I’ve Got Your Back: Reciprocity Among Corporate Leaders

Have you ever seen a situation where person A does something nice for person B, which spurs person B to help person C? In a nutshell, that “pay-it-forward” behavior is something called social exchange theory; one good deed begets another. When someone helps us out, we feel indebted to repay the favor in some way and “even the score,” so to speak.

This theory holds its weight even among corporate leaders. Impression management, or a leader’s effectiveness at controlling and influencing how he or she is perceived, is a critical component of corporate governance. CEOs often find their leadership strategies challenged in the press, especially amidst disclosures of their firm’s poor performance or low corporate earnings. The media might perceive a CEO’s defense of his actions or the ill-fated state of his organization as self-serving in nature. However, reporters understand the situation differently when CEOs of rival firms in the same industry defend their fellow constituents and explain that industry-wide challenges and external factors contributed to the organization’s state of demise.

Why would one CEO defend his fellow CEO to the press, you may ask? The authors, (Westphal, Park, McDonald, & Hayward, 2012) list a couple of reasons. For one, a CEO who has received support from another CEO feels indebted to defend his corporate colleague should the situation reverse. For another, a CEO who benefited from the support of a fellow CEO in the past will likely help out another of his colleagues being slammed by the press. Finally, a CEO will often feel compelled to support a fellow CEO who has provided similar support to other corporate leaders in the past. So start reading the newspaper with a more critical eye; you might be surprised at how differently the same story can be spun.

 

Westphal, J. D., Park, S. H., McDonald, M. L., & Hayward, M. L. A. (2012). Helping Other CEOs Avoid Bad Press: Social Exchange and Impression Management Support among CEOs in Communications with Journalists. Administrative Science Quarterly, 57(2) 217-268.