The financial benefits are greatest if the appointed executive is a woman Do you want to improve your company's financial performance? If so, then hire a Chief Corporate Social Responsibility (CSR) Officer. ESADE Associate Professor Frank Wiengarten and his research colleagues at the Hong Kong Polytechnic University have demonstrated that Chief CSR Officers, under certain conditions and with certain characteristics, improve a firm's financial performance in terms of return on assets (ROA). Under what circumstances - and to what extent - can a Chief CSR Officer impact a company's financial performance? "Our findings in the Journal of Business Ethics demonstrate that appointing a Chief CSR Officer does more than improve financial performance. More importantly, we employ a behavioral perspective and explore how certain characteristics of the CSR executive impact financial performance. We found that the best financial performance is achieved if the appointee is female with a CSR functional background," says Prof. Wiengarten. To be effective, the Chief CSR Officer needs to be part of the top management team, which is directly involved with strategic decisions made by the CEO. CSR and financial performance Previous research has confirmed the impact that improvements in environmental and social performance can have on financial performance. According to Prof. Wiengarten, appointing a Chief CSR Officer can help to enhance a company's reputation, thereby positively affecting its financial performance. "Effective sustainability strategies can help to reduce costs, which in turn can have a positive impact on financial performance," explains Prof. Wiengarten. "We believe that the Chief CSR Officer has a substantial influence on effective sustainability strategy." Female Chief CSR Officers Gender does matter. Previous research has demonstrated that gender diversity in the top management team can generate economic gains. "Previous studies suggest that women are more concerned with ethical and CSR behaviours, are more inclined to build harmonious relationships and help others, and are more likely than men to be ethical," explains Prof. Wiengarten. "In our study, we found that greater performance benefits can be expected in terms of ROA if the CSR executive is a woman." Internal hire, functional background and newly created position Other aspects that contribute to greater financial performance are for the CSR executive to be an internal hire (instead of externally recruited) and to have a relevant functional background, as it will allow him or her to be more influential in the firm's strategic decisions. Another characteristic that contributes to improving firm performance is for the CSR position to be a newly created strategic role within the company. This sends signals to both internal and external stakeholders that the CSR role is being elevated to the strategic level. The researchers warn that in order to implement an effective sustainability strategy, the Chief CSR Officer should have a high level of technical knowledge of the operations process as well as solid managerial skills to encourage a new corporate culture and liaise with various internal stakeholders.

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Hiring a Chief CSR Officer improves firm performance

01/2018

The financial benefits are greatest if the appointed executive is a woman


Do you want to improve your company's financial performance? If so, then hire a Chief Corporate Social Responsibility (CSR) Officer.


ESADE Associate Professor Frank Wiengarten and his research colleagues at the Hong Kong Polytechnic University have demonstrated that Chief CSR Officers, under certain conditions and with certain characteristics, improve a firm's financial performance in terms of return on assets (ROA).


Under what circumstances - and to what extent - can a Chief CSR Officer impact a company's financial performance?

"Our findings in the Journal of Business Ethics demonstrate that appointing a Chief CSR Officer does more than improve financial performance. More importantly, we employ a behavioral perspective and explore how certain characteristics of the CSR executive impact financial performance. We found that the best financial performance is achieved if the appointee is female with a CSR functional background," says Prof. Wiengarten.


To be effective, the Chief CSR Officer needs to be part of the top management team, which is directly involved with strategic decisions made by the CEO.


CSR and financial performance


Previous research has confirmed the impact that improvements in environmental and social performance can have on financial performance. According to Prof. Wiengarten, appointing a Chief CSR Officer can help to enhance a company's reputation, thereby positively affecting its financial performance.

"Effective sustainability strategies can help to reduce costs, which in turn can have a positive impact on financial performance," explains Prof. Wiengarten. "We believe that the Chief CSR Officer has a substantial influence on effective sustainability strategy."


Female Chief CSR Officers


Gender does matter. Previous research has demonstrated that gender diversity in the top management team can generate economic gains.


"Previous studies suggest that women are more concerned with ethical and CSR behaviours, are more inclined to build harmonious relationships and help others, and are more likely than men to be ethical," explains Prof. Wiengarten.


"In our study, we found that greater performance benefits can be expected in terms of ROA if the CSR executive is a woman."


Internal hire, functional background and newly created position


Other aspects that contribute to greater financial performance are for the CSR executive to be an internal hire (instead of externally recruited) and to have a relevant functional background, as it will allow him or her to be more influential in the firm's strategic decisions.


Another characteristic that contributes to improving firm performance is for the CSR position to be a newly created strategic role within the company. This sends signals to both internal and external stakeholders that the CSR role is being elevated to the strategic level.


The researchers warn that in order to implement an effective sustainability strategy, the Chief CSR Officer should have a high level of technical knowledge of the operations process as well as solid managerial skills to encourage a new corporate culture and liaise with various internal stakeholders.

More Knowledge
How does sustainability leadership affect firm performance? The choices associated with appointing a chief officer of corporate social responsibility
Wiengarten, Frank; Lo , Chris; Lam , Jessie
Journal of Business Ethics
Vol. 140, n 3, 02/2017, p. 477 - 493
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