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Professors win award for paper on responsible management
The world’s top professional association for scholars has honored two Thunderbird professors for their research showing that business leaders deliver better financial results when they put the greater good first.
Thunderbird professors Mary Sully de Luque, Ph.D., and Nathan Washburn, Ph.D., learned June 3 that a joint study they co-authored with researchers at Arizona State University and the University of Pennsylvania finished as the second runner-up to the 2008 organizational management paper of the year from the Academy of Management.
The paper, “Unrequited Profit: How Stakeholder and Economic Values Relate to Subordinates' Perceptions of Leadership and Firm Performance,” was published in the December 2008 issue of Administrative Science Quarterly.
The study of approximately 600 CEOs and their management teams in 15 countries found that business leaders who put the greater good first actually achieve better firm performance than managers who focus solely on profit maximization.
Executives often emphasize profits, thinking their decisions will predominantly benefit firm performance. However, the research shows that leaders who balance a wider range of stakeholder needs are more likely to be viewed as visionary leaders, and these leaders actually achieve greater profits.
The 25-page study reveals that it behooves executives to emphasize values and vision that pertain to employees, customers and the greater community — along with shareholders.
“Executives should not disregard profit maximization and rational decision-making,” Sully de Luque said. “But it is most advantageous for leaders to give attention to balancing the concerns of multiple stakeholder groups to make better decisions and successfully lead their organizations.”
A committee of 10 people nominated award finalists from among all the papers published in eight leading journals in 2008.
"This paper is pretty remarkable in its ability to empirically show that CEO values affect top managers’ leadership perceptions and their own behavior, which have an impact on firm performance,” one committee member wrote about the second runner-up. “This paper also offers a critial lesson for managers at all levels — that overemphasizing economic efficiency and profit maximization can have unintended negative consequences for subordinate behavior and collective performance."
Thunderbird President Ángel Cabrera, Ph.D., has cited the study as evidence that ethical leaders can serve the greater good in society without shortchanging shareholders.
“The process of selecting candidates for this award is extremely competitive,” Cabrera said. “The recognition of Mary Sully de Luque and Nathan Washburn shows that their research is having an impact in the academic community and hopefully in the business community as well.”