CSR incentives and corporate irresponsibility: evidence from the United States

Purpose This study aims to investigate whether linking management compensation to corporate social responsibility criteria (CSR incentives) reduces corporate social irresponsibility (CSiR). Drawing on stakeholder–agency theory, the author argues that CSR incentives align management and stakeholder interests, discouraging irresponsible actions. Using resource dependence theory, this study examines how industry characteristics moderate this relationship. Design/methodology/approach This study analyzes a sample of 1,763 US firms from 2011 to 2019 using fixed-effects regression models. This study complements this with a two-stage least squares regression and an alternative CSiR measure for robustness reasons. Findings The results show that CSR incentives are negatively associated with CSiR, supporting their role in mitigating irresponsible actions. This effect is weaker in munificent industries due to resource abundance and stronger in dynamic environments, where CSR incentives help firms adapt to shifting stakeholder demands. Environmental complexity does not significantly moderate the relationship, possibly because firms in complex industries already integrate diverse stakeholder interests, reducing the added impact of CSR incentives. Originality/value This study extends CSR governance research by showing that CSR incentives mitigate harmful corporate behavior, not just promote positive outcomes. This study also identifies how environmental conditions shape effectiveness.