Who saves our world? The impact of executives’ gender on corporate social and ecological investments


In August 2019, 181 members of the Business Roundtable, a nonprofit association whose members are chief executive officers of major U.S. companies, signed a “Statement on the Purpose of a Corporation,” which represents a rebuke from a strong shareholder orientation towards a more modern stakeholder capitalism. Two of the five pillars described in the statement are a commitment to socially oriented and sustainable business practices. They aim at fair and reasonable wages, employee development, supporting communities, and protecting the environment. The statement followed peaked public concern about climate change and its effects on society, and increased pressure from shareholders and governments demanding that firms be socially responsible and lower their ecological footprint.

Therefore, social and environmental issues are increasingly seen as a competitive advantage. Recent research finds positive effects of firms’ corporate social responsibility (CSR) performance on outcomes such as organizational commitment, employee satisfaction and retention, cost and risk reduction and stakeholder satisfaction.

While management is generally responsible for the implementation of a firm’s CSR activities, the board of directors also has a fundamental role in representing a broad range of stakeholders and considering CSR issues in a firm’s strategic agenda.

In this context, a substantial body of archival research suggests that female board members and female managers are among the main drivers of firms’ stakeholder orientation and CSR performance. However, archival studies on the relationship between executive diversity and CSR are subject to some methodological challenges and do not deliver conclusive evidence for a causal inference between female representation and CSR performance. Also, research has not fully unveiled which characteristics and factors influence executives’ CSR decision-making and why archival research finds differences between female and male executives.

Thus, we create an experimental investing scenario in which we observe executives’ CSR decision-making on short-term profit maximization versus improvement of social/ecological standards under a restrained budget. Using a private survey company and several screening questions in our survey, we make sure that the sample includes only managers higher up in the hierarchy and executives with the authority to make significant business decisions in their firm.

Experimental Setting

In our experimental setting, participants assume the role of an executive belonging to the management board of a fictitious firm, which plans to invest $100 million in a new production facility to increase growth and profitability. Participants, as a member of management, decide how to allocate the budget between the short-term profitability of the production facility and the improvement of social and/or ecological standards at the new production facility. Participants’ personal compensation for conducting our experiment increases with the increase in short-term profitability of the fictitious firm. To not only incentivize participants with their personal compensation, we also explain to them that we donate their allocation to the improvement of social and ecological standards to respective U.S. charities after our experiment is finished.

Our main dependent variable (CSR investment) is the sum of participants’ allocation of money to the improvement of social and ecological standards. As independent variables, we capture participants’ gender, their real world incentive programs, i.e. what percentage of participants’ real life salary is attributable to financial goals versus personal development and sustainability goals, and manipulate shareholder pressure by changing the financial performance of our fictitious firm (sales and earnings growth above (below) industry average). Drawing upon psychological concepts and results from the large body of archival research, we predict that female executives are generally more willing to sacrifice short-term financial return to improve social/ecological standards when making investment decisions than male executives

Findings and Analysis

We find that gender has a marginally significant impact on CSR investment. Thus, we can provide weak evidence that female executives are more oriented towards social and sustainable practices per se. However, this finding is in line with many archival studies that find a positive association between board gender diversity and CSR performance.

As we capture participants’ real world incentive programs, we are able to analyze how participants’ real world business environment affects their CSR decision-making in our experiment. We find strong statistical evidence that as the relevance of achieving financial goals in participants’ real world incentive program increases, participants focus more on short-term profit maximization in our experimental setting. Therefore, we conclude that a certain type of behavior, which is promoted through participants’ real world incentive program, also transfers to the decisions made by participants in our experiment.

Finally, as public attention to firms’ involvement in socially and environmentally responsible business practices has risen and investors with a focus on socially and ecologically responsible investments have gained prominence, we also predict that shareholder pressure affects executives’ CSR decision making. However, using the relative financial performance of our hypothetical firm in our experiment to manipulate shareholder pressure[1], we do not find that shareholder pressure has a statistically significant effect on executives’ CSR decision making.

In our supplemental analyses, we analyze whether differences in executives’ CSR decision making are influenced by specific character traits. We find a strong correlation between gender and these character traits, but no statistically significant effect of these character traits on CSR decision-making. This is surprising, as studies on gender differences often use these character traits as explanation for differences between females and males. In our context however, it seems that participants’ incentive program overrides any relation between executives’ character traits and CSR investment.

Our study makes important contributions to the CSR literature and the literature on executives’ decision making. With our experimental analysis, we can generally confirm a positive impact of female executives on firms’ CSR performance. Although we find that the character traits, which are used extensively in archival studies to explain positive effects of female executives on firms’ CSR performances, are gender dependent, we do not find any effects of these character traits on executives CSR investment decision. Our analyses provide further interesting insights that might help to explain inconclusive findings of prior archival studies. As we find that executives’ real world incentive program plays a key role in explaining their CSR decision–making, we contribute to a growing stream of literature on CSR decision making by outlining that it is essential to control for executives’ real world incentive programs to derive valid inferences. Additionally, our study is of practical importance. Our study offers implications for policy makers, who are concerned about the appropriateness of gender quotas and their effect on a firm’s decision making, and for firms themselves, which will continue to face public and investor pressure to expand their social and ecological activities and therefore must adapt their corporate decision-making to address all stakeholder concerns. The results of our study imply that firms that intend to transform their business to adapt to the increased challenges of sustainability and social compliance need to revise their incentive programs to include sustainability goals.


Jochen Theis is an Associate Professor in the Department of Business and Economics at the University of Southern Denmark.

Marvin Nipper is a Ph.D. student at the University of Duisburg-Essen.

This post is adapted from their paper, “Who Saves Our World? The Impact of Executives’ Gender on Corporate Social and Ecological Investments,” available on SSRN.

[1] There are different types of shareholder pressure that executives might experience. We decided to manipulate financial performance to impose a type of shareholder pressure that is indirectly related to CSR investments, because a direct manipulation of shareholder pressure based on CSR (e.g. new CSR-activist investor; CSR related shareholder proposal) seemed too obvious, possibly inducing demand effects in participants.

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