Corporate Social Responsibility Performance, Incentives, and Learning Effects

Giovanni-Battista Derchi (), Laura Zoni () and Andrea Dossi ()
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Giovanni-Battista Derchi: Ecole Hoteliere de Lausanne, HES-SO University of Applied Sciences and Arts Western Switzerland
Laura Zoni: Università Cattolica del Sacro Cuore, Faculty of Economics and Law
Andrea Dossi: Università Bocconi / SDA Bocconi School of Management

Journal of Business Ethics, 2021, vol. 173, issue 3, No 10, 617-641

Abstract: Abstract This paper examines the effectiveness of the use of executive compensation linked to Corporate Social Responsibility (CSR) goals across US firms. Empirical analysis of a cross-industry sample of 746 listed companies for the period 2002–2013 showed that the use of CSR-linked compensation contracts for Named Executive Officers (NEOs) promotes CSR performance. More specifically, we found that linking NEOs’ compensation to CSR goals produces positive effects in the 3rd year after adoption. As firms accumulate experience and learn how to use the system over the following eight periods, CSR performance increases monotonically. Furthermore, experience accumulated over time affects the different specifications of CSR performance asymmetrically, by reducing both environmental and social CSR concerns and increasing only environmental CSR strengths. Interestingly, we also found that the simultaneous use of other CSR-focused governance systems moderates the effect of a firm’s accumulated experience in using CSR-linked executive compensation on CSR performance: the existence of a CSR committee at the board level and the public release of a CSR report are likely to have a positive moderating effect, while the purchase of a CSR audit has no moderating effect.

Keywords: Executive compensation; CSR performance measures; Organizational learning; CSR governance (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (18)

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DOI: 10.1007/s10551-020-04556-8

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