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Reconciling Different Views on Responsible Leadership: A Rationality-Based Approach

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Abstract

Business leaders are increasingly responsible for the societal and environmental impacts of their actions. Yet conceptual views on responsible leadership differ in their definitions and theoretical foundations. This study attempts to reconcile these diverse views and uncover the phenomenon from a business leader’s point of view. Based on rational egoism theory, this article proposes a formal mathematical model of responsible leadership that considers different types of incentives for stakeholder engagement. The analyses reveal that monetary and instrumental incentives are neither sufficient nor necessary for business leaders to consider societal and environmental stakeholder needs. Non-monetary and non-instrumental incentives, such as leaders’ values and authenticity, as well as their planning horizons, counterbalance pure monetary and instrumental orientations. The model in this article complements the growing body of research on responsible leadership by reconciling its various conceptual views and providing a foundation for future theory development and testing.

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Abbreviations

S :

Business leader’s stakeholder engagement

π :

Present value of the company’s profits

α :

Relative strength of non-monetary and non-instrumental incentives

\(\pi_{\text{C}} (S)\) :

Company’s current profits

\(\pi_{\text{F}} (S)\) :

Present value of the company’s future profits

δ :

Business leader’s planning horizon

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Authors and Affiliations

  1. Department of Global Business and Trade, Institute for International Business, WU Vienna, Welthandelsplatz 1, Building D1, 1020, Vienna, Austria

    Christof Miska

  2. Faculty of Mathematics, University of Vienna, Nordbergstraße 15, 1090, Vienna, Austria

    Christian Hilbe

  3. Department of Socioeconomics, Institute for Social Policy, WU Vienna, Welthandelsplatz 1, Building D4, 1020, Vienna, Austria

    Susanne Mayer

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  1. Christof Miska
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  2. Christian Hilbe
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  3. Susanne Mayer
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Correspondence to Christof Miska.

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Miska, C., Hilbe, C. & Mayer, S. Reconciling Different Views on Responsible Leadership: A Rationality-Based Approach. J Bus Ethics 125, 349–360 (2014). https://doi.org/10.1007/s10551-013-1923-8

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