Affiliation:
1. Institute for Advanced Research in Business and Economics (INARBE), Public University of Navarra, Pamplona, Spain
Abstract
This study examines how the integration of corporate social responsibility (CSR) criteria in executive compensation can improve green innovation performance in European countries. Using agency theory and stakeholder theory, and a database of 5,603 firm-year observations from European companies in the period 2012–2021, we find that CSR aligns the interests of senior executives with the company’s green innovation goals through green compensation contracts. We also explore the indirect effect in this relationship and reveal that the implementation of green practices mediates the impact of CSR contracting on green innovation performance. These findings indicate that CSR contracting as an effective governance mechanism could be strengthened by green practices, such as reducing resource use, water efficiency, energy reuse, emission reduction and pollution prevention. This study offers valuable insights for senior executives and policymakers who wish to manage CSR initiatives and green practices to improve their green innovation performance. JEL CLASSIFICATION: Q56 M12
Funder
Agencia Estatal de Investigación
Subject
Economics and Econometrics,General Business, Management and Accounting,Business and International Management,Strategy and Management