Top Management Team Functional Experience and Corporate Social (Ir)responsibility: Threshold Effects on Executive Incentives

The fulfillment of corporate social responsibility remains crucial for companies to maintain competitiveness in today’s rapidly developing digital landscape. A truly robust corporate social responsibility strategy involves avoiding “doing bad” and actively engaging in “doing good.” This study uses data from 692 A-share listed companies from 2013 to 2021 to analyze the relationship between top management team (TMT) functional experience, executive incentives, and corporate social responsibility behavior. The research suggests that such heterogeneity enhances responsible behaviors and reduces irresponsible behaviors of firms, and functional experience centrality enhances responsible behaviors but does not reduce irresponsible behaviors. By adopting a stakeholder and behavioral segmentation method into the firm’s corporate social responsibility, it was observed that TMT functional experience heterogeneity enhances responsible behaviors of internal stakeholders while reducing irresponsible behaviors of external stakeholders, whereas TMT functional experience centrality primarily enhances responsible behaviors of internal stakeholders. When compensation incentives exceed a certain threshold to align with the expectations of TMT, members can leverage their experience to enhance responsible corporate behavior and reduce irresponsible behaviors. However, equity incentives must be controlled within certain thresholds to effectively harness the heterogeneous functional experience of TMTs and address irresponsible corporate behavior.