Proceedings of 9th Annual London Business Research Conference
4 - 5 August 2014, Imperial College, London, UK, ISBN: 978-1-922069-56-6
Green IT Strategic Practices and CEO Compensation:
Empirical Evidence from the ICT Industry
Ricky Y. K. Chan
Amidst the global trend of heightening environmental consciousness, firms today have to
face soaring pressures from various stakeholders to operate in an ecologically
responsible manner. These pressures have, in turn, prompted firms to resort to various
environmental initiatives to manage the business─environment relationship. Of these
initiatives, the use of information technology or IT to support corporate environmental
practices (called “IT-based environmental strategies” hereafter) has become increasingly
popular in this digital age.
Against the foregoing backdrop, this study is aimed at investigating how different
compensation forms (salary, bonus and stock option) of a chief executive officer (CEO)
influence the corporate practice of IT-based environmental strategies. According to
upper echelons theory, CEOs hold the ultimate responsibility for critical resource
allocations pertaining to various major investments and strategic moves of their firms. In
view of CEOs’ crucial influence on advancing corporate sustainability, it is important to
better understand how they are motivated by different forms of compensation in the
pursuit of IT-based environmental strategies.
This study chooses the information and communications technology (ICT) industry as the
research setting. The ICT industry currently accounts for approximately 2% of global
carbon dioxide emissions and is characterized by high levels of technological and
competitive intensity. These industry characteristics offer an appropriate setting to
examine how firms deploy their technological resources to advance corporate
sustainability in face of considerable levels of ecological and competitive pressures.
Given the rapidly changing or dynamic nature of the ICT industry, this study also
examines the possible moderating effect of market dynamism on the aforementioned
relationship between CEO compensation forms and the corporate practice of IT-based
environmental strategies. This examination helps practitioners and academics better
understand if the (de)motivational effect of different CEO compensation forms on the
practice of IT-based environmental strategies would further vary alongside the distinct
business conditions which firms face.
The study was undertaken by analyzing survey and archival data collected from 145 ICT
firms. By and large, the results derived from regression analysis support the proposed
hypotheses. Specifically, they reveal the negative impact of fixed pay and bonus pay,
and the positive impact of stock option pay on the practice of IT-based environmental
strategies. In addition, the findings show that the perceived degree of market dynamism
moderates the aforementioned influences of different CE compensation forms on the
practice of IT-based environmental strategies. Overall, the findings provide the board of
directors of an ICT firm with useful insights into fine-tuning its CEO motivation package
so as to facilitate the strategic pursuit of corporate sustainability in line with the business
conditions which its firm faces.
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Ricky Y. K. Chan, Associate Professor in Marketing, Department of Management and Marketing,
Hong Kong Polytechnic University, Hung Hom, Kowloon, Hong Kong, E-mail: msricky@polyu.edu.hk