Corporate environmental management: Individual-level drivers and the

moderating role of charismatic leadership.

Abstract
Drawing upon norm-activation and social cognitive theories, we examine

whether the personal norms and self-efficacy of top managers affect their decisions to

engage in environmental management initiatives (EMI). We also investigate whether

this relationship is moderated by CEO charisma. Empirical evidence from a sample of

125 companies indicates that significant variation in EMI is explained by the two

activators of personal norms – namely, awareness of consequences and ascription of

responsibility – as well as self-efficacy with respect to environmental decisions.

Furthermore, the effects of managers’ personal norms on EMI engagement are more

intense when charismatic leadership is present. The results offer insights into the

microfoundations of proactive environmental management and their interplay with

charismatic leadership. Managerial implications for firms seeking to advance their

environmental conduct are discussed.

Keywords: Environmental management, Decision making, Personal norms,

Awareness, Responsibility, Self-efficacy, Charismatic leadership.

Introduction
There is currently a growing consensus among academics and practitioners that

corporate environmental management yields a double dividend, with positive effects

on both the natural environment and business performance . An increasing number of

companies are engaging in a variety of environmental management initiatives (EMI).

Indicatively, the number of ISO 14001-certified facilities has increased from 188,574
1
in 2008 to 319,324 in 2015 . Along with this trend, an expanding research stream has

paid significant attention to the antecedents of EMI engagement. This stream has

centered largely on macro and industry-level drivers of corporate environmental

activities. For example, early work argues that the general competitive environment

influences the environmental orientation of businesses . Subsequent research has

focused on specific forces that may influence the way businesses form their

environmental posture. Environmental regulation, for example, has been showed to

drive the adoption of various environmental initiatives . Other studies demonstrate

that coercive and normative pressures stemming from stakeholders such as customers,

investors, local communities, and environmental activists may affect the adoption of

EMI . Also, the industry-specific characteristics have been found to have both direct

and indirect effects on the way firms perceive environmental issues and adopt green

management practices .

However, as Delmas and Toffel argue, institutional and macro-level perspectives

cannot explain why firms that are subject to the same level of institutional pressures

follow different environmental management strategies. Scholars have recently argued

that investigation at the individual level would allow us to better understand

behavioural drivers that inform the environmental decision making of key players and

explain subsequent organizational outcomes . Despite their importance, little is known

about the micro-level factors, such as those referring to managers’ behavioral traits

and perceptions, that may influence the extent to which firms engage in

environmental initiatives .

In addition, given that organizational context influences environmental decision

making , the largely disregarded role of leadership in shaping corporate socio-

environmental orientation is itself a challenge to be addressed . Leaders are

2
responsible for organizing collective efforts within organizations and have a

significant impact on the dynamics and culture of the top management team as well as

on the attitudes of employees . However, few studies have surveyed linkages between

leadership and corporate social responsibility . Even scarcer is research that adopts an

individual level of analysis to examine how corporate leadership interacts with the

idiosyncrasies of decision makers and potentially influences their socio-environmental

behaviour .

The purpose of the current study is twofold: first, to examine whether normative

and cognitive attributes of managers are related to their environmental decision

making; second, to examine whether corporate leadership may influence the above

relationship. To that end, we focus on managers who are empowered to make

strategic decisions regarding environmental issues (hereafter called managers). We

rely on the work of Stern to identify what drives the environmental behaviour of

these managers within organizational boundaries, as reflected by their decision to

engage in EMI. More specifically, drawing on the norm-activation model and social

cognitive theory , we examine the effects of personal norms and self-efficacy of

managers with respect to environmental issues. Following , norms are examined

through their two activators, namely awareness of consequences (AC) and ascription

of responsibility (AR).

In addition, we investigate whether leadership interplays with the above

managerial characteristics to shape corporate EMI engagement. We focus on

charismatic leadership due to its profound follower effects . Specifically, charismatic

leaders enhance the accountability of followers, influence their self-concepts, affect

their social identities and activate them to act according to their abilities . Therefore,

3
we expect that the effect of personal norms and self-efficacy of managers on EMI will

be particularly pronounced for firms with charismatic leaders.

The current study contributes to an emerging research stream that focuses on the

microfoundations of corporate sustainability , that is, foundations based on individual

actions and interactions. Existing literature argues that social norms and contextual

factors are the primarily forces behind proactive environmental decision making . Our

findings reveal that, after controlling for the above factors, attributes of the decision

makers at the micro-level may explain a significant variation of environmental

management proactiveness. By accentuating the role of managers’ norms and

cognitions, we advance current knowledge on why firms go green. At the same time,

we offer a theory-based explanation for the heterogeneity of EMI levels among

companies that operate in environments with similar macro-level characteristics.

We also provide empirical evidence for the interplay between individual and

organizational determinants of EMI. More specifically, we demonstrate that the

effects of managers’ personal norms on EMI are reinforced by the presence of

charismatic leadership. In doing so, we empirically contribute to an emerging

literature that explores how leaders can facilitate corporate sustainability . This

finding also enriches our understanding of the conditions under which micro-level

factors become more effective.

Overall, our results point toward a better understating of environmental

proactivity by investigating its microfoundations . They also highlight the importance

of multi-level investigations in environmental sustainability research .

Theory and hypotheses

Environmental management and individual-level drivers
4
 Firms respond to environmental issues in different ways, which in turn shape

their environmental profiles. Based on these profiles, early work has identified

different stages or postures of corporate environmental management. For example,

Hunt and Auster , using as a criterion the degree to which companies engage in

environmental management programs, developed a five-stage “environmental

developmental continuum”. Companies are shifting from stage one (“beginner”) to

stage five (“proactivist”), as they address legal and public requirements, increase their

level of commitment to natural environment, adopt advanced environmental programs

and so forth. Similarly, Roome’s “Strategic Options Model”, categorizes possible

corporate responses to external pressures concerning the environmental performance

of firms into five groups, namely “Non-compliance”, “Compliance”, “Compliance

plus”, “Commercial and environmental excellence”, and “Leading edge”.

The above models assume that corporate environmental conduct can range within

a continuum from extreme reactive to extreme proactive. While reactive responses are

primarily shaped by institutional pressures (e.g. environmental regulations), proactive

responses are also driven by managerial attitudes towards the natural environment .

The present study seeks to advance knowledge on the drivers of environmental

proactivity. More particularly, it focuses on the voluntary (beyond-compliance)

administrative practices that are intended to develop, manage, and monitor corporate

environmental conduct. Examples of such Environmental management initiatives

(EMI) include formulation of environmental policy, measurement and assessment of a

firm’s environmental performance and conduct of environmental audits . Our

conceptualization of environmental management includes the main components of

voluntary environmental management and resembles the “Planning and

Organizational” dimension of study on proactive environmental management.

5
 EMI includes practices that firms adopt in a voluntary base, as a means to reduce

their impact on the natural environment. Prior research argues that the engagement in

such initiatives is a result of choices made by managers that possess the power and

discretion to shape the environmental conduct in their firms . According to Stern’s

categorization, the environmental behaviour of those managers is largely shaped by

attitudinal factors and personal capabilities. First, attitudinal factors include

behaviour-specific predispositions, particularly with respect to personal values, beliefs

and norms. Drawing on norm-activation theory , we consider the environmental

personal norms (hereafter called personal norms) of managers to guide their decisions

concerning the adoption of EMI, as demonstrated through their levels of awareness

and sense of responsibility. Second, personal capabilities refer to the knowledge and

skills required for a particular action. Although this factor has been found to have

limited explanatory power , perceptions of individuals concerning their abilities are

considered to be a valid determinant of behaviour . We therefore rely on social

cognitive theory and its core element, self-efficacy, to examine whether managers’

sense of mastery in environmental issues is positively associated with their

environmental decisions.

Awareness of Consequences and Ascription of Responsibility

Norm-activation theory holds that behaviour occurs in response to personal

norms. When a personal norm is activated, an individual is possessed by feelings of

moral obligation to engage in a certain behaviour. To activate a norm and to behave

accordingly, an individual must hold two types of beliefs: awareness of consequences

(AC) and ascription of responsibility (AR). The first is the belief that a particular

condition may negatively affect an object that the individual values. The latter is the

belief that the individual feels personally responsible for the unfavourable outcomes
6
of this condition. Prior studies have empirically confirmed that when individuals are

aware of the negative effects of a particular issue and have developed ascription of

responsibility regarding this issue, then they develop positive norms that guide their

behaviour .

Although norm-activation theory was originally applied to explain altruistic

behaviour, it was subsequently used to predict pro-environmental behaviour . Prior

research has also used the theory to explain individual behaviour within organizations.

For example, Zhang et al. found that personal norms positively influence employee

electricity saving behaviour. Similarly, found that the environmental behaviour of

employees in the workplace was guided by their personal norms. Moreover, Stern

argues that norms may explain individual behaviour that influences "the actions of

organizations to which they [the individuals] belong" (: 410).

With this premise as a reference, we expect that the ecological AC and AR of

managers would inform their environmental decisions and shape the EMI engagement

of their firms. In the context of this study, the condition of interest is natural

environment degradation and the associated environmental problems. AC refers to the

awareness of the harmful effects of this condition to other persons (altruistic

dimension), to non-human species (biospheric dimension) and to the individual under

examination (egoistic dimension) . The second norm activator, AR, refers to the

responsibility that the individual feels in being involved with the particular condition

and becoming a part of its solution . In the context of the present study, the strength of

AR depends on whether managers judge themselves personally responsible, at least

partly, for the environmental problems that they are aware of.

The link between AC and AR beliefs and actual behaviour lies in the relationship

between the norms and a person's self-image, such that a violation of personal norms

7
evokes feelings of guilt and self-depreciation, whereas compliance evokes feelings of

pride and self-appreciation . An empirical study of Onwezen and colleagues

confirmed that pride and guilt lead individuals to behave in ways that are consistent

with their personal norm.

Based on the above reflections, we formulate the following hypotheses:

H1a: The higher the level of managers' awareness of consequences (AC) concerning

environmental problems, the higher the degree to which firms engage in EMI.

H1b: The higher the level of managers' ascription of responsibility (AR) concerning

environmental problems, the higher the degree to which firms engage in EMI.

Self-Efficacy

Bandura defines self-efficacy as the belief or conviction that one can

successfully execute the behaviour that is required to produce a certain outcome. The

strength of individuals' convictions in their own effectiveness is likely to affect their

behaviour in several ways. Evidence shows that people with high levels of self-

efficacy set more challenging goals and demonstrate firmer goal commitment .

Krueger and Dickson found evidence that a positive change in the levels of self-

efficacy leads to an increase in perceptions of opportunity and a decrease in the

perception of threat for a particular dilemma; these effects also lead to increased risk-

taking.

The nature of environmental decisions is particularly relevant to the above

discussion. First, environmental decisions are often complex and risky to handle , and

their implementation is likely to be followed by organizational or industry barriers .

Thus, managers with high levels of self-efficacy, who are also anticipated to be more

confident, risk-prone, goal-committed and persistent , are more likely to overcome the

above barriers and adopt proactive environmental initiatives. Second, environmental

8
proactiveness is associated with the view of the environmental domain as a source of

challenging business opportunity which is expected to be most common among

managers with high levels of self-efficacy .

Based on the above, we surmise that managers with high levels of self-efficacy

with respect to environmental issues, i.e., beliefs that they possess the required

knowledge, skills and abilities to manage environmental issues, will be more likely to

proactively adopt and promote environmental management initiatives.

H2: The higher the level of managers' self-efficacy with respect to environmental

issues, the higher the degree to which firms engage in EMI.

Charismatic leadership and effects on followers

Charisma is defined as “an attribution based on follower perceptions of their

leader’s behavior” . Some researchers treat charisma as one dimension of

transformational leadership while others view it as the most exemplary form that

transformational leaders could assume . In the present study, following a significant

stream of the literature , we adopt the latter approach, treating charismatic leadership

as a distinct leadership style. Although other leadership styles have also been

associated with the socio-environmental conduct of firms , charisma is highly relevant

to our study due to its profound motivation effects on followers. As Waldman et al.

suggest, managers are affected by the charismatic leadership of their CEOs and

consequently “institute policies and strategies in line with CSR in their own units”.

Charismatic leaders provide a clear and inspiring vision for the future,

communicate high performance expectations and show sensitivity to the needs and

feelings of other members of their organization . On the other side, followers

experience feelings of trust, confidence, admiration and respect, based on the actions

and values of their leaders . Charismatic leadership is expected to influence the

9
environmental orientation of firms by providing directions to followers and

articulating the context that facilitates normative incentives to become action. First,

charismatic leaders are perceived by followers as champions who seek to change the

status quo; at the same time, the principles of environmental management challenge

conventional business philosophy . Formulating the proper structure for change,

leaders often assign accountability to certain key people and provide guidelines for

action. This accountability induces a sense of responsibility in individuals, enhancing

the norms that guide their behaviours .

Second, as self-concept-based theory holds, charismatic leaders engage

followers’ self-concepts in the interest of the leaders’ vision, resulting in profound

transformational effects . Such leaders communicate or symbolize messages with

references to values and norms. By establishing strategic goals that represent such

values, leaders activate the self-concept of followers and affect their psychological

states. This does not mean that leaders cultivate the ethical values and norms of

followers. As Shamir et al. explain, CEOs appeal to existing elements of the

followers’ self-concepts and “connect them with goals and required behaviours”.

Third, EMI may be better promoted when environmental norms of managers are

supported by a corporate-wide environmental orientation. Social identity theory

provides the mechanisms that link charismatic leadership, collective identity, and the

enhancement of firms’ environmental management conduct. According to the theory,

an individual develops both a unique personal identity and a social identity, and the

latter is formed due to membership in particular groups. Charismatic leaders have

been portrayed as amplifying this social identity to their subordinates by enhancing its

salience in their self-concepts . As a result, followers often transcend their own self-

interests for the sake of collective interests. More importantly, personal and social

10
identities interact with one another to form individuals’ overall identity . An

application of this notion to the context of this study implies that moral and

environmental values instilled by charismatic leaders within the organization – or at

least within the top management team – will affect the strength of managers’ AC and

AR beliefs and their subsequent decisions concerning EMI. Hence, the following

hypotheses are advanced:

H3a: CEOs' charismatic leadership will positively moderate the relationship between

managers’ awareness of consequences (AC) and the degree to which firms engage in

EMI.

H3b: CEOs' charismatic leadership will positively moderate the relationship between

managers’ ascription of responsibility (AR) and the degree to which firms engage in

EMI.

Additionally, charismatic leadership is expected to affect that part of followers’

environmental behaviour attributed to their self-efficacy. For instance, the vision

articulated by charismatic leaders inspires followers to conceive new opportunities for

change and provides them with hope and assurance for the future . When this vision

has specific references to a firm’s environmental responsiveness, managers who feel

capable of handling environmental issues will have an additional inducement to

exhibit the appropriate behaviour. Moreover, leaders typically establish inspiring but

difficult-to-achieve objectives, an example being excellence in corporate

environmental management. To balance this difficulty, they not only express high

expectations but also confidence in their followers’ abilities and skills to meet these

expectations . This expression on the part of the leaders acts in conjunction with

followers’ convictions in their own effectiveness. The sign and strength of these two

11
forces will determine the final outcome, e.g., a manager who presents high levels of

self-efficacy and receives positive expressions regarding his abilities will be more

inclined to behave as required.

Similar effects are produced when leaders and their actions spread feelings of

empowerment among followers. A source of empowerment is derived from the

feedback of leaders concerning the self-efficacy of followers. Corresponding actions

on the part of leaders may include not only encouraging signals but also facilitating

activities, such as providing followers with autonomy from bureaucratic barriers . In

this manner, behavioural controls are surpassed, strengthening the link between what

managers believe they can do and what they actually do. In sum, the presence of

charismatic leadership is expected to equip followers with confidence and

empowerment, elements that reinforce the positive effects of self-efficacy on their

environmental decision making. Hence:

H4: CEOs' charismatic leadership will positively moderate the relationship between

managers’ self-efficacy and the degree to which firms engage in EMI.

Figure 1 depicts the theoretical framework of the study and the derived hypotheses.

(Figure 1 about here)

Methods
Data collection and sample
We tested our hypotheses on a sample of Greek manufacturing companies.

Greece belongs to a cluster of countries with average levels of corporate social

responsibility , and thus, Greek firms face many challenges and opportunities to

advance their environmental sustainability. In addition, because manufacturing firms

produce significant environmental externalities, they experience great regulatory and

social pressure to address environmental issues.

12
 Data on environmental initiatives from published sources are available for a

limited number of Greek firms, which publish environmental reports on a voluntary

basis. Moreover, constructs referring to leadership styles and personality traits are

difficult to operationalize using objective indicators. Therefore, a questionnaire was

sent by mail to survey a sample of managers. We used the Hellas-Stat database, and,

following previous research , we selected sectors with significant environmental

footprints, namely wood, paper and pulp; chemicals and pharmaceuticals; plastics;

metals; minerals and non-metals; and food and beverages.

Prior to the mail survey, we contacted companies by phone (when no information

from external sources was available) to identify the appropriate respondents. We

limited our search to top managers who have adequate power and discretion to shape

the environmental responsiveness of their organizations . We set a minimum level of

three years of tenure to allow time for the effects of CEOs’ charisma and managers’

environmental initiatives to become evident. Applying the above filters, our target

population was limited to 656 companies, to which we sent one or more

questionnaires according to the number of managers responsible for making

environmental decisions. The data collection process resulted in 230 individual

responses, which correspond to 149 out of 656 companies, yielding a response rate of

22.7%. Questionnaires from seven companies were eliminated due to the inadequate

completion of the research instrument. Furthermore, in seventeen cases, a single

questionnaire was filled in by the CEO due to the small size of the firms and the

apparent lack of a green top manager. These cases were excluded, since the influence

of CEO charisma on managers could not be assessed. Titles of respondents include

total quality managers (21.6%), production managers (18.9%), managers of

environmental and social affairs (15.3%), and plant managers (10.5%).

13
 Although relatively small, the response rate of this study falls within the expected

range (i.e. 16.8%-51.8%) for organizational surveys and is comparable to that of

other environmental and leadership studies with similar designs . More importantly,

any level of non-response can, but need not, induce non-response bias in survey

estimates. Clearly, response representativeness is more important, especially when

response rate is on the low side and may threaten the reliability of the empirical

estimations . In order to assess the representativeness of our sample, we compared

differences in the mean values of the responding and non-responding companies,

based on company age, number of employees, and five-year sales averages. The

analysis did not reveal any significant non-response bias.

Measures
The questionnaire was addressed to managers, who bear the responsibility to

make decisions that shape the environmental management of their firms. All scales

were 7-point Likert-type.

Environmental management initiatives (EMI): To measure this construct, we

adopted six items from the literature , which correspond to the main components of

corporate environmental management . More specifically, managers were asked to

indicate the degree to which their firms undertake each of the following activities: a)

Formulation of corporate environmental policy, b) Natural environmental training/

seminars to both employees and managers, c) Regular meetings on environmental

issues, d) Use of environmental management systems (ISO14001, EMAS), e)

Measurement and assessment of environmental performance, and f) Environmental

audits on a regular basis. Principal component analysis to the full set of items

indicated one factor with eigenvalue greater than 1 (4.40), accounting for 73.4% of

the variance in the construct. Factor loadings ranged from .79 to .91. Internal
14
reliability analysis produced a Cronbach's alpha value of .92. Confirmatory factor

analysis provided additional support of the validity of the construct (all factor

loadings were above .70; χ2(9)=57.54, p<.01; CFI=.92; SRMR=.04; RMSEA=.08; p-

close=.16; Composite reliability=.90).

Awareness of consequences (AC): To measure this construct we used the General

Awareness of Consequences (GAC) scale . Respondents were asked to indicate their

agreement with the ten items of the scale, such as: "Environmental protection will

help people have a better quality life", and "Environmental damage generated here

harms people all over the world". Confirmatory factor analysis of the ten items

yielded moderate fit statistics [chi2(35)=134.8; p<.00; CFI=.84; TLI=.79; SRMR= .

07]. However, two of the items produced coefficients lower than the acceptable threat

of .50 (.48 and .12). After excluding these items, the analysis produced statistics that

indicate a good fit of the data [chi2 (20)=52.37; p<.00; CFI=.94; TLI=.91; SRMR= .

040; RMSEA=.06; p-close=.28] and high internal consistency (Cronbach’s α=.89;

Composite reliability=.88).

Ascription to responsibility (AR): To measure this construct we used three items

adopted by and and modified to the environmental domain. Specifically, respondents

were asked to indicate their agreement with the following statements: “Every citizen

must take responsibility for the natural environment”, “I am jointly responsible for the

environmental problems”, and “My contribution to the environmental problems is

negligible” (reversed). Principal component analysis indicated one factor

(eigenvalue=2.06) that accounts for 68.8% of the variance in the construct. Factor

loadings ranged from .76 to .88. Internal reliability analysis produced a Cronbach's

alpha value of .76.

15
 Self-efficacy (SE): This construct was measured with two items adopted from

Jones' instrument. Following previous research , we modified the items to the

environmental domain. Specifically, respondents were asked to indicate their

agreement (1 ‘strongly disagree’, to 7, ‘strongly agree’) with the following

statements: "I feel confident that my skills, abilities and knowledge qualify me to

make a decision concerning environmental issues" and "My past experience increases

my confidence that I am qualified to make a decision concerning environmental

issues". The measure is highly reliable (α=0.84).

Charismatic leadership (CL): This construct was measured with Conger-

Kanungo scale . The scale has been extensively used in prior empirical studies that

have established its validity. The Conger-Kanungo model conceptualizes charismatic

leadership as an attribution based on how followers perceive the behavior of their

CEOs. More importantly, it offers a holistic and comprehensive measure of charisma

as it assesses various aspects of charismatic leadership, e.g. articulation of vision,

sensitivity to member needs and unconventional behaviour.

Managers were asked to indicate their agreement with statements referring to the

charismatic behavior of their company's CEO. Sample items include "Provides

inspiring strategic and organizational goals", and "Often expresses personal concern

for the needs and feelings of other members in the organization". Principal component

analysis to the full set of items indicated one factor with eigenvalue greater than 1

(9.23), accounting for the 65.9% of the variance in the construct (α=0.96). Factor

loadings range from .70 to .87.

Controls: We included several control variables that previous research has

identified as significant antecedents of EMI adoption. First, we controlled for firm

size (measured by the natural logarithm of the total number of employees), since

16
larger firms have greater available resources and are subject to higher levels of public

scrutiny and expectations. Second, to account for industry-specific variability, we

used the Chemical sector as a baseline group and assigned five dummy variables to

the rest of the sectors. Third, to control for corporate environmental conduct that is

attributed to institutional pressures, we asked managers to indicate the degree to

which environmental expectations of six major stakeholder groups are influencing

their environmental-related decisions . Principal component analysis indicated two

factors which account for the 65.7% of the variance in the construct. The first factor

includes three stakeholder groups, namely customers, shareholders and employees

(α=.65) and was labeled Organizational Stakeholders. The second factor includes

environmental organizations, local community and the media (α=.78) and was labeled

Community Stakeholders.

Fourth, to account for influences of the external environment, we asked managers

to indicate their level of uncertainty in relation to eight items of Lewis and Harvey's

Perceived Environmental Uncertainty scale. Four items measured the predictability of

environmental resources (labeled External Resources), with sample items:

"Availability of trained environmental personnel" and "Availability of natural

resources" (α=.78). Four items measured the predictability of environmental markets,

(labeled External Markets) with sample items: "Changes in the competitors'

environmental strategy" and "Entry of new firms into the environmental market" (α

= .80). Fifth, to account for cost considerations that may control managers' behavior

toward adopting environmental initiatives , we asked managers to indicate their

agreement with the following statements: ‘The monetary cost-benefit outcome must

be positive if it is to adopt an environmental initiative’ and ‘Cost is an important

17
factor that influence my decision on adopting an environmental initiative’ (a = .64).

This variable was labeled Cost Considerations.

Analyses
Aggregation of multiple responses:
Sixty-five companies (52% of the sample) provided two responses. Given that

EMI engagement is a manifestation of the decisions taken by these executives

combined, we examined the aggregation of the individual responses to the upper

level. We made an a priori hypothesis that the two managers, representing a small

“green” top management team, provided identical responses. We then calculated the

inter-rater agreement index (rwg) as a mean to assess within-group agreement .

Analysis yielded mean values above the acceptable criterion of .70 (.95 for AC, .91

for AR, .90 for SE, .99 for CL, .96 for EMI, and above 0.86 for control variables). We

also computed two intra-class correlation coefficients: ICC1, to estimate the

proportion of variance in ratings due to team membership, and ICC2, to estimate the

reliability of mean scores. The threshold value for ICC2 is 0.70. Whereas there are no

definite guidelines on acceptable ICC1 scores, the analysis produced very high values

for all variables (AC: ICC1=.93, ICC2=.96, F=26.06, p<.01; AR: ICC1=.85,

ICC2=.92, F=12.68, p<.01; SE: ICC1=.67, ICC2=.80, F=5.04, p<.01; CL: ICC1=.93,

ICC2=.97, F=29.47, p<.01, EMI: ICC1=.97, ICC2=.98, F=61.99, p<.01; significantly

positive for control variables). Taken together, these results support the aggregation of

the individual scores to the upper level.

Testing for Endogeneity

Although the hypotheses of this study are derived from well-established theories,

one could question the direction of the causality between the variables. For instance,

companies seeking to improve their environmental performance may hire managers

18
with high levels of environmental norms; therefore a simultaneous causality between

managers' personal norms and environmental management engagement may exist. In

this case, AC and AR are endogenous variables with regard to EMI and results of

statistical estimations could be biased . We argue that this type of endogeneity is not

likely to be a source of concern as the number of Greek companies with distinct

environmental departments is very low. The common practice is that managers of

related departments are assigned environmental responsibilities. Indeed, descriptive

data from our sample shows that only 15% of the respondents were managers of

environmental affairs. The rest 85% of the respondents were mainly total quality

managers, product managers and plant managers.

To provide empirical support, we adopted an instrumental variables (IV)

methodology, running a two-stage least squares (2SLS) regression. First, we

identified two theoretically valid instruments, namely the Self-Transcendent and Self-

Enhancement clusters of personal values. These variables are expected to have

significantly positive relationship with the endogenous regressors (AC and AR), but

also to be uncorrelated to the structural equation errors. To operationalize these

instruments, we used the abbreviated scale of Schwartz’s Value Inventory. We

performed a 2SLS regression, using the ivreg2 module in the STATA software. We

entered the options ffirst to produce first stage statistics and endog for testing

endogeneity for both AC and AR. The Hansen-Sargan statistic produced a p-value of

zero, indicating that the equation is exactly identified. Then, we examined the strength

of the instruments, as weak instruments lead to an asymptotic bias that makes t-

statistics and confidence intervals non reliable. The first-stage F-statistic produced a

value of 36.57, which, compared against Stock-Yogo weak ID test critical values,

suggests that both our instruments are strong . Finally, Durbin-Wu-Hausman test of

19
endogeneity of regressors produced a value of .26 with a p-value of .87. Under the

null hypothesis, regressors can be treated as exogenous. The above results indicate

that AC and AR are exogenous variables with respect to EMI.

Results
Means, standard deviations and correlations for all variables are displayed in

Table 1. To test our hypotheses, we conducted multiple regression analyses. To

improve the interpretability of the regression coefficients, we mean-centered all

continuous independent variables.

(Table 1 about here)

Table 2 shows the multiple regression results. In the first step, we entered the

control variables (Model 1), to have a point of reference against which to compare the

other models. Model 2 adds the main variables as a test of their direct effects on EMI

engagement. Models 3 to 6 examine the moderating effects of charismatic leadership.

Models 3 to 5 examine each of the moderation separately, while Model 6 examines

the three moderations jointly. To assess multicollinearity, we computed the variance

inflation factor (VIF) scores for Model 6 that includes all interaction terms. All values

were well below the accepted cut-off of 10 , ranging from 1.12 to 2.15.

(Table 2 about here)

Our estimations included several control variables aiming to capture EMI

variation attributed to institutional forces, industry characteristics and organizational

constrains. Consistent with prior studies , the expectations and pressures from

organizational stakeholders, the availability of environmental resources and

organizational constrains pertaining to the cost-benefit assessment of environmental

investments are significant predictors of EMI. Our sample included only

manufacturing firms; thus, the type of industry had a limited effect on EMI variations.

20
 H1a and H1b predicted that environmental awareness (AC) and ascription of

responsibility (AR) of managers will be positively related to the EMI engagement of

their firms. The coefficient for AC is positive and significant, though at a probability

level of 10% (Model 2, β=.31, p<.10), lending moderate support to H1a. The

coefficient for AR is positive and significant (Model 2, β=.36, p<.05), in support of

H1b. Taken together, these results indicate that, controlling for other factors, personal

norms of top managers, as captured by their levels of AC and AR, positively influence

the EMI of their organizations.

H2 predicted a positive link between self-efficacy of managers and EMI. The

coefficient for CE is positive and significant (Model 2, β=.23, p<.05), in support of

H2. H3a and H3b predicted that charismatic leadership moderates the effect of AC

and AR of managers on EMI engagement. Model 6 shows that the interaction terms of

charismatic leadership with both AC and AR are positive and significant (β=.26,

p<.05 and β=.42, p<.05, respectively). We performed a simple slope analysis to

examine how personal norms of managers relate to EMI, at average (mean value), low

(one standard deviation below the mean), and high levels (one standard deviation

above the mean) of charismatic leadership (see Figures 2 and 3). The results show that

the relation between managers’ AC and their firms’ engagement in EMI is positive

and significant at high levels (β=.64, t=2.65, p<0.01), positive and significant at

medium levels (β=.40, t=2.18, p<0.05), and positive and insignificant at low levels

(β=.16, t=.85, p>0.10) of charismatic leadership. Additional tests show that, overall,

the slopes are significantly different from each other (β=-.48, t=-2.04, p<0.05).

Similarly, the results show that the relation between managers’ AR and their

firms’ engagement in EMI is positive and significant at high levels (β=.76, t=3.21,

p<0.01), positive and significant at medium levels (β=.37, t=2.29, p<0.05), and

21
negative and insignificant at low levels (β=-.01, t=-.06, p>0.10) of charismatic

leadership. Additional tests show that overall, the slopes are significantly different

from each other (β=-.77, t=-2.35, p<0.05).

(Figures 2 and 3 about here)

Collectively, the results indicate that the relationship between managers’ personal

norms and EMI engagement is stronger at higher levels of charismatic leadership,

while it becomes weaker at lower levels of charismatic leadership. Thus, H3a and

H3b are strongly supported.

In H4, we predicted that charismatic leadership moderates the effect of managers’

self-efficacy on EMI engagement. Contrary to our expectations, the data do not

support this hypothesis. As Model 6 shows, the coefficient for the interaction term is

insignificant (β=-.14, p>.10). Similar results are obtained from Model 5, when the

specific interaction is examined in isolation (β=-.07, p>.10).

Testing for common method bias

We performed additional analyses to check for the threat of common method

bias. We first created an objective measurement (EMI_obj) of EMI engagement. Two

independent researchers received proper training and performed a content analysis on

the websites and annual reports of the companies. In 65 cases, no relevant content was

found. For the remaining 60 cases (48% of the total sample), an index was calculated

by adding up the scores for each practice, with potential values of 0 (the practice was

not carried out) or 1 (the practice was carried out). The maximum value of the index

is 6 (when all practices are carried out). The index had a mean of 3.68 (s.d. 1.37).

Next, we estimated a model in which the predictors and controls of the current

study were set to predict EMI_obj, which in turn (along with the control variables)

predicted EMI (see Figure 3). We estimated a structural equation model using

22
observed variables and STATA’s robust maximum likelihood estimator with missing

values (mlmv), which fits parameters in cases of missing values, allowing for the

analysis of the full sample (a listwise deletion would have substantially reduced the

sample size and inflated standard errors).

(Figure 4 about here)

The model estimation indicates a good fit of the data [chi2 (6)=5.90; p=.43;

CFI=.99; TLI=.98; RMSEA=.01; p-close=.61] (the SRMR statistic is not reported due

to missing values). The signs and significance levels of the main variables are similar

to those reported in the initial model. The relationship between EMI_obj and EMI is

statistically significant at the 5% level (β=.83, p<.05). Collectively, these results

indicate a high correlation between the objective and subjective measurements of EMI

and a high consistency between the initial model and the model with the objective

EMI as a dependent variable. The analysis provides strong empirical evidence that our

data do not suffer from common method bias. In addition, previous research

demonstrates that interaction effects cannot be artefacts of common method bias .

Therefore, at a minimum level, such bias is unlikely to account for the results relating

to H3a, H3b and H4, which involve interaction effects.

Discussion
The current work contributes to the sustainability literature by specifying and

testing a model of individual-level factors that drive proactive environmental

management. Personal norms of managers were found to positively influence EMI

engagement. This finding has implications concerning the use of normative arguments

in sustainability studies. Prior research has demonstrated that personal norms are

strong predictors of employee environmental behavior within organizations . We

show that similar effects can be found among managers who make strategic decisions.
23
This insight has unique value because managers often behave according to the interest

of their firms even if such behaviour violates their personal norms. In the present

study, controlling for other factors that might shape managers’ behaviour, we provide

evidence for the power of personal norms to influence the decision making of

managers.

The examination of personal norms through their main activators – awareness of

consequences (AC) and ascription of responsibility (AR) – allowed us to gain a

deeper understanding of the nature of their effect. More specifically, AR is found to

be a stronger predictor of EMI engagement. Past studies have found mixed results.

For example, found significant effects for AR but non-significant effects for AC.

found AC and AR to have effects of equal size on personal norms. Our results are in

line with Schwartz , who found that when situational factors increase the clarity with

which consequences are perceived, AR is the dominant determinant of norm

activation. These results suggest that responsibility at the individual level is a

significant driver of corporate greening, and thus research should try to further

delineate how responsibility emerges and how it affects subsequent behaviour.

Self-confidence with respect to task accomplishment also emerges as a

significant antecedent of EMI engagement. This finding is consistent with previous

research that demonstrates the strength of self-efficacy effects in predicting the

environmental activity of managers . This effect can be attributed to the complexity

and newness of environmental issues that may discourage managers from acting

according to their beliefs and intentions. Obviously, environmental decision making

falls into the category of behaviour that is difficult to explain using only attitudinal

and social forces. To predict such behaviours, Ajzen proposed the addition of

perceived behavioural controls, with a particular focus on self-efficacy. Our results

24
suggest that this variable should also be used to explain voluntary or ethical

behaviours within the business context, implying an organization-based extension of

norm-activation framework.

In addition, the strength of the relationship between managers’ personal norms

and EMI engagement is found to vary across different levels of CEOs’ charisma. Note

that norms are relative vulnerable cognitive characteristics compared with the more

stable elements of one’s personality, such as personal values . Therefore, norms are

more likely to be influenced by organization-wide factors that overlap with the

individual case of each member of an organization. found a positive relationship

between CEO charismatic leadership and the propensity of firms to engage in

corporate social responsibility. Building upon this finding, we show that charismatic

leadership influences the environmental conduct of firms through its interplay with

individual-level factors, such as the normative beliefs of decision makers. Moreover,

we extend prior evidence on the profound follower effect of a CEO’s charisma by

empirically showing the influence of charisma in the case of environmental

sustainability.

We did not find support that the effect of managers’ self-efficacy on their

decisions to adopt EMI significantly varies with charismatic leadership. This result

supports the view that self-efficacy is a personal attribute that is gradually shaped

from past experiences and self-perception that the individual develops over time

through involvement in various tasks and contingencies . Consequently, the

empowerment and motivational effects of charismatic leaders on efficacy

expectations are likely to be weak. This finding frames the magnitude and limits of

the effects of CEOs’ charisma on certain attributes of followers. We demonstrate that

charisma has an influence on followers’ personal norms but not on their self-efficacy.

25
Future research could aim to provide further empirical evidence to confirm and

delineate the boundaries of charismatic effects.

Firms seeking to develop or maintain high levels of environmental management

conduct can benefit from the above findings. First, the appointment of managers with

environmental responsibilities could take into account the candidates’ environmental

norms and levels of self-efficacy . Such an approach would ensure a minimum state of

willingness and confidence on the part of managers to make pro-active environmental

decisions. Furthermore, organizations should consider encouraging initiatives (e.g.,

environmental events and meetings) aimed at cultivating environmental awareness

among managers and employees, as well as at making clear the contribution of each

individual to environmental problems. Such initiatives would increase managers’

awareness of consequences and ascription of responsibility, the two basic triggers of

an individual’s personal norms.

In addition, the study highlights the pivotal role of charismatic leadership in

reinforcing firms’ engagement in environmental management. A crucial question,

however, is whether charisma can be taught. Despite recent evidence that associates

the occupancy of a leadership role with the presence of a certain type of gene , other

experimental studies have shown that charisma can, to a certain degree, be taught

through appropriate training . Examples of training techniques could include

workshops and coaching sessions. However, prior to any intervention, leaders whould

evaluate their own charismatic abilities by receiving feedback from their subordinates

and assessing their performance in conditions with a certain level of expected

outcomes. This approach is required because leaders tend to overestimate their

abilities .

Limitations and future research

26
 This study has potential limitations that may provide suggestions for further

research. First, relying on how managers perceive their CEO’s personality, we

implicitly assume proximity between leader and follower. However, several authors

have distinguished between close and distant leadership, the latter stemming either

from physical distance between the leader and the follower or from the perception of

the follower on the level of social connectedness and the frequency of interaction with

the leader . In the case of distant leadership, followers may not be able to easily

evaluate and identify the moral and environmental dispositions of their CEO. Future

studies could relax the proximity assumption and examine the role of leadership

distance in our model.

Second, we operationailized EMI as a composite measure that captures different

manifestations of environmental management initiatives, e.g., environmental

planning, training and audit. However, the significance of the relationships among our

main variables may vary across the various initiatives. Future studies could

decompose the EMI measurement and test our model in more specific forms of

environmental management.

Third, non-response bias was only tested for the available descriptive variables,

such as age, size, and profitability of firms. However, non-responding companies may

differ in terms of other variables of the study, such as environmental management or

charismatic leadership. While no data were available to test for these differences, the

representativeness of our sample in terms of the selected descriptive variables can

provide us with a certain degree of confidence about the robustness of the results. For

example, the representativeness in terms of size means that our sample firms are

similar in terms of population visibility and financial resources; thus they have the

27
same level of incentives and means to implement environmental management

practices .

Conclusion
In this study, we show that normative and cognitive attributes of managers may

explain why some firms adopt voluntary environmental management practices while

other firms do not. We also demonstrate that the effect of these drivers are reinforced

in the presence of charismatic leadership. We thus offer empirical evidence to an

emerging research stream that calls for research on the microfoundations of corporate

sustainability providing also a condition (i.e. CEO’s charisma) under which micro-

level attributes are more likely to drive corporate environmental proactivity.

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33
 Table 1. Means, standard deviations, and Pearson correlations

Variable N Mean s.d. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

1Size 125 2.17 .44
2Food and beverages 125 .27 .45 .20 *
3Plastic 125 .11 .32 .18 * -.22 *
4Metals 125 .11 .32 -.10 -.22 * -.13
5Non-metallic 125 .14 .34 -.19 * -.24 ** -.14 -.14
6Wood, paper & pulp 125 .11 .32 -.08 -.22 * -.12 -.13 -.14
7Organizational stakeholders 125 4.91 1.21 .02 .11 .12 -.08 -.07 -.10
8Community stakeholders 125 4.18 1.44 -.00 .14 .04 -.03 -.08 -.03 .51 *
9Cost considerations 124 4.72 1.27 -.06 .08 -.08 .13 .01 -.03 -.13 .05
1External-markets 124 4.46 1.06 .06 -.04 .09 -.11 -.16 .17 .24 ** .35 ** -.12

0 1External-resources 124 4.35 1.09 .07 -.01 .09 .06 -.16 .22 * .21 * .20 -.12 .50 **

1 1Self-efficacy 124 5.47 .96 .06 .02 .04 -.11 .07 .19 * .29 ** .19 * -.14 .21 * .35 **

2 1Awareness of consequences 123 5.13 .79 .17 -.11 -.03 .05 .12 -.06 .14 .03 -.01 .09 .19 * .10

3 1Ascription to responsibility 123 5.31 .71 .02 -.12 .07 .03 .17 .09 .24 * .05 -.09 .11 .14 .25 * .28 *

4 1Charismatic leadership 125 5.68 .92 .11 -.08 .05 -.05 .05 -.00 .37 ** .17 -.07 .28 ** .26 ** .14 .33 ** .19 *

5 1Environmental Management 125 4.79 1.61 .14 -.03 .20 * -.03 -.11 -.02 .52 ** .34 ** -.02 .33 ** .35 ** .36 ** .28 ** .31 ** .31
**

6 * p < .05, ** p < .01

Table 2. Results of Multiple Regression Analyses

a

34
Variablesb Model 1 Model 2 Model 3 Model 4 Model 5 Model 6
Intercept -1.79 † (.99) -.03 (1.16) .45 (1.11) -.34 (1.13) .09 (1.18) .23 (1.11)
AC .31 † (.17) .36 * (.18) .34 † (.18) .31 † (.17) .40 * (.18)
AR .36 * (.17) .36 * (.17) .38 * (.16) .35 * (.18) .37 * (.16)

35
SE .23 * (.12) .21 † (.12) .22 † (.11) .22 † (.12) .18 (.12)
Charismatic leadership .04 (.15) .14 (.15) .01 (.14) .05 (.15) .10 (.15)
Charismatic leadership x AC .36 ** (.12) .26 * (.13)
Charismatic leadership x AR .40 * (.15) .42 * (.13)
Charismatic leadership x SE -.07 (.10) -.14 (.12)

Controls
Size .41 (.28) .10 (.26) .02 (.25) .07 (.25) .08 (.26) .01 (.24)
Organizational stakeholders .65 ** (.12) .51 ** (.13) .48 ** (.12) .54 ** (.12) .49 ** (.14) .47 ** (.13)
Community stakeholders .01 (.09) .05 (.09) .08 (.09) .04 (.09) .06 (.10) .08 (.09)
Cost considerations .17 † (.09) .17 * (.08) .15 † (.08) .18 * (.08) .17 † (.09) .16 † (.08)
External-markets .13 (.15) .11 (.16) .04 † (.15) .10 (.15) .11 (.16) .04 (.15)
External-resources .29 * (.13) .19 (.12) .21 (.12) .25 * (.12) .20 (.12) .26 * (.12)
Food and beverages -.52 (.29) -.46 † (.27) -.47 † (.28) -.39 (.28) -.47 † (.28) -.41 (.29)
Plastic .19 (.37) .03 (.37) .05 (.38) .02 (.36) .08 (.36) .13 (.37)
Metals -.29 (.51) -.39 (.47) -.35 (.45) -.33 (.47) -.40 (.48) -.30 (.45)
Non-metallic -.32 (.41) -.75 † (.40) -.85 * (.40) -.95 * (.42) -.70 † (.41) -.93 * (.42)
Wood, paper & pulp -.28 (.42) -.52 (.40) -.41 (.38) -.41 (.40) -.51 (.39) -.30 (.37)

R2 .364 .435 .464 .457 .431 .476

ΔR2c .071 .029 .022 -.004 .041
ΔF 12.33 ** 3.90 * 9.00 * 5.59 * 0.51 3.87 *
RMSE 1.271 1.198 1.167 1.175 1.203 1.154
a
Environmental Management Initiatives (EMI) is the dependent variable. Values are unstandardized regression coefficients, with standard errors in parentheses
b
SE:Self efficacy; AC:Awareness of Consequences; AR: Ascription to Responsibility
c
The base model for calculating changes in ΔR and ΔF for Models 3-6 is Model 2. The base model for Model 2 is Model 1.
†p<.10, * p < .05, ** p < .01

36
Figure 1. Theoretical Framework and Hypotheses

Charismatic Leadership

Personal Norms
H3a
Awareness of H3b
H1a
Consequences (AC)
H4

H1b Environmental
Ascription of
Management Initiatives
Responsibility (AR)
(EMI)

H2
Self Efficacy (SE)

37
Figure 2. Interaction between Awareness of Consequences (AC) and
Charismatic Leadership in predicting EMI

Environmental Management Initiatiatives (EMI)

4 4.5 5 5.5

Low AC Medium AC High AC

Low Levels of Charismatic Leadership (-1SD)

Medium Levels of Charismatic Leadership
High Levels of Charismatic Leadership (+1SD)

Figure 3. Interaction between Ascription of Responsibility (AR) and

Charismatic Leadership in predicting EMI
Environmental Management Initiatiatives (EMI)
4 4.5 5 5.5

Low AR Medium AR High AR

Low Levels of Charismatic Leadership (-1SD)

Medium Levels of Charismatic Leadership
High Levels of Charismatic Leadership (+1SD)

38
Figure 4. Structural Equation Model Estimates

AC
.3
3*
(. 1
5)
AR .48
* (.
21
)

.25†
SE (.13)
.83** (.18)
EMI_obj EMI

(.15)
.33*
Charismatic
leadership X AC
8)
( .1
9 *
.3
Charismatic
Control variables
leadership X AR
3)

Sector, Size, Community

(. 1

Stakeholders, Organizational
8+

Stakeholders, External
-.1

Charismatic Resources, External Markets

leadership X SE

Values are unstandardized regression coefficients, with standard errors in parentheses

†p<.10, *p<.05, **p<.01

39