A Dynamic Relationship Between CEO Social Class Origin, CEO Career Experience, And Employee Treatment

Keywords: CEO social class, CEO career experience, employee treatment

Abstract: We argue that CEOs from higher social classes tend to treat employees in a transactional manner compared to CEOs from lower social classes who relationally treat employees. We attribute this difference to agentic vs. contextual beliefs that individuals from different social classes adopt due to the circumstances of their upbringing. We further argue that elite education, career hardship, entry into a distressed labor market, and an insider career trajectory erode agentic thinking, strengthen communal thinking and thus moderate the relationship between CEO social class origin and employee treatment. We rely on a survey sample from 135 CEOs from S&P 1500 firms and 403 firm-year observations to test our predictions for 2007 to 2020 for supportive employee treatment. We additionally test callous employee treatment with 87 firm-year observations during the Covid-19 event period of 2020. We find our hypotheses supported.