- gests that the concept of leader inclusiveness is a key antecedent of psychological safety. Leader in- clusiveness is the extent to which a leader’s words and deeds indicate an invitation and appreciation for others’ contributions (Nembhard & Edmondson, 2006). It seems clear that leader inclusiveness is conceptually related to responsible leadership that emphasizes a stakeholder-based approach—leaders who are more sincerely interested and invite oth- ers’ contributions would be considered high on leader inclusiveness and likely to engage multiple categories of stakeholders in a given discussion.

It should be noted that we assume here that in- clusive leaders are aware of the existence of various stakeholder groups, to include them. Inclusiveness may actually have multiple dimensions, however, such as depth of inclusion and breadth of stake- holders included; future research should examine whether leader inclusiveness does, indeed, consist of multiple dimensions. In any case, based on the literature on psychological safety in work teams, there is a psychological benefit to leader inclusive- ness, which then results in greater levels of engage- ment and team learning (e.g., Nembhard & Edmond- son, 2006). This provides further support at the team level for the idea that responsible leadership using a stakeholder approach would result in psychological benefits that would then translate into positive out- comes at multiple levels of analysis.

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Another stream of research at the team level that points to the psychological benefits of a more stake- holder-oriented approach for responsible leaders is the literature on shared leadership in teams. Car- son, Tesluk, and Marrone (2007) defined shared leadership as an emergent, team-level property re- flecting the distribution of leadership influence across multiple team members. In a sample of 59 consulting teams, shared leadership predicted team performance, such that teams with higher levels of shared leadership were able to perform better (Car- son et al., 2007).

While we do not think it necessary for responsi- ble leaders to share leadership with stakeholders to be considered responsible, we do see a connection between leaders who are open to the idea of sharing leadership responsibilities and the qualities that have been attributed to responsible leadership. While this openness may have an important impact on the task outcome, there is also likely a psycho- logical process occurring that helps to solidify team members’ trust in the leader. A leader who can admit what he or she does and does not know and can confidently seek out those who are able to pro- vide the necessary knowledge and perspectives on the issue is likely to be perceived by followers as more honest, trustworthy, and effective (e.g., Ancona, Malone, Orlikowski, & Senge, 2007), resulting in a further psychological boost. The psychological bene- fits of an inclusive approach to leadership are also supported by the literature on participative leader- ship (cf. Bass, 2008).

At the organizational level, a responsible leader who values stakeholders beyond merely those in the stockholder/ownership category can have an important impact on the culture of the organization through psychological means. As noted above, Voegtlin and colleagues (2012) explicated the im- pact that responsible leaders can have on meso- level issues as they shape organizational culture and performance (e.g., through building an ethical culture, boosting the corporate social responsibility of the organization, creating opportunities for so- cial entrepreneurship for themselves, and possibly contributing directly and/or indirectly to the firm performance). Here, we suggest that the psycholog- ical benefits of a more stakeholder-oriented ap- proach create a virtuous cycle at the organizational level. As leaders are more inclusive of the perspec- tives of various important stakeholders, those stakeholders are more likely to trust the leader, feel committed to what the organization is trying to accomplish, feel more psychological ownership

over the tasks at hand, perhaps feel more of an emotional connection to the work and to the organ- ization, and be more motivated at the individual level as a result.

Organizational culture can be thought of as both a bottom-up emergent phenomenon and a top- down contextual phenomenon (e.g., Kozlowski & Klein, 2000). We argue that the responsible leader creates a cascade of positive influence from the top down by being inclusive with various stakeholder groups; this inclusive, open culture is then rein- forced from the bottom up as employees of the organization feel the impact of this leadership ap- proach. Over time, because the nature of the stake- holder approach is to build bridges and community with other groups outside the organization (i.e., not just employees), this culture will both be an exten- sion of and reinforce the connections that the re- sponsible leader has made with the broader com- munity of stakeholders (e.g., suppliers, customers, trade groups, etc.). The connection between organ- izational leadership and culture, of course, is both robust and complex (e.g., Cameron, Quinn, Degraff, & Thakor, 2006; Schein, 1992).

As the organization interfaces with a global, di- verse set of stakeholders, it is important to note the likely psychological benefits of the responsible leader’s stakeholder approach cross-culturally as well. Although to our knowledge no studies have directly examined the psychological benefits of a stakeholder approach in terms of cross-cultural leadership effectiveness, it would seem that re- sponsible leaders with an inclination to include stakeholders would be more effective in leading across cultures. Leaders who are focused solely on stockholders and short-term profit-oriented con- cerns may miss opportunities to create long-lasting connections with stakeholders across cultural boundaries. By contrast, responsible leaders who can navigate cross-cultural challenges with acumen likely understand the importance of an inclusive approach to successful cross-cultural leadership.

Mittal and Dorfman (2012), for example, offered strong support for the idea of servant leadership across cultures, suggesting that this may be an ef- fective leadership style to use in cross-cultural sit- uations. It is important to note that their results are somewhat nuanced, however, in that not all groups of cultures examined found the dimensions of ser- vant leadership to be similarly effective (for exam- ple, the humility dimension of servant leadership was not highly endorsed in Germany, Austria, and Switzerland; in contrast, this dimension was

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strongly accepted in many of the Asian countries included in the study). In any case, as leaders con- duct increasingly more business with a diverse group of stakeholders, one dimension of that diver- sity is likely to be culture, and the more practice the responsible leader has with respect to building bridges to various communities, the more skillful he or she will become, building other stakeholders’ trust and confidence in his or her leadership skills along the way.

Pathway 2: Knowledge-Based Benefits of Responsible Leadership

In addition to the psychological pathway, a sec- ond, equally important route that responsible lead- ers can take to influence outcomes is the knowl- edge-based pathway. Adopting the perspective that organizations are open systems (e.g., Allport, 1955; Giddens, 1993), we assert that responsible leaders with high consideration for stakeholders are likely well positioned both to navigate the context within which organizations operate and to encourage knowledge to flow in a functional manner within and across the boundaries of the organization among employees and external stakeholders.

Knowledge flow and management in organiza- tions has been a topic of great interest in the broader management literature over the past two decades (e.g., Hansen, Mors, & Lovas, 2005; Nonaka & Takeuchi, 1995; Spender & Grant, 1996; Tsai, 2001), in large part because knowledge is an invalu- able source of the firm’s ability to innovate and deliver value (cf. Grant, 1996; Nonaka & Takeuchi, 1995). We define the concept of knowledge sharing somewhat broadly, in keeping with Srivastava, Bar- tol, and Locke (2006), as any sharing of task-rele- vant ideas, information, and suggestions among the parties involved. Additionally, we adopt Nonaka’s (1994) theory that new knowledge is created when interaction occurs between two basic types of knowledge (tacit and explicit), giving rise to four types of knowledge creation (internalization, so- cialization, articulation, and combination). Thus, knowledge sharing between and among organiza- tional stakeholders is critical for knowledge cre- ation and, more broadly, innovation. Despite the need for integration between theories of responsi- ble leadership and the literature on knowledge sharing and creation, as Bird and Oddou (2013) noted, there is a surprising dearth of research ad- dressing the connection between these two topics. We assert that a knowledge-based pathway is the

second route through which responsible leaders with high consideration for stakeholders can func- tion effectively across levels of analysis; in the fol- lowing section, we briefly review existing research that supports this claim.

One central focus of the knowledge sharing and transfer literature at the individual and dyadic lev- els of analysis has been to better understand how to encourage individuals within organizations to share the knowledge they have with others to form the basis of innovative new ideas (e.g., Nonaka, 1994). Motivating factors such as incentives, goals, trust between knowledge provider and recipient, and norms regarding reciprocity of communication have been examined in the knowledge sharing lit- erature (e.g., Bartol & Srivastava, 2002; Davenport & Prusak, 1998; Hansen et al., 2005; Quigley, Tesluk, Locke, & Bartol, 2007), but as noted above, rela- tively few studies in the knowledge sharing litera- ture or in the leadership literature have examined the role of leadership as a motivating factor in the knowledge sharing process. We would expect that responsible leaders taking a CSR approach would, in fact, affect whether organizational stakeholders choose to share or not share knowledge.

This was indeed the case in a field study con- ducted by Srivastava and colleagues (2006), who found that empowering leadership was positively related to knowledge sharing and subsequent per- formance of management teams. In other words, knowledge sharing was a key mediating variable through which empowering leadership influenced performance. While responsible leaders taking a CSR approach would not necessarily adopt an em- powering leadership style, we expect that respon- sible leaders who communicate with and balance the needs of various stakeholders would likely model and (either intentionally or unintentionally) encourage knowledge sharing among organiza- tional stakeholders themselves. Recent research in the domain of leader-member exchange (LMX) sim- ilarly suggests that leaders who have high-quality relationships with followers encourage employee knowledge sharing (e.g., Carmeli, Atwater, & Levi, 2011). Therefore, we expect that responsible lead- ers who effectively involve multiple stakeholders will likely help to motivate those stakeholders, both within and outside the organization, to share knowledge with one another, thus improving indi- vidual-level outcomes at work.

The knowledge sharing pathway will also aid responsible leaders who take a more CSR-oriented approach in that we expect there to be a positive

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impact on processes and outcomes at the work group/team level. Some stakeholders are likely to be more or less formally organized in groups or teams, and the issues associated with knowledge sharing become more complex as responsible lead- ers consider interactions among team members. Stasser and Titus (1985), for example, developed the concept of “hidden profiles” to describe the problem of group decision making when some in- formation is shared among group members and other information remains unshared, creating shared information biases and leading to poor de- cisions. This literature has revealed that individu- als are more likely to exchange information they already share rather than information that is unique and could lead to better decisions (see Mesmer- Magnus & DeChurch, 2009, for a review).

One solution to this problem is the deliberate integration of the unique knowledge of individual group members to allow optimal decisions to be realized. Unshared information is more often novel, and thus incorporating it into decision mak- ing leads to more fully informed and innovative outcomes. Although no published studies to date address this, the hidden profile issue likely also exists between stakeholder groups. For responsible leaders to fully leverage the latent knowledge within and among stakeholder groups, they must first be aware of this issue, and consider ways in which different groups might communicate more effectively with the leader and among themselves to lead to the development of new knowledge and innovation.

Groupthink is another example of a classic “pro- cess loss” issue in the teams literature that might be effectively mitigated with a responsible leader’s CSR approach (Janis, 1972). Groupthink is caused, in part, by the conformity of thinking that arises from a lack of cognitive diversity among team mem- bers. We would expect a responsible leader taking a CSR approach to be better able to integrate diverse perspectives in decision-making processes, leading to knowledge sharing within and across various teams and ultimately circumventing the process loss issues caused by groupthink. Our discussion of the impact a responsible leader may have on team processes and outcomes because of the knowledge- oriented pathway is somewhat limited here, but we believe this could be an extremely fruitful avenue for future research.

At the organizational level, responsible leaders taking a CSR approach serve in a boundary-span- ning capacity—a sort of external liaison—to iden-

tify, calibrate, and process information and cues coming from the external environment generally and key stakeholders in particular. In their role as boundary spanners, responsible leaders leverage the knowledge-based pathway to improve organi- zational outcomes. Such a role is especially valu- able considering the increasing interaction between firms and nongovernmental stakeholders (NGOs). These interactions may be conflicting, with NGOs seeking to call attention to the shortcomings of corporate social and environmental performance. They might also cooperate with firms and NGOs, engaging in some form of partnership or collabora- tion (Yaziji & Doh, 2009). Closer relationships with NGOs may provide corporations with access to dif- ferent skills, competencies, and capabilities than those that are otherwise available within their or- ganization or that might result from alliances with for-profit organizations.

According to Rondinelli and London (2003), cross-sector alliances—collaborative relationships among NGOs and corporations—may offer oppor- tunities for corporations to achieve the legitimacy and develop the capabilities needed to respond to increasing pressure from stakeholders to address environmental and social issues (Waddock, 1988, 1991). For example, Doctors Without Borders pro- vides a reliable, efficient, and trustworthy partner for pharmaceutical companies in distributing medica- tions in developing countries and conveys poten- tial reputation benefits (or costs) that are idiosyn- cratic to its status as a nonfirm, nongovernmental stakeholder. Yet, to identify and recognize the po- tential value of these relationships, a responsible leader must be attuned to signals from the external environment and able to identify opportunities that emanate from those signals. The leader must also listen to and/or share leadership with other organ- izational members who might also be in tune with such signals.

Some scholars have even advocated for engage- ment with “fringe” stakeholders to develop more imaginative and creative approaches to tackling major challenges (Hart & Sharma, 2004), arguing that the knowledge required to engage in “compet- itive imagination” increasingly exists outside of the firm and even beyond traditional corporate com- munities. By reaching for these sometimes mar- ginal fringe stakeholders, firms can develop a dif- ferentiated perspective that is attuned to social movements and trends and position themselves on the leading edge of these transformations in ways that create economic and social value (Hart &

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Sharma, 2004). Hart and Sharma (2004) suggested that empathy with those on the margins is both good social policy and a potential contributor to long-term competitive advantage. Interestingly, they explicitly advocate moving beyond large, powerful salient stakeholders to those that are less visible, prominent, and explicitly influential. An- other way to describe these stakeholders is as “la- tent,” in that their immediate power and urgency is not apparent but rather is in an embryonic phase or form, poised to emerge at some subsequent pe- riod (e.g., Mitchell et al., 1997).

Responsible leaders who are oriented toward serving as a pathway through which knowledge and insight flow are clearly in a stronger position to capitalize on the engagement with external stake- holders who might otherwise go unnoticed (at least until they pose challenges or threats to the firm). These latent stakeholders may provide cues to help leaders and their firms increase awareness and ap- preciation of important trends. Through engage- ment with these peripheral stakeholders, firms and leaders may be less likely to be blindsided by un- foreseen developments that are outside the scope of their typical perspectives. As part of this “early warning system,” engagement with these stake- holders may provide partial insulation from social movement action and NGO advocacy (Doh, Law- ton, & Rajwani, 2012; Lawton, Doh, & Rajwani, 2014). Responsible leaders who see their role as brokering information and knowledge and creating more permeable firm borders have the capacity to acquire and distribute knowledge that can be help- ful and supportive of firm goals and of a culture of social responsibility and sustainability. Once that knowledge is assembled or aggregated, responsible leaders can also serve as an internal advocate and carrier for knowledge flow and distribution; shar- ing this macro-level knowledge internally within their organizations with the appropriate individu- als and teams will assist in the decision-making process at lower levels of analysis.

Hence, responsible leadership can create value and improve decision making at the organizational level through the process of boundary spanning with external actors and engaging with latent stake- holders, and then incorporating the perspectives and knowledge from those stakeholders into firm- level decision making. In addition, as discussed above, responsible leaders foster internal informa- tion sharing, including uncovering and disseminat- ing novel “hidden” knowledge, promoting multiple creative options, and creating a culture of overall

knowledge sharing. Therefore, the knowledge- based pathway clearly represents a set of mecha- nisms that responsible leaders taking a broad ap- proach to stakeholders can use to positively influence outcomes at multiple levels of analysis. We acknowledge that this perspective is somewhat idealized; in reality, it must be balanced with time management, resource constraints, and bounded rationality (Voegtlin et al., 2012).

Last, we note that the psychological and knowl- edge-based pathways are not entirely discrete or mutually exclusive, although we have discussed them separately here for the purposes of clarity. Rather, they can and do coexist, either in a tempo- rally concurrent or sequential fashion. That is, be- havior and action resulting from the psychological pathway may precede that which emanates from the knowledge-based pathway (e.g., the Walmart example we discuss below) or vice versa (the Coke and DuPont examples, also below). Moreover, as shown in Figure 1, these cases underscore the re- ality that these pathways are often mutually rein- forcing, dynamic, and recursive, such that move- ment on one begets action on the other and vice versa.

In the next section we provide three brief exam- ples from the world of corporate sustainability to illustrate our perspective and the explanatory power of the psychological and knowledge-based pathways.

RESPONSIBLE LEADERSHIP PATHWAYS: EXAMPLES FROM CORPORATE SUSTAINABILITY LEADERSHIP

Sustainability has emerged as an important soci- etal issue and one that corporations have begun to incorporate into their business strategy and their broader social engagement (Bansal, 2002; Orlitzky, Siegel, & Waldman, 2011). Organizational leaders are recognizing that addressing sustainability chal- lenges may improve their standing with their stake- holders and potentially translate into a stronger reputation (Flammer, 2013). Significant variance exists, however, in what firms and leaders believe are the potential benefits of committing to sustain- able management practices (Aguilera, Rupp, Wil- liams, & Ganapathi, 2007). Anecdotal evidence sug- gests that individual leaders can have a profound impact on a company’s decision to move affirma- tively toward a more sustainable business model.

Often, a crisis or personal epiphany is the cata- lyst that drives a leader—and the company—in the

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direction of a sustainable future. In both cases, the psychological and knowledge-based pathways are likely at work. A personal epiphany may occur because of new knowledge or insight the leader has acquired, perhaps from an external stakeholder. The psychological pathway is also involved, begin- ning with the CEO or top management team mem- ber(s) undergoing a change of perspective and then appealing to different levels of the organization to support that shift (e.g., Walmart). In the case of a crisis or watershed event, the knowledge-based pathway may prompt a leader to initiate or accel- erate actions (e.g., Coke and DuPont). As responsi- ble leaders attempt to galvanize support for their decisions, the psychological pathway becomes crit- ical. In most instances, these processes are initiated at the level of the organizational leader and “trickle down,” but in some instances they emanate both from senior levels and from the bottom up. As we noted above, the psychological and knowledge- based pathways are not mutually exclusive; in- deed, they likely coexist and may even be mutually reinforcing.

In this section, we briefly highlight three compa- nies and their leaders, each of whom demonstrates some of the mechanisms we described above regard- ing pathways of responsible leadership, through ei- ther knowledge sharing/dissemination or psycholog- ical enrichment—or both. Notably, these examples are somewhat stylized, as they are intended to pro- vide practical illustrations of the pathways de- scribed above. In addition, much of our discussion focuses on the knowledge-based pathway (or some combination of psychological and knowledge- based), because these cases are based on secondary data, and the knowledge pathway is more easily observable from that perspective.

Walmart, the Walton Family, and Lee Scott

The story of Walmart’s conversion to sustainabil- ity is legendary. Although Walmart introduced green product labeling beginning in the late 1990s, those steps backfired when consumers perceived Walmart’s commitment to be superficial and cur- sory (Plambeck & Denend, 2008).

According to lore, the real change happened when Rob Walton, son of founder Sam Walton, was confronted at the end of a scuba diving trip in Costa Rica by Peter Seligmann, co-founder and CEO of Conservation International, who said, “We need to change the way industry works. And you can have an influence” (Gunther, 2006, p. 43). As it turns

out, there was a strong conservationist streak in the family already: The family often took camping va- cations, younger brother John was a conservation- ist, and Rob’s son Sam, who worked as a Colorado River guide, sat on the board of the Environmental Defense Fund. A few years earlier, after a trip to Africa, Rob Walton had begun setting aside family resources for conservation causes, but Seligmann sug- gested that Walmart could do more by leveraging the power of its commercial influence (Gunther, 2006) to become a catalyst for environmental change across its industry peers and among its extensive supplier base, the largest in the world (Gunther, 2006). This interaction reflects the sometimes pow- erful role a key outside stakeholder and a personal relationship can play in transforming the way com- panies and their leaders gain knowledge and in- sight—and a resulting reorientation.

According to Plambeck (2007, p. 18), Walmart’s first outside CEO, Lee Scott, strongly supported this agenda. Some of this support reflected the deep Christian religious beliefs of the Waltons and Scott:

In October 2005, in an auditorium filled to capacity, Wal-Mart President and CEO Lee Scott made the company’s first speech to be broadcast to 1.6 million employees in all 6,000-plus stores worldwide—and shared with its 60,000-plus suppliers. Scott an- nounced that Wal-Mart was launching a sweeping business sustainability strategy to dramatically re- duce the company’s impact on the global environ- ment. . . . He argued that “being a good steward of the environment and being profitable are not mutu- ally exclusive. They are one and the same.” Scott also committed Wal-Mart to three aspirational goals: to be supplied 100% by renewable energy, to create zero waste, and to sell products that sustain our resources and the environment.

Walmart made its biggest sustainability impact by requiring its thousands of global suppliers to sign on to stringent environmental requirements. Devel- opment of these standards took place as part of broad cooperation with environmental NGOs, par- ticularly the Environmental Defense Fund. Tyler Elm, Walmart’s vice president and senior director of corporate strategy and business sustainability, remarked at the time, “We recognized early on that we had to look at the entire value chain. If we had focused on just our own operations, we would have limited ourselves to 10 percent of our effect on the environment and eliminated 90 percent of the op- portunity that’s out there” (Plambeck, 2007, p. 18).

Since that time, Walmart has embarked on what some consider to be a profound transformation of

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its operations and those of its suppliers, initiating a series of global environmental initiatives that have had broad and deep direct and secondary effects on its internal organization, customers, suppliers, and other stakeholders. According to Walmart’s (2012) Global Responsibility Report, company achieve- ments included reducing waste by 80%, expanding locally grown produce sold, expanding the Wom- en’s Economic Empowerment Initiative, using 1.1 billion kilowatt-hours of renewable energy (more than 38 U.S. states combined), developing an inte- grated sustainability index, expanding its global direct farm program, and increasing diversity and inclusion for women and minorities (Walmart, 2012). Walmart now ranks suppliers—large and small—on their sustainability efforts and has be- come an active participant in global efforts to sup- port sustainably sourced forest products, marine fish and aquatic species, and palm oil, reflecting a level of “responsibility” that goes beyond the com- pany’s own organizational boundaries. Most re- cently, Walmart has embarked on an effort to green the production and packaging of children’s toys.

Walmart’s leadership around sustainability dem- onstrates elements of the psychological and knowl- edge-based pathways of responsible leadership. The family founding of the company and its reli- gious motivations for conservation suggest strong psychological pathways through which the firm influenced its internal and external stakeholders at multiple levels. The initial process occurred at the most senior level of the organization and within the founding family and top executives. Subsequently, however, the move toward responsible leadership cascaded down and across the organization to in- clude even the retail stores and suppliers. While the psychological pathway remained strong and salient, Walmart and its leaders—the Walton fam- ily and Lee Scott—leveraged the knowledge-based pathway to engage external stakeholders such as the Environmental Defense Fund and transfer and disseminate the knowledge and insights of those stakeholders—and the powerful logic of moving to a more sustainable future—to both internal and external constituencies (e.g., employees, custom- ers, and suppliers).

Coca-Cola and Neville Isdell

In the mid-2000s, Coca-Cola was accused of us- ing water that contained pesticides in its bottling plants in Kerala, India, and of illegal water dis- charges and diversion. An environmental group,

the Center for Science and Environment (CSE), found that 57 bottles of Coke and Pepsi products from 12 Indian states contained unsafe levels of pesticides (Mather, Johnson, & Kumar, 2003). Kera- la’s minister of health, Karnataka R. Ashok, im- posed a ban on the manufacture and sale of Coca- Cola products in the region. Although subsequent tests suggested that the amount of pesticides found in Pepsi and Coca-Cola drinks was harmless to the body, Coca-Cola’s reputation had been tarnished. In May of 2007, a team of investigators led by the India Resource Center released a report on viola- tions by a Coca-Cola bottling plant in Sinhachawar, Uttar Pradesh, documenting wastewater discharges into surrounding agricultural fields and a canal that feeds into the Ganges River as well as illegal dump- ing of sludge on the plant’s property. As such, Coke’s move toward responsible leadership began at the societal and organizational levels, with broad political, economic, and cultural forces exerting specific pressures for change.

These developments also had a profound impact on Coke’s then CEO, Neville Isdell. Although Isdell had a strong personal commitment to environmen- tal sustainability, the company had not launched any major initiatives until this crisis. While Isdell had not operationalized his personal psychological commitment to sustainability, this crisis—channel- ing new knowledge and insight from external par- ties—helped activate the dormant psychological pathway.

One early move was to establish an in-house team of sustainability advocates, operating almost as an in-house NGO. According to Kert Davies, then research director at Greenpeace, this initiative was genuine and authentic: “The inspiration and the perspiration are real” (Gunther, 2008, p. 68). Such a step was a somewhat radical acknowledgment of the need to broaden the knowledge-based pathways available to the organization and widen the scope of knowledge and expertise available to the firm as it tackled this crisis.

Isdell underscored the need to include multi- ple stakeholders to address challenges of this type to leverage the knowledge these parties could bring to the table. Shortly after the India debacle, he remarked:

No single company or organization has all the an- swers or holds ultimate responsibility, but we all can do our part to conserve and protect water re- sources. . . . Our company will need time and coop- eration from our bottlers, our suppliers and our con- servation partners to accomplish the goal of

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replacing the water we use. We will be open about our progress and engage others to better understand what it takes. (World Wildlife Fund, 2007)

During the remaining years of his tenure at Coke, Isdell undertook a series of sustainability initia- tives that engaged internal and external stakehold- ers and, according to former critic Greenpeace, had a measurable impact on the world’s environment. These included providing financial support to bot- tlers to finance new wastewater equipment, engag- ing with NGOs such as Greenpeace, World Wildlife Fund (WWF), and others, and moving toward water neutrality in its global operations. The company also undertook a global risk assessment to persuade its bottlers to join the initiatives and forestall an- other crisis such as the one in India. Muhtar Kent, Isdell’s successor as the CEO of Coke, has contin- ued this legacy of environmental sustainability and has tried to instill an ongoing culture of sustain- ability at the organization, suggesting some activity through the psychological pathway we describe.

Kent built on Isdell’s initiatives by deepening Coke’s partnerships with bottlers and suppliers, engaging employees in sustainability efforts, and integrating sustainability with Coke’s other CSR initiatives. In the meantime, Isdell became chair- man of the board of the World Wildlife Fund and has devoted his retirement to advancing the sus- tainability cause; Kent and Isdell continue to work together, as Coke and WWF have now forged a comprehensive partnership around climate change, called the “Climate Savers” campaign. Interest- ingly, Kent frequently remarks that he is Coke’s chief sustainability officer: “I say that the chief sustainability officer of the Coca-Cola Company is me. . . . That’s my responsibility. It starts at the top, and it is driven and permeates through the entire organization from the top” (Shapiro, 2010).

Coca-Cola’s leadership around sustainability demonstrates both the knowledge-based and psy- chological pathways as mechanisms through which responsible leaders effect change. Although the cat- alyst was primarily knowledge-based, the ensuing organizational changes employed both pathways. Both Isdell and Kent assumed responsibilities for harnessing external cues and interests in addition to marshaling internal information and knowledge exchanges to leverage and influence employees and other stakeholders. Moreover, Coke’s relationship with bottlers, on which it was and is mutually dependent, also reflected this important knowl- edge-sharing and influencing process. In terms of

the psychological pathway, the personal experi- ences and dedication of Coke’s leaders offered the potential to spill over to the organization’s culture, although it is difficult to discern the depth and breadth of that effect from secondary sources alone. It is clear, however, that both Isdell and Kent em- bodied a deep personal commitment to sustainabil- ity, and that those psychological commitments were increasingly used to galvanize Coca-Cola’s employees. Ultimately, the knowledge-based and psychological pathways appear to have converged in these two leaders’ ability to mobilize Coca- Cola—and many other individuals and organiza- tions—to this mission of responsible environmen- tal leadership.

DuPont and Chad Holliday

DuPont was one of the codevelopers of ozone- depleting chlorofluorocarbons (CFCs) used in re- frigerants and aerosol spray cans, and in the 1980s the company was one of the largest producers of CFCs in the world, with a 25% market share. It was also the target of aggressive criticism from NGOs such as Greenpeace, whose members scaled one of its plants facing a highway (on which thousands of drivers passed each day) to hang a banner that read, “Number 1 in contributing to destruction of the ozone layer.” Like Coca-Cola, DuPont faced a seri- ous crisis, and leaders sought to change the context and process for decision making. Again, both the knowledge-based and psychological pathways pro- vided mechanisms to facilitate change.

DuPont has made a great deal of progress toward sustainability in the ensuing years, first under the leadership of Chad Holliday and then under Ellen Kullman. The company’s recent strong commit- ment to environmental sustainability has included phasing out the production of CFCs, dramatically improving energy efficiency at its plants around the world, substantially reducing water use and waste, and developing new energy-saving products and services such as Tyvek building insulation. DuPont has since received a number of awards for its sus- tainability accomplishments. For his part, Holliday has served on numerous NGO boards and govern- ment committees, including the ClimateWorks Foundation, and acted as co-chair of the UN Secre- tary-General’s High-Level Group on Sustainable Energy for All.

From 2000 to 2010, when he retired, Holliday frequently commented on his philosophy and ra- tionale for moving DuPont toward a more sustain-

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able future. His approach reflected elements of the information pathway we describe above. After his retirement from DuPont in 2010, Holliday gave an interview in which he discussed his commitment to sustainability, how he engaged the entire DuPont organization, and how he looked outside of tradi- tional organizational boundaries for new ideas (Rogers, 2012).

Regarding the overall sustainability challenge, he remarked, “In the United States . . . we have to do something different. Somewhere along the line, people will wake up to the reality that the world has changed and that they need to adapt” (Rogers, 2012, p. 4). Regarding the need to infuse the organ- ization with new and diverse information, he suggested:

Once ideas reach a certain point of development, you have to find ways to disseminate them, because you limit their growth if you keep them protected. DuPont handled this by moving people around its organization. . . . It’s critical to start with concrete examples. If you do that, people will be more likely to listen to your theoretical approach. All my expe- rience at DuPont suggests that it’s the stories that really capture people’s imagination. . . . At DuPont, we recognized great achievements and really high- lighted good ideas so people would understand what the company valued. We gave out sustainable- growth awards every year. We had hundreds of sub- missions, and we established an external board to evaluate a short list of about 12 ideas. (Rogers, 2012, p. 6)

As a responsible leader, Holliday used the knowl- edge-based pathway to increase the psychological commitment of DuPont’s employees to his sustain- ability initiatives. Like Coke, DuPont also recog- nized the need to open up its organizational bound- aries and engage with nontraditional stakeholders, such as NGOs. Holliday noted:

Twice a year, DuPont invited about 10 NGOs to a meeting with about 10 of the company’s business leaders. . . . The first meeting we had was tough, but it was amazing how the experience opened us up. It helped us understand the sensitivities in a variety of areas, as well as how NGOs thought, and we went about accomplishing our strategy differently as a result. Sometimes we actually identified market opportunities because of the dialogues. . . . These experiences also enabled us to avoid a lot of con- flicts because we learned where the “hot spots” were. And we developed such good relationships with NGOs that they were willing to help us. When DuPont did face a situation and the press called these NGOs, they were able to explain our views

because they knew us. But you have to put some chips in the bank with NGOs. It’s a multiyear pro- cess: they need time to really get to know the com- pany, and companies need to know NGOs as well. (Rogers, 2012, p. 8)

Holliday indicated that he was committed to gain- ing diverse outside perspectives:

Leaders should spend quality time with people out- side their industries—people who think differ- ently. . . . At DuPont, we looked for opportunities to send senior businesspeople into communities where there were conflicts between commercial in- terests, civil society, and government. The idea was to help our people develop leadership skills by helping communities reach solutions. DuPont had no stake in these conflicts; we just wanted our staff to get experience dealing with complicated issues where multiple stakeholders had differing interests. (Rogers, 2012, p. 8)

This passage underscores a fairly substantial reori- entation in the process through which DuPont as an organization acquired, processed, and dissemi- nated knowledge from and to its stakeholders. Based on Holliday’s comments, it seems that Du- Pont was actually engaging in an organization-wide responsible leadership development initiative with the explicit purpose of training leaders to be able to incorporate the views of multiple stakeholders in their decision-making processes.

Ellen Kullman, who succeeded Holliday as chair and CEO of DuPont, has maintained DuPont’s com- mitment to sustainable enterprise. In a recent inter- view with Leaders magazine (2012, p. 20), she remarked:

When I joined DuPont in the 1980s, sustainability was very important to the then CEO. He called him- self a chief environmental officer—he was a real pioneer. Chad Holliday also championed sustain- able development, so it’s embedded now in what we do. We not only think about footprint reduction when we think about sustainability; we think about it from a numerator standpoint, how we create prod- ucts that keep the environment or the world safe.

DuPont’s experience with sustainability leadership exhibits mostly elements of the knowledge-based pathway, although the psychological pathway played an important role as well. As a science- based organization where knowledge and informa- tion are paramount, and in the face of a change in broad, external conditions and expectations, DuPont demonstrated an openness to outside infor- mation and influences—even when these external

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ideas presented as potentially threatening and crit- ical. This willingness to engage with critical exter- nal stakeholders was a hallmark of DuPont’s sus- tainability experience. Indeed, DuPont appeared to sometimes engage with “fringe” stakeholders to gain important knowledge (Hart & Sharma, 2004). In addition, DuPont pursued several innovative mechanisms for sharing knowledge and encourag- ing participatory development of the sustainability program. The personal commitment and interest of DuPont’s leaders also suggest activity along the psychological pathway, although that influence, again, is not as clear or evident as the knowledge- based pathway.

It is important to reiterate that the examples above reflect only the positive attributes of respon- sible leadership exhibited by these leaders. Each has also been faulted for several mistakes, errors, and even transgressions. We have deliberately and intentionally included only those leadership attri- butes that help to reveal the pathways of influence of responsible leadership that we outlined above.

Table 1 provides a summary of these cases, not- ing the leaders involved, the primary impetus that resulted in an increase in responsible leadership, the main pathways through which responsible leadership had an impact, and the levels of affected outcomes.

CONCLUSIONS AND FUTURE RESEARCH

It is clear that our understanding of the concept of responsible leadership is evolving and becoming more defined as more scholarship appears on the subject. We have tried here to further link the re- sponsible leadership (and the broader leadership) literature to stakeholder theory by explicating the pathways through which responsible leaders influ- ence outcomes at multiple levels of analysis within organizations. Further, we have attempted to show how responsible leaders who take an open and inclusive approach to understanding and incorpo-

rating the views of a diverse set of stakeholders into executive decision making may have a positive im- pact. We have built on prior recent work in this area (e.g., Miska et al., 2013; Pless et al., 2012; Stahl et al., 2013; Voegtlin et al., 2012) by proposing the pathways (psychological and knowledge-based) through which this process occurs. We reviewed literature from related fields (e.g., leadership, deci- sion making, etc.) to help support our arguments. Last, we used three recent examples of leaders at Walmart, Coca-Cola, and DuPont to further illus- trate the theoretical pathways we proposed.

It should be noted that several scholars have proposed that CSR is most effective when it ties closely to the business capabilities of the company and complements the firm’s business and corpo- rate-level strategies (Siegel, in Waldman & Siegel, 2008). As noted by Porter and Kramer (2006, p. 89– 90), the “most strategic CSR occurs when a com- pany adds a social dimension to its value proposi- tion, making social impact integral to the overall strategy.” Further, Pearce and Doh (2005) suggested that collaborative social initiatives work best when they leverage the core business competencies of the firm. The pathways approach we have described provides one specific set of mechanisms that may be used to advance this approach.

Much work remains to be done as we continue to grapple with understanding the essence of respon- sible leadership. We encourage future scholarship in this area to focus on process issues: If responsi- ble leaders are, indeed, more effective, how do they manage these processes? As we noted in our dis- cussion of Voegtlin and colleagues’s (2012) work, the discursive decision process to reach consensus that responsible leaders use seems somewhat ten- uous and inconsistent with some leadership the- ory. In our ever-changing, fast-paced, global world, leaders are increasingly asked to make real-time decisions without the luxury of consultation. Given these kinds of demands on their time (and other resources), how can responsible leaders effectively

TABLE 1 Corporate Sustainability and Responsible Leadership Pathways at Walmart, Coca-Cola, and DuPont

Company Leaders Initial prompt Pathway Relevant levels of action

Walmart Rob Walton Lee Scott

Personal and individual Primarily psychological Meso and individual

Coca-Cola Neville Isdell Muhtar Kent

Event-driven but subsequently embedded Psychological and knowledge- based

Macro, meso, and individual

DuPont Chad Holliday Ellen Kullman

Event-driven but subsequently embedded Primarily knowledge-based Macro and meso

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communicate with the stakeholders who are criti- cal to their ability to make good decisions?

Finally, future work should examine empirically whether the pathways we have proposed here are as important as theory would suggest—critically, the linkages and interactions among these path- ways, leadership characteristics, and outcomes need attention. In particular, we have suggested that our model portrays a reflexive and dynamic process, but we have provided only anecdotal evi- dence of that. We also make some inferences about succession and the influence of prior leaders on their successors (e.g., Holliday and Kullman, Isdell and Kent, and Walton and Scott), although this very im- portant process deserves more comprehensive analy- sis and scrutiny.

Future research should also examine whether there are best practices or preferred methods by which leaders can manage the flow of knowledge with critical stakeholders. Even more broadly, we still need to know more about how responsible leaders prioritize stakeholder groups such that they can manage communication and knowledge-shar- ing in a logical fashion. It is clear that much work remains to be done on the practical side of respon- sible leadership—which leads one to ask, what can we do, on the academic/research side, to provide advice and/or assistance to those leaders who wish to be considered as “responsible” as part of their legacy? These and other questions must continue to be examined in future research on responsible lead- ership. We hope to have provided a start in this direction.

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Jonathan P. Doh ([email protected]) is Ramm- rath Professor in International Business, faculty director of the Center for Global Leadership, and professor of management at the Villanova School of Business. His research interests include strategies for emerging mar- kets, corporate-NGO interactions, and global corporate responsibility. His most recent book, Aligning for Advan- tage: Competitive Strategies for the Political and Social Arenas (with Thomas Lawton and Tazeeb Rajwani), was published by Oxford in April. He is 2014 program chair for the Academy of Management Organizations and Natural Environment Division and incoming editor in chief of Journal of World Business. He received his PhD in strategic and international management from the George Washington University.

Narda R. Quigley ([email protected]) is an associate professor and chair of the Management and Operations Department at the Villanova School of Busi- ness. She earned her PhD in organizational behavior from the Robert H. Smith School of Business at the University of Maryland, College Park. Her research interests include emergent and cross-cultural leadership, multilevel is- sues, knowledge sharing, and groups and teams in organizations.

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