Diversity of returnee executives' foreign experience and corporate social responsibility performance.

Abstract

Top managers' past experiences (e.g., foreign experience) significantly impact their decision-making behavior, which may influence firms' sustainable development. The available literature, focusing on the role of the increase in the number of top executives with foreign experience in corporate social responsibility (CSR), yields mixed results. In order to clarify the ambiguous relationship between executive foreign experience and CSR, we empirically examine the effect of the geographic diversity of top executives' foreign experience on CSR. Based on a hand-collected dataset of the top management team's (TMT's) foreign experience, we demonstrate the positive impact of the geographic diversity of returnee executives' foreign experience on firms' CSR using Chinese A-share listed firms from 2009 to 2018. Moreover, this impact is stronger in firms with political connections with the central government and in regions with good market development. Furthermore, the mechanism analysis shows that returnee executives drive firms' CSR by promoting corporate donations and green innovation. This paper offers clear policy implications by suggesting that hiring returnees with a broad geographic scope of foreign experience as corporate executives is an efficient way to enhance firms' CSR.