ESG performance and beyond: Exploring leadership, organizational psychological capital, and narcissistic reporting

Abstract

Environmental, Social, and Governance (ESG) performance has emerged as a critical focus for businesses, driven by global challenges such as climate change, social inequality, and corporate misconduct. This thesis examines the dimensions of ESG performance through three essays, exploring the roles of corporate leadership, intangible organizational resources, and corporate communication strategies. Using a systematic literature review (SLR) and empirical analyses, this thesis provides novel insights into the effect of leadership and psychological resources in shaping ESG outcomes. The empirical analyses employ a dataset of 1,659 firm-year observations from UK companies listed on the FTSE 350 Index between 2012 and 2021 and employing advanced Natural Language Processing (NLP) techniques. The first essay presents a comprehensive SLR on the CEO–environmental sustainability relationship, synthesizing 139 studies to provide a robust framework for understanding the field. It identifies critical gaps in the literature, such as the limited exploration of CEO psychological traits and the qualitative dimensions of environmental disclosures, including tone, specificity, and readability. By mapping CEO attributes to environmental outcomes, this review highlights the importance of integrating psychological and demographic factors in future sustainability research. Recommendations for future studies include cross-country comparisons, industry-specific analyses, and an exploration of underrepresented regions. The second essay investigates the influence of Organizational Psychological Capital (OPC) on ESG performance and examines the moderating role of CEO power. The findings reveal a significant positive relationship between OPC and ESG performance, underscoring the importance of intangible resources. However, the study also shows that CEO power negatively moderates this relationship, indicating that leadership dynamics play a critical role in shaping the effectiveness of psychological resources in achieving sustainability outcomes. The analysis further highlights the dual strategic importance of OPC as a driver of both ESG and financial performance, contributing to the literature on resource-based and leadership theories. The third essay explores the relationship between ESG performance and the use of narcissistic rhetoric in corporate disclosures, with a specific focus on the moderating role of board gender diversity. The study finds that firms with stronger ESG performance employ more narcissistic rhetoric to project legitimacy and enhance stakeholder perceptions. However, this relationship is tempered by board gender diversity, with more gender-diverse boards fostering balanced and transparent communication. The findings contribute to the literature by linking ESG performance with corporate narrative strategies and demonstrating the role of internal governance mechanisms in shaping disclosure practices. This thesis makes significant contributions to the academic discourse on corporate governance, sustainability, and organizational behavior. First, it offers the first SLR on the CEO–environmental sustainability relationship, addressing critical gaps in the literature and providing a research framework guides future research. Second, it is the first study introduces OPC as a key intangible resource driving ESG performance, expanding resource-based theory and integrating it with upper echelons theory. Third, it enriches the disclosure literature by being the first to link ESG performance with a relatively understudied disclosure strategy—narcissistic rhetoric— and integrates legitimacy theory and gender socialization theory to explore how governance structures shape corporate narratives. Finally, the thesis employs advanced methodological approaches, including NLP techniques, to analyze qualitative dimensions of ESG disclosures, setting a precedent for future research in corporate sustainability practices and communication strategies.