Doing Good and Doing Well: The Rise of Prosocial Managers

This paper examines how individuals’ prosocial tendency, proxied by involvement with charitable organizations, relates to career outcomes. We find that, compared with their non-prosocial counterparts, prosocial individuals are more likely to attain top executive positions, including non-CEO and CEO roles, and reach these positions more quickly. Cross-sectional evidence further shows that the results are stronger when i) the charitable organizations with which managers are involved are directly aimed at improving the welfare of others, consistent with prosocial tendency rather than general ability or energy driving the results; and ii) managers are promoted internally rather than hired externally, consistent with prosocial behavior fostering trust and goodwill within firms. Conditional on being in office, prosocial CEOs are less likely to be dismissed for poor performance. We also find that prosocial managers receive higher compensation than non-prosocial managers, partly because they are more likely to become CEOs and to lead larger and better-performing firms. Our findings suggest that prosocial tendency benefits individuals’ careers.