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The role of business strategy and CEO compensation structure in driving corporate social responsibility: Linkage towards a sustainable development perspective
Author(s) -
Peng ChihWei
Publication year - 2019
Publication title -
corporate social responsibility and environmental management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.519
H-Index - 73
eISSN - 1535-3966
pISSN - 1535-3958
DOI - 10.1002/csr.1863
Subject(s) - corporate social responsibility , business , compensation (psychology) , incentive , linkage (software) , sustainability , perspective (graphical) , sustainable development , investment (military) , executive compensation , marketing , industrial organization , accounting , corporate governance , public relations , microeconomics , finance , economics , psychology , ecology , biochemistry , chemistry , artificial intelligence , politics , political science , computer science , psychoanalysis , law , gene , biology
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.