Do CEO incentives and characteristics influence corporate social responsibility (CSR) and vice versa? A literature review

Abstract

PurposeThis paper aims to analyze whether chief executive officer (CEO) incentives and characteristics (e.g. CEO power, CEO tenure) are linked with corporate social responsibility (CSR) and vice versa.Design/methodology/approachBased on upper echelons theory, the author conducts a structured literature review and evaluates 84 empirical-quantitative studies on CEO and CSR variables.FindingsWhile the majority of the included studies analyzed the CEO-CSR link, there are indicators for a bidirectional relationship. Moreover, prior research has focused on CEO incentives, especially compensation contracts, and on the US capital market. A major research gap relates to CEO characteristics, e.g. CEO values, education and experience.Research limitations/implicationsHeterogeneous CEO and CSR variables and endogeneity concerns lower the validity of recent studies. Future research is encouraged to implement dynamic regression models, increase CSR and CEO proxies and focus on international samples with country-specific effects.Practical implicationsAs CEO activities can have a major impact on CSR activities, the author recommends firms to search for opportunities to make their CSR strategy more comprehensive by their stakeholder communication, thus providing deeper insights into their CSR performance in line with stakeholders’ interests.Originality/valueThe paper is the first literature review on the interaction between CEO and CSR so far. The author explains the main CEO and CSR variables that have been included in research, stresses the limitations of the studies and gives useful recommendations for future research, practice and regulators.

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“…This variable will, therefore, vary between 1 and 3. Its construction is in line with past research [56]. The existing literature on CEO power considers CEO duality to be a strong source of CEO power [57].…”

The revision of nonfinancial reporting directive: A critical lens on the comparability principle

“…Moreover, this impact is higher when the CEO is also a member of the BoD (Abdullah, Yusof, & Nor, 2010; Rechner & Dalton, 1991). CEO duality represents one of the main relevant topics related to the dichotomous relationship between organizational dynamics and nonfinancial performance (Lagasio & Cucari, 2019; Velte, 2019). In particular, prior studies have highlighted that the disclosure of nonfinancial activities by the CEO could be done for unethical purposes such as impression management and greenwashing (Cho, Laine, Roberts, & Rodrigue, 2015; Di Tullio et al, 2019).…”

Does CSR Governance Improve Social Sustainability and Reduce the Carbon Footprint: International Evidence from the Energy Sector

“…To extend our analysis, we use a unique attribute (CEO duality) of corporate governance that plays a key role in forming a CSR committee, since the CEO power and performance can be classified as an opportunity for decision making and strengthening the relationship with shareholders. Moreover, CEO duality can be classified as a specific CEO power variable in terms of CSR characteristics [58], while the CEO has more possibilities and power to implement a sustainable strategy for improving environmental and social performance [31,46]. It may be used opportunistically according to the stakeholder agency theory.…”