How Top Management Team State Orientation Influences SOEs’ Corporate Social Performance

Building upon social role theory and upper echelons theory, we seek to advance research on SOEs and strategic leadership by examining how major aspects of SOEs’ corporate social performance (CSP) are influenced by top management teams’ (TMT) state orientation, the degree to which top executives represent the government’s ideology in decision making. SOEs have grown in both number and size around the globe and their total assets are half of global GDP. Our theory explains why a stronger TMT state orientation in China leads to a greater focus on achieving harmony, which can result in 1) better environmental performance, 2) better societal outcomes, captured by less corruption-related spending and more charitable donations, 3) higher employee compensation and lower intraorganizational pay dispersion, but 4) worse financial performance. Using an original set of unobtrusive indicators of TMT state orientation, we find support for our theoretical expectations after analyzing a large and longitudinal sample of public SOEs in China between 2003 and 2017. In explaining how TMT state orientation influences SOEs’ CSP, our study offers a theoretical explanation for the heterogeneity in the CSP of these organizations while significantly broadening the ambit of upper echelons research. Our study also contributes to upper echelons research by developing theory about how the governmental system and state ideology influence organizational outcomes through top managers.