Anecdotal accounts of global firms describe their plans for or existing CSR contracting. 3 These compensation policies signal firms’ embrace of CSR as an important element of corporate strategy and commitment to addressing stakeholders’ needs in their strategic decisions ( Berrone & Gomez-Mejia, 2009 Flammer et al., 2019). corporations are sincere about, then they must link compensation for the senior executives directly to meeting goals such as cutting carbon emissions, and lowering water and energy use” ( The Guardian, 2014). These compensation policies link executive pay to social and environmental performance targets, such as reductions of greenhouse gas emissions, employee health and safety, employee satisfaction, and community development ( Flammer, Hong, & Minor, 2019 Hong, Li, & Minor, 2016 Ikram, Li, & Minor, 2019). As these declarations indicate, firms face increasing pressures to focus on the long-term interests of all stakeholders rather than just short-term shareholder value ( Aguilera, Filatotchev, Gospel, & Jackson, 2008), and in response, as well as to strengthen their relations with stakeholders, firms increasingly adopt initiatives and policies to embrace CSR ( Berrone & Gomez-Mejia, 2009 Walls, Berrone, & Phan, 2012 Wang, Tong, Takeuchi, & George, 2016).Ī relatively recent but important trend marking these initiatives and policies is the integration of CSR criteria into executive compensation contracts, which we refer to as CSR contracting. firms-publicly agreed to share “a fundamental commitment to all of our stakeholders” ( Business Roundtable, 2019: 1). For instance, at the end of 2019, the World Economic Forum (WEF) declared in its “Davos Manifesto” that the universal purpose of a company “is to engage all its stakeholders in shared and sustained value creation.” 2 Six months before this declaration, the Business Roundtable-an association of chief executive officers of leading U.S. 1 Although CSR is not a new topic (e.g., Bowen, 1953), it is clear that firms no longer can afford to solely focus on shareholders’ interests. Broadly defined, CSR refers to “the integration of social and environmental concerns in their companies’ operations and in their interactions with stakeholders” ( Cheng, Ioannou, & Serafeim, 2014: 1). KeywordsĬorporate social responsibility (CSR) has rapidly risen up the corporate agenda and increasingly is of critical importance for firms across the globe. This study advances understanding of how the corporate governance bundle of external regulatory pressures and internal corporate governance mechanisms affects the adoption of a relatively recent, important corporate governance practice in the boardroom. Corporate governance mechanisms have moderating effects: a greater degree of board independence strengthens the conformity effect, whereas blockholder ownership weakens it. Regulatory pressures evoke heterogeneous responses among firms within a country though, depending on their interaction in the corporate governance bundle. The analysis of a worldwide, longitudinal sample of 2,328 firms listed in 37 countries during 2003 through 2015 reveals that the degree of regulatory pressure on firms to operate in socially and environmentally sound ways positively influences their adoption of CSR criteria in executive compensation contracts (i.e., conformity effect). ![]() Building on the notion that firms operate in settings in which external regulatory pressures and internal corporate governance conditions interact, we investigate how internal corporate governance mechanisms moderate the relationship between external regulatory pressures and adoption of CSR criteria in executive compensation contracts. This study examines the relationship between the degree of external social and environmental regulatory pressures and firms’ integration of corporate social responsibility (CSR) criteria into executive compensation contracts.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |