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Implementing Environmental, Social, and Governance (ESG) Principles in Organizations: The Role of Leadership and Impacts on Corporate Financial Performance

Ajayi, Oluseyi Adedayo
http://orcid.org/0000-0002-8424-7742
http://rave.ohiolink.edu/etdc/view?acc_num=case171235193083631

Abstract Details

2024, Doctor of Philosophy, Case Western Reserve University, Management.
There is a growing body of literature highlighting the significance of adopting Environmental, Social, and Governance (ESG) principles, which contribute positively to an enterprise's value. The influence of stakeholder theory has prompted global organizations to increasingly embrace ESG principles, garnering heightened attention in recent years, a shift from the past. However, there is a paucity of literature on empirical studies investigating the impact of organizational behaviors on the decision-making process of adopting ESG principles. This dissertation employs a sequential mixed-method research design to explore the effects of leadership styles on the perceived importance of ESG factors in organizations. Initially, an exploratory qualitative inquiry, involving semi-structured interviews with thirty respondents, examines the factors influencing the decision to adopt and implement social-related issues in organizations. Subsequently, an archival study delves into the mechanisms through which ESG indirectly influences firm profitability via employee satisfaction. The research also investigates the direct effects of authentic and ethical leadership on perceptions of ESG. Informed in general by the upper echelons theory and the stakeholder theory of the firm, the study considers leadership authority as a factor driving the embrace and implementation of ESG principles. Leaders exert influence in allocating organizational resources to achieve desired outcomes. Additionally, other factors such as costs, regulation, and reputation play a role in the decision to adopt ESG-related policies. The second phase of the dissertation explores the direct and indirect effects of positive performance indicators of environmental, social, and governance aspects on corporate financial performance (CFP) through employee satisfaction (ES) among S&P 500 companies from 2015 to 2019. The findings indicate a significant positive impact of employee satisfaction on corporate financial performance, mediating the social aspects of ESG and CFP. This underscores the importance of employee satisfaction as the mechanism through which the social element of ESG influences corporate financial performance. The third study informed by the leadership theories of authentic and ethical leadership investigates the direct effects of authentic and ethical leadership approaches on the perceptions of ESG among 302 managers and executives. The results indicate that both ethical and authentic leadership are associated with the perception of environmental, social, and governance elements of ESG. These findings have crucial implications for leadership development and their role in fostering organizational sustainability and responsible practices.
Timothy Fogarty, Ph.D. (Committee Chair)
Olubunmi Faleye, Ph.D. (Committee Member)
Yunmei Wang, Ph.D. (Committee Member)
Philip Cola, Ph.D. (Committee Member)
169 p.
Management
stakeholder theory, organizational behaviors, decision making, upper echelons theory, corporate financial performance, employee satisfaction, ethical leadership, authentic leadership, perceptions of environmental social and governance (ESG).

Recommended Citations

Citations

  • Ajayi, O. A. (2024). Implementing Environmental, Social, and Governance (ESG) Principles in Organizations: The Role of Leadership and Impacts on Corporate Financial Performance [Doctoral dissertation, Case Western Reserve University]. OhioLINK Electronic Theses and Dissertations Center. http://rave.ohiolink.edu/etdc/view?acc_num=case171235193083631

    APA Style (7th edition)

  • Ajayi, Oluseyi. Implementing Environmental, Social, and Governance (ESG) Principles in Organizations: The Role of Leadership and Impacts on Corporate Financial Performance. 2024. Case Western Reserve University, Doctoral dissertation. OhioLINK Electronic Theses and Dissertations Center, http://rave.ohiolink.edu/etdc/view?acc_num=case171235193083631.

    MLA Style (8th edition)

  • Ajayi, Oluseyi. "Implementing Environmental, Social, and Governance (ESG) Principles in Organizations: The Role of Leadership and Impacts on Corporate Financial Performance." Doctoral dissertation, Case Western Reserve University, 2024. http://rave.ohiolink.edu/etdc/view?acc_num=case171235193083631

    Chicago Manual of Style (17th edition)

case171235193083631
741
© 2024, all rights reserved.
This open access ETD is published by Case Western Reserve University School of Graduate Studies and OhioLINK.