The role of business strategy and CEO compensation structure in driving corporate social responsibility: Linkage towards a sustainable development perspective

Abstract

This study extends prior studies by analyzing how business strategies affect corporate social responsibility (CSR) engagement. Studies in the business strategy and compensation literature further investigate whether firms have superior CSR if they tend to align their compensation with their company's overall strategy. This tendency would tend to encourage firms to make their investment decisions on the basis of a long‐term sustainability development perspective. The data consist of a broad cross‐section of companies and industries in the United States for the 2003–2012 period. To avoid a potential endogenous effect, a two‐stage instrumental variables regression is also adopted in this study. It is found that the prospector business strategy has a strong positive association with CSR. In addition, CEOs with short‐term compensation have less incentive to invest in CSR if their firms adopt a defender strategy. The opposite is true for the prospector group, suggesting that sometimes, misfits may also produce good CSR outcomes.

CEO ability and sustainability disclosures: The mediating effect of corporate social responsibility performance

“…Moreover, as the decision to invest in CSR is related to the CEO's career concerns, firms should consider this fact and include CSR indicators in their assessments of the CEO's performance so that their efforts to improve CSR performance and reporting enhance their value in the labour market and career prospects (García‐Sánchez & Martínez‐Ferrero, ; Yuan et al, ). Similarly, to encourage CEOs to promote CSR practices, executive compensation plans could include CSR‐related terms (Jouber, ; Peng, ). Second, because better CSR disclosures can be attributed to the CEOs' managerial ability, such disclosures can send investors and financial analysts a “signal” of the firms' management quality and, hence, enhance the firms' reputation in the financial market.…”

“…Second, because better CSR disclosures can be attributed to the CEOs' managerial ability, such disclosures can send investors and financial analysts a “signal” of the firms' management quality and, hence, enhance the firms' reputation in the financial market. Finally, to the extent that CEO compensation packages are linked to CSR indicators, both the firms' boards and policy makers should implement measures (i.e., external monitoring mechanisms) to ensure the credibility of the firms' CSR indicators and disclosures (Jouber, ; Peng, ).…”

Sustainable strategies and corporate social responsibility in the Italian fisheries companies

“…The fisheries industry is characterized by a social context in which all levels of competitiveness and economic development must continue to grow, while simultaneously ensuring commitment to levels of environmental and social sustainability (Cash et al, 2003; Elkington, 2013; Feller, 2015; Peng, 2020; Smith et al, 2010).…”

How significant is corporate social responsibility to business research?

“…However, this implication should be taken with caution. While there is evidence of the importance of more materialistic interests when it comes to make business decisions by those at the top of an organization (e.g., Callan & Thomas, ; Jouber, ; Peng, ), academic journals are not very well known among business professionals and there is a gap between academic research and business people (Perea & Brady, ), so its real influence is still quite uncertain.…”