Beyond profit: Exploring CEO tenure, social value risk‐taking, and competitive dynamics in savings banks

Abstract Existing research overlooks the possibility that firms may engage in risk‐taking for social value beyond profit. Drawing on the community embeddedness literature, we propose that firms engage in risk‐taking for social value to enhance their local standing and acceptance. We examine the microfinance lending activities of 79 South Korean savings banks from 2013 to 2022 to test our hypotheses. Contrary to previous findings that longer CEO tenure decreases corporate risk‐taking, our results show that longer CEO tenure is associated with increased corporate risk‐taking for social value, suggesting that the impact of CEO tenure on risk‐taking depends on the firm's goals. Additionally, our results indicate that when neighboring firms in the same community engage in legitimacy‐enhancing behaviors, this triggers a corresponding increase in the focal firm's efforts to enhance local legitimacy. This implies a competitive “race for legitimacy” among firms within the community. We discuss these findings' implications and explore future research directions.