Chief sustainability officers and corporate social (Ir)responsibility

• Date: 01 April 2020
• Published date: 01 April 2020
• DOI: http://doi.org/10.1002/smj.3113

RESEARCH ARTICLE

Chief sustainability officers and corporate social (Ir)

responsibility

Ruchunyi Fu

1

| Yi Tang

2

| Guoli Chen

3

1

College of Business, Shanghai University

of Finance and Economics, Shanghai, China

2

Faculty of Business and Economics,

University of Hong Kong, Pokfulam,

Hong Kong

3

INSEAD, Singapore, Singapore

Correspondence

Guoli Chen, INSEAD, 1 Ayer Rajah

Avenue, Singapore, Singapore.

Email: guoli.chen@insead.edu

Abstract

Research Summary: How will a chief sustainability officer

(CSO) influence corporate social performance? Building

upon the upper echelons perspective and the attention-based

view, this study argues that while a CSO helps channel man-

agerial attention to a firm's social domain, managerial atten-

tion is more likely to be directed to negative issues than to

positive issues. In addition, such relationships are contingent

on the focal firm's governance design and its industry culpa-

bility. Analysis of a sample of S&P 500 firms for the period

of 2005–2014 largely renders support to our predictions.

Managerial Summary: While more and more firms start to

put a chief sustainability officer (CSO) on its top manage-

ment team (TMT), the implications for corporate social per-

formance of CSO presence remain unclear. With a sample

of S&P 500 firms, we find that the presence of a CSO

increases the firm's socially responsible activities (CSR)

and reduces its socially irresponsible activities (CSiR).

Moreover, CSO presence has a greater effect on reducing

CSiR than on increasing CSR. These relationships become

stronger when the firm has a sustainability committee on

the board and is in a culpable industry.

KEYWORDS

attention-based view, chief sustainability officer, corporate social (ir)

responsibility, top management team, upper echelons theory

1|INTRODUCTION

Since the formal appointment of Linda Fisher as the first Chief Sustainability Officer (CSO) of

DuPont in 2004, firms in different industries have been following suit to add this new position to

Received: 14 February 2018 Revised: 8 October 2019 Accepted: 9 October 2019 Published on: 3 December 2019

DOI: 10.1002/smj.3113

656 © 2019 John Wiley & Sons, Ltd. Strat Mgmt J. 2020;41:656–680.wileyonlinelibrary.com/journal/smj

their top management team (TMT) or C-suite (Weinreb Group, 2011). Among these firms are indus-

try leaders such as AT&T, UPS, Coca-Cola, and Kellogg's. Signaling the commitment to sustainabil-

ity in contemporary firms, CSOs are senior executives in TMTs who are explicitly hired to manage a

firm's corporate social performance (Matten & Moon, 2008). Typically, a CSO's core role is com-

prised of improving working conditions in the supply chain, creating better safety procedures, and

reaping profits from products that address environmental and social problems (Forbes, 2014). Up to

2015, more than three dozen of the largest U.S. public companies had a CSO, and many more had a

senior executive who was in charge of sustainability, corporate responsibility, or corporate citizen-

ship (The Atlantic, 2015). This number has increased steadily over the past few years (Business

Ethics, 2018). Such corporate enthusiasm demonstrates that “companies finally realize that sustain-

ability and efficiency go hand in hand”(New York Time, 2007).

Despite the prevalence and importance of the CSO, the field is almost devoid of research on this

relatively new TMT role and its implications for corporate social performance. The few exceptions

are mainly focused on describing the CSO's emergence, role, and characteristics (Miller & Serafeim,

2014; Strand, 2013). However, to date, empirical research on how CSO presence affects a firm's

social performance is scant. Addressing this gap is important because the purpose of setting up this

new TMT position is to manage firms' social performance, which has become increasingly important

nowadays for firms hoping to achieve and maintain their competitive advantages (Berman, Wicks,

Kotha, & Jones, 1999; Lev, Petrovits, & Radhakrishnan, 2010; Muller & Kräussl, 2011; Waddock &

Graves, 1997; Wang & Qian, 2011).

We explore the mechanism through which CSO presence affects corporate social performance by

examining how it simultaneously affects a firm's engagement in socially responsible as well as

socially irresponsible activities. Scholars in the field of corporate social performance have acknowl-

edged the importance of decomposing this construct into its positive and negative components

(Godfrey, Merrill, & Hansen, 2009; Kotchen & Moon, 2012; Muller & Kräussl, 2011; Strike,

Gao, & Bansal, 2006). The former refers to voluntary corporate actions designed to improve social

conditions (Mackey, Mackey, & Barney, 2007), whereas the latter pertains to “the set of corporate

actions that negatively affects an identifiable social stakeholder's legitimate claims in the long run”

(Strike et al., 2006: 852). Studying both the positive and negative components of corporate social

performance would allow scholars to unveil new insights because a firm can engage in responsible

behavior (“good deeds”) and irresponsible behavior (“bad deeds”) at the same time, and the two are

conceptually distinct and subject to different dynamics (Lange & Washburn, 2012; Mattingly &

Berman, 2006).

Grounded in the recent research on executives' role in corporate social performance (e.g., Chen,

Crossland, & Huang, 2019; Chin, Hambrick, & Treviño, 2013; Tang, Qian, Chen, & Shen, 2015;

Wong, Ormiston, & Tetlock, 2011) and the attention-based view of the firm (Barnett, 2008; Ocasio,

1997; Ocasio & Joseph, 2005), we postulate that CSO presence in the TMT both improves the firm's

socially responsible performance (CSR) and reduces its socially irresponsible performance (CSiR).

1

These effects are mainly driven by the CSO as an attention carrier in firms who channels managerial

attention to social issues. Furthermore, because the attention of decision-makers, as well as other

stakeholders, is more likely to be directed to negative issues than to positive issues, the influence of

CSO presence on corporate social performance is asymmetric: it has a greater effect on reducing

CSiR (the CSO-CSiR relation) than on increasing CSR (the CSO-CSR relation). We further build on

the argument that individual attention is contextually embedded and explore two contextual

1

Unless indicated otherwise, CSR in our article denotes corporate responsible behavior (“good deeds”) and CSiR denotes

corporate irresponsible behavior (“bad deeds”). We use corporate social performance to include both CSR and CSiR.

FU ET AL.657