Together, Mary Sully de Luque, assistant professor of management and research fellow at Thunderbird School of Global Management, and David Waldman, director of the Center for Responsible Leadership at Arizona State University’s School of Global Management and Leadership at the West campus, have found that maintaining a specific focus on profits in decision-making can have negative effects on how a leader is viewed.
Often, executives emphasize profits thinking that their decisions will predominantly benefit their constituents, the shareholders. However, the study discovered that leaders who balance a wider range of stakeholder needs are more likely to be viewed as visionary leaders, and these leaders have a better chance of actually achieving profits.
Nathan Washburn, of ASU’s W. P. Carey School of Business, joined the research team of the complex study involving data from more than 40 academic researchers and examining nearly 500 CEOs and their organizations spread across 17 countries on five continents. Study findings may serve as a blueprint for corporate leaders as they hone their management and leadership skills.
“CEOs with strong economic values tend to be viewed by followers as highly authoritarian, rather than as visionary,” notes Waldman, who conducts interdisciplinary work involving colleagues from areas such as operations management, strategy, economics, information systems, accounting and finance. According to the study, firms that are better performers, in terms of current financial results, employ optimism regarding the company’s future. The extra effort they are willing to put forward are what marks CEOs as visionary.
The 25-page study titled “Unrequited Profits: The Relationship of Economic and Stakeholder Values to Leadership and Firm Performance,” sought to determine if an emphasis on rational quantification and profit maximization were optimal directives for executive decision-making. “Although executives should not disregard profit maximization and rational decision-making,” says Sully de Luque, “it is advantageous for leaders to give attention to balancing the concerns of multiple stakeholder groups to make better decisions and successfully lead their organizations.”
“The most important implication of these findings is that top-level executives who give too much emphasis to rational, quantifiable outcomes inherent in economics theories may find their values go unrequited,” Washburn says. The research team also noted that even though executives make decisions with profits squarely in mind, those profits may not be realized.
Based on these findings, the report concludes that executives should not solely emphasize the pursuit of profits. Instead it may behoove executives to emphasize values and visions that pertain to broader objectives and sets of stakeholders, which includes employees, customers or clients, and the greater community in which the firm exists.

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