CTO Characteristics and ESG Performance of Corporation: Evidence from Korea

Abstract

While there has been a steady stream of research on chief technology officers (CTOs), studies specifically examining the expanding role of CTOs, particularly in the areas of environmental, social, and governance (ESG), remain scarce. Despite extensive research on boards of directors (BODs), chief executive officers (CEOs), and corporate social responsibility (CSR) committees, there is a significant lack of research on the role of CTOs in integrating ESG considerations into technology development and operations. To fill this gap, this study investigated the impact of CTO characteristics (personal, positional, and career-related) on corporate ESG performance. Based on previous studies, we created a conceptual model and proposed 12 hypotheses. A sample of 218 publicly traded corporations in Korea was selected, and a structural equation model was used to test the fit of the research model and hypotheses. The results indicate that the positional characteristics of the CTO positively affect a corporation’s ESG performance, whereas the career-related characteristics of the CTO negatively affect it. However, personal characteristics did not exhibit significant effects. Therefore, this study underscores the need for corporations to empower technology leaders, such as the CTO, and enable them to play an important role in strategic decision-making. By doing so, organizations can enhance their social responsibility, improve environmental sustainability, and maintain competitiveness.

1. Introduction

The growing global interest in corporate social responsibility (CSR) has led to remarkable milestones, such as the creation of ISO 26000 [1], an international standard defining the ethical management, environmental protection, and labor responsibilities of businesses [2,3,4]. This shift requires corporations to move beyond the pursuit of profit and adopt responsible behavior as members of society and communities. Unlike CSR, which focuses on non-financial value creation, environmental, social, and governance (ESG) is a concept adopted by investors and used as a specific metric to evaluate a corporation’s non-financial performance [2]. The emergence of ESG, along with the United Nations Principles for Responsible Investment (UNPRI) of 2006, provides a new perspective on a corporation’s ESG performance, compelling corporations to seek new ways to create sustainable value [3,4].

Recently, the global business environment has witnessed a surge in interest in corporate ESG performance. Investors, consumers, and regulators increasingly demand transparency and accountability for corporate sustainability and social responsibility [5]. These shifts are driving organizations to intensify their strategic efforts to improve ESG performance. The technical decisions and leadership of the Chief Technology Officer (CTO), who is responsible for technology strategy, can significantly enhance a corporation’s environmental performance and positively affect its social responsibility and economic performance [6]. CTOs who drive innovation and technology development directly influence a corporation’s ESG performance, with the potential to improve environmental outcomes through sustainable technology development and environmentally friendly product innovation [7,8]. Conversely, when technological strategies focus on short-term profitability and overlook environmental or social criteria, they can negatively affect ESG performance [9].

The role of the CTO in an organization has been the subject of extensive research. Various studies have emphasized the strategic importance of CTOs and their diverse roles in aligning technology with business goals and driving innovation. Nagahira [10] argues that CTOs in Japanese companies are primarily involved in technology assessment, roadmap creation, R&D resource management, R&D projects, creating technology synergies, networking with external partners, and representing technical aspects to management. Van der Hoven [11] defines six key activities of a CTO, emphasizing the strategic nature of the CTO role, particularly in aligning technology with corporate strategy and business models. Giordan [12] highlights the expanding role of the CTO by emphasizing the need to lead global market strategy teams, engage in co-development and strategic commercialization, develop brand concepts, establish strategic partnerships with IP holders, and integrate R&D and technology commercialization. Lohmüller et al. [13] describe the role of determining company priorities and balancing strategy execution with technology implementation. Taken together, these studies summarize the role of the CTO as aligning technology strategy with business goals, effectively managing technology resources, driving innovation, creating synergies through external partnerships and networking, and collaborating with management.

Additionally, the CTO’s role in aligning technology strategy with business goals is becoming increasingly important in the context of ESG objectives. CTOs are now at the forefront of driving sustainable innovation and enhancing corporate sustainability through the development of sustainable technologies and green products [14]. CTOs are playing an important role in addressing key challenges such as sustainability, talent management, workplace issues, and the future of R&D [15]. In addition to driving innovation, CTOs support their companies’ ESG goals by developing technology solutions that minimize environmental impact and ensure long-term sustainability [16]. For these reasons, CTOs play an essential role in the sustainable growth of organizations, and their importance is expected to grow in the future.

To address the research objectives, this study conducted an empirical analysis focusing on the following question: ‘How do the personal, positional, and career-related characteristics of CTOs influence the ESG performance of corporations in the context of growing global emphasis on sustainability?’ Given the strategic importance of CTOs in aligning technology with corporate goals, these characteristics were analyzed to assess their impact on organizational ESG outcomes.

In particular, the COVID-19 pandemic has increased attention to ESG performance, further emphasizing the importance of creating sustainable value for corporations. Several corporations are expanding their efforts to integrate ESG performance, including the introduction of independent decision-making bodies, such as ESG committees. This drive toward ESG management makes it imperative to consider non-financial factors in addition to financial benefits [2]. Numerous ESG rating organizations have evaluated corporations’ sustainability and ESG performance.

This study investigates how the personal, positional, and career-related characteristics of CTOs influence their organizations’ ESG performance. It seeks to provide strategic insights to help corporations achieve sustainable growth and fulfill their social responsibilities. Despite recent studies making important contributions to this field [17,18,19], there is a significant lack of research to examine the relationship between CTO characteristics and ESG performance.

This paper proceeds as follows: Section 2 provides a comprehensive literature review, examining the relationships between CTO characteristics and ESG performance, with subsections exploring personal, positional, and career-related characteristics. This section also presents the hypotheses derived from the literature. Section 3 describes the research methods employed in this study, including the research model, data collection procedures, and definitions of key variables. Section 4 presents the results, focusing on model fit, the reliability and validity of the measurement instruments, and the outcomes of the hypothesis testing. Section 5 discusses the findings in depth, highlighting the theoretical, practical, and policy implications of the study. Finally, Section 6 concludes the paper by summarizing the key insights and suggesting directions for future research.

2. Literature Review and Hypotheses

In recent years, the ESG performance of corporations has become a key indicator of the global business environment. This shift is driven by the growing interest in corporate sustainability and social responsibility among investors, consumers, and regulators, prompting organizations to enhance ESG performance [5,20]. Chung and Kang [21] highlight the increasingly important role of the CTO in promoting sustainable business practices. Wu and Li [22] argue that technological leadership and innovation contribute to social and environmental sustainability.

Previous studies have extensively covered the impact of board composition, CEO leadership, and the role of CSR committees on a corporation’s ESG performance [23]. However, there is a relative lack of research analyzing the influence of CTO characteristics and their technological decisions on ESG outcomes. This study complements prior research by highlighting the characteristics and role of CTOs in achieving ESG goals through technological innovation.

ESG performance is a critical indicator of corporate sustainability and social responsibility. ESG components are broadly divided into three categories: environmental, social, and governance. Environmental performance includes resource utilization, energy efficiency, and waste management. Social performance encompasses labor practices, employee benefits, and community contributions. Governance performance includes transparency, board composition, and ethical management [24].

A CTO drives innovation and technological development, directly influencing a corporation’s ESG performance. For instance, if a CTO leads sustainable technological development and environmentally friendly product innovation, a corporation’s environmental performance can improve [8]. Conversely, Yang and Li and Liu and Wu [9,25] point out that a corporation’s ESG performance can suffer if its technology strategy prioritizes short-term profitability over environmental or social criteria.

2.1. CTO Characteristics and ESG Performance

CTOs play an important role in integrating ESG objectives with technological strategies. They ensure that environmental and social considerations are part of technology development and operations. Zhu and Huang [26] argue that ESG-driven innovation enhances firm performance, while CIO&Leader [27] highlight the role of CTOs in promoting ESG efficiency. CTOs influence ESG outcomes through decisions on technology procurement, maintenance, and operations, directly impacting a company’s environmental footprint. Their leadership in sustainable technology development, social responsibility, and energy management supports long-term sustainability goals [26,28].

Key characteristics of effective CTOs include technical expertise, innovative capabilities, and strategic vision. Wang et al. [29] demonstrate that CTOs who lead efforts in reducing carbon emissions and developing renewable technologies significantly improve ESG performance. Corporations should prioritize CTOs with the right skills to drive sustainable growth and integrate ESG principles into their strategies [28,29].

To improve corporate ESG performance, it is necessary to extend prior research on boards of directors (BODs), CEOs, and CSR committees to include the expanding role of the CTO in relation to ESG. This study builds on prior research to examine how CTOs’ personal characteristics, positional characteristics, and career-related characteristics affect ESG performance.

2.2. Personal Characteristics

Analyzing the impact of personal characteristics on organizational strategy and performance is an important topic in leadership theory and management. Executives’ personal characteristics, such as age, education level, and tenure, significantly influence strategic organizational decisions and performance, particularly ESG performance. A CTO’s effective technical leadership and decision-making abilities are important for ESG performance. These characteristics influence how the CTO designs and implements the organization’s ESG strategy, which is directly related to long-term organizational performance. Therefore, the personal characteristics of a CTO are key factors in shaping the strategic direction and ESG performance of an organization, playing an essential role in ensuring sustainable and responsible growth. This enables the organization to remain competitive in a complex global environment while significantly contributing to meeting stakeholder expectations.

2.2.1. CTO Age

Recent studies argue that CEO age is strongly related to an organization’s environmental performance. Ozbek [30] suggests that CEO age plays an important role in the success of company spin-offs, indicating that older CEOs can take a more cautious approach to risk management and innovative decisions based on their accumulated experience. Barker III and Mueller [31] also argue that CEO age can influence a corporation’s research and development (R&D) spending and significantly impact ESG decisions.

Building on these prior findings, this study investigates the impact of CTO age on an organization’s ESG performance. Specifically, we analyze whether older CTOs can use their accumulated knowledge and experience to implement ESG strategies more effectively, contributing to the sustainable development of the organization and the achievement of its social responsibility goals.

According to Hambrick and Mason’s [32] upper echelon theory, an organization reflects the characteristics of its senior executives. Therefore, older CTOs are likely to favor strategies that value long-term sustainability and social responsibility, positively impacting a corporation’s ESG performance. This study seeks to comprehensively analyze the role of older CTOs in making ESG-related decisions and implementing strategies that enhance corporate sustainability and social responsibility, thereby significantly influencing their organizations and contributing to their long-term success.

2.2.2. CTO Education Level

Recent studies have analyzed the impact of a CEO’s education level on a corporation’s ESG performance, suggesting that it plays an important role in developing environmentally friendly technological innovations and policies. Barker III and Mueller [31] and Amore et al. [33] emphasize that senior management’s education level is closely related to R&D expenditures that enhance environmental sustainability. Additionally, Ban [34] and Tran and Pham [35] suggest that a CEO’s education level positively affects CSR activities and environmental and social performance.

Building on these findings, this study investigates the impact of CTO education level on a corporation’s ESG performance. Specifically, we analyze how CTO education level influences environmentally friendly technological innovation, social responsibility fulfillment, and governance-related policy development. Elsharkawy et al. [36] report that highly educated executives can contribute to improving governance structures and setting ethical standards. By further analyzing whether CTO education level contributes to governance-related outcomes, this study aims to determine whether the education level significantly influences CTO ESG strategy development and implementation.

Overall, the education level of the CTO can play an important role in improving an organization’s ESG performance. This study demonstrates that the education level can be a key factor in enabling the CTO to enhance sustainable development and social responsibility.

2.2.3. CTO Tenure

Recent studies have highlighted the impact of tenure on an organization’s ESG performance. These findings suggest that long-tenured CEOs may have the necessary understanding to develop and implement sustainable practices and strategies in their organizations. Khan et al. [37] argue that executive tenure plays an important role in improving corporate, social, and environmental performance. Huang [38] emphasizes that the stability and consistency of a long-term CEO provide a foundation for sustainable development and promote sustainable innovation.

Building on these studies, this study investigates the impact of CTO tenure on organizational ESG performance. Specifically, we analyze whether CTOs with longer tenure are more likely to possess the experience and knowledge required to lead and manage environmental, social, and governance-related changes effectively. Drawing on the insights of Ratri et al. [39] and Hambrick and Finkelstein [40], who explain how the tenure of senior executives influences organizational strategy and performance through hierarchy theory, this study examines whether CTOs with longer tenures are more inclined to evolve and execute their organizations’ social responsibility strategies.

Overall, this study explores how CTO tenure can significantly influence the ongoing development of an organization’s ESG strategies and practices, promoting sustainable growth. This approach highlights CTO tenure as a critical factor in helping organizations achieve their ESG goals and maintain long-term success and competitiveness.

Given that the personal characteristics of the CTO, namely age, education level, and tenure, may impact ESG performance, we posit the following hypotheses:

Hypothesis 1.

CTO personal characteristics positively affect ESG performance.

• Hypothesis1-1. CTO personal characteristics positively affect environmental performance.
• Hypothesis1-2. CTO personal characteristics positively affect social performance.
• Hypothesis1-3. CTO personal characteristics positively affect governance performance.

2.3. Positional Characteristics

Positional characteristics are important factors that determine the impact of a CTO and the scope of their role within an organization. These characteristics play an important role in enabling CTOs to expand their influence and improve ESG performance. Factors such as equity ownership, board membership, and holding multiple roles provide CTOs with greater motivation and authority to make strategic decisions and drive innovation. These characteristics are essential for CTOs to practice sustainable development, social responsibility, and effective governance within their organizations. Consequently, the nature of the CTO’s position can significantly influence the strategic direction and long-term success of an organization and is essential for enhancing a corporation’s ESG performance. This reinforces the CTO’s role in helping organizations respond effectively to complex challenges, meet the needs of diverse stakeholders, and remain competitive.

2.3.1. CTO Equity Ownership

Recent studies have examined the impact of CEO equity ownership on corporations’ social and environmental performance. Grosser and Moon [41] and Jo and Harjoto [42] emphasize the close relationship between corporate governance and CSR performance, finding that executive equity ownership can improve these outcomes. Building on these findings, this study investigates how a CTO’s equity ownership influences ESG performance. Specifically, we analyze how equity ownership motivates CTOs to develop and introduce environmentally friendly technological innovations and policies. Cheng et al. [43] and Berrone and Gomez-Mejia [44] examine how management’s compensation structure influences an organization’s environmental performance, suggesting that equity-owning CTOs may have a strong incentive to improve a corporation’s environmental performance.

Jensen and Meckling [45] highlight the positive impact of equity ownership on corporation value through theories of managerial behavior, agency costs, and ownership structure. Hillman and Dalziel [46] argue that equity ownership can improve the quality of corporate governance. This study extends this perspective by investigating how CTO equity ownership contributes to the achievement of a corporation’s ESG goals.

This study analyzes how CTO equity ownership plays an important role in improving corporations’ ESG performance. This ownership provides an incentive for CTOs to practice sustainable development, social responsibility, and effective governance, thereby enabling the corporation’s long-term success.

2.3.2. CTO Board Membership

Studies on CEO power and its impact on a corporation’s environmental performance suggest that a strong CEO can positively influence environmental sustainability [47,48,49]. Kim et al. [50] demonstrate a complex relationship between CSR activities, CEO power, and investment efficiency. Hillman and Dalziel [46] analyze the impact of board composition on corporation performance, while Grosser and Moon [41] and Jo and Harjoto [42] examine the impact of corporate governance and CSR on corporation value.

This study investigates the impact of CTO board membership on an organization’s ESG practices. By serving on boards, CTOs can enhance the social performance of organizations. Their technical expertise and leadership can guide strategic corporate decisions, improve governance quality, and enhance corporate performance. Building on prior research related to CEO influence, this study empirically examines the different effects of technical insights and strategic leadership provided by the CTO within the board on organizational ESG performance.

2.3.3. CTO Multiple Roles

Recent studies have analyzed the complementary and substitution effects of CEO skills and corporate governance on socially responsible performance, demonstrating the potential for different CEO roles to contribute to ESG activities. García-Sánchez et al. [6] and Lee and Kim [51] emphasize that when CEOs hold multiple roles, their diverse perspectives and expertise can improve ESG performance. Jizi et al. [52] and Lu et al. [53] note that a CEO’s multiple roles can contribute to enhanced CSR through transparent information disclosure. Ullah et al. [54] and Romano et al. [55] argue that multiple roles can promote diversity and inclusion within organizations, supporting the achievement of ESG goals. Crossland and Hambrick [56] and Westphal and Zajac [57] argue that analyzing the impact of country-specific business environments on executive influence provides insights into how multiple roles can support ESG activities in different environments. These studies indicate that CEOs’ multiple roles can provide the adaptability and flexibility essential to an organization’s ESG strategy [58]. Finkelstein and Mooney [59] emphasize that CEOs’ multiple roles can have an important impact on strengthening corporate governance and influencing ESG-related decisions.

Building on these studies, this research empirically analyzes the impact of a CTO’s multiple roles on organizational ESG performance. While the literature on CEOs provides strong evidence that multiple roles can positively affect a corporation’s ESG activities, it is not yet clear whether multiple roles of a CTO play a similar role within an organization. Therefore, we analyze how the CTO’s multiple roles on the board can contribute to the achievement of ESG objectives through decision-making based on technical expertise. This may provide an opportunity for the CTO to use the knowledge and experience gained from diverse industries and boards to enhance their organization’s ESG activities and contribute to the achievement of ESG goals.

Given that the positional characteristics of a CTO, including equity ownership, board membership, and multiple roles, may influence ESG performance, we posit the following hypotheses:

Hypothesis 2.

CTO positional characteristics positively affect ESG performance.

• Hypothesis2-1. CTO positional characteristics positively affect environmental performance.
• Hypothesis2-2. CTO positional characteristics positively affect social performance.
• Hypothesis2-3. CTO positional characteristics positively affect governance performance.

2.4. Career-Related Characteristics

Career-related characteristics, such as functional experience, industry experience, and diverse work experience, play an important role in shaping CTO leadership and strategic decision-making. These career-related characteristics are instrumental in leveraging the CTO’s expertise and experience to drive innovation, address technological and societal challenges, and pursue sustainable development within the organization. The diverse career backgrounds of CTOs contribute to developing the organizational agility needed to thrive in a dynamic global market. Therefore, the career-related characteristics of CTOs are important in achieving the organization’s ESG goals and strategic priorities, highlighting the important role of their expertise and experience in enhancing organizational performance and sustainable competitiveness.

2.4.1. CTO Functional Experience

Recent studies have underscored the importance of a CEO’s functional experience in influencing an organization’s ESG performance [60,61]. They have shown that a CEO’s business and technology expertise can enhance technological innovation and environmental sustainability. Harvard [62] and McKinsey [63] examine how leadership roles align with business strategies and how executives’ functional expertise enables them to address technological challenges and implement ESG initiatives. Building on these findings, our study investigates how a CTO’s functional experience impacts an organization’s ESG performance. By extending the prior research on CEOs, we aim to analyze how the CTO’s characteristics and expertise significantly contribute to the development and implementation of ESG strategies within the organization. Additionally, Dahlander and Gann’s [64] work on the influence of technological innovation on organizations suggests that the CTO’s experience is important in improving ESG performance.

Overall, this study explores how the CTO’s functional experience can significantly improve an organization’s ESG performance and how their characteristics and expertise shape the organization’s strategic direction and performance. This research contributes to understanding the CTO’s influence by building on previous CEO research.

2.4.2. CTO Industry Experience

Studies on the impact of CEO characteristics on an organization’s sustainable development and social performance have demonstrated the value of executives’ industry experience in achieving ESG goals. Huang [38] and Manner [65] highlight that senior management’s rich industry experience provides critical leadership and insights essential for organizational sustainability. Shane [66] examines how executives’ existing knowledge can lead to the discovery of new opportunities, while Bantel [67] and Talke et al. [68] emphasize that team diversity, including varied industry experiences, enhances innovation and performance. Executives with industry experience bring diverse perspectives and ideas to developing an organization’s ESG strategy.

Based on these findings, this study analyzes the role of the CTO and investigates whether a CTO’s industry experience significantly contributes to improving an organization’s ESG performance. CTOs are assumed to have a deep understanding of the complexity and nature of their industries, enabling them to drive sustainable innovation and effectively manage ESG-related challenges. By examining how a CTO’s industry experience influences the achievement of an organization’s ESG goals and sustainable growth, this study explores the decisive role and functional experience of the CTO in shaping the organization’s strategic direction and performance.

2.4.3. CTO Diverse Work Experience

Previous studies emphasize that diverse work experiences among CEOs can significantly enhance a corporation’s ESG performance. Tseng et al. [69] and Easa and Orra [70] find that CEOs with diverse work experiences are better equipped to lead radical innovation, thereby improving an organization’s environmental performance through sustainable practices. Manner [65] and Thomas and Simerly [71] show that executives with experience in different industries bring important competencies for fulfilling CSR and building positive community relationships. Crossland and Hambrick [56] and Hillman and Dalziel [46] emphasize that management diversity enhances corporate governance by offering varied perspectives and enhancing ethical decision-making.

Building on these findings, this study empirically analyzes whether similar effects exist for CTOs. Specifically, we investigate whether CTOs with diverse industry experiences contribute to a corporation’s ESG goals. In line with the importance of human capital highlighted by Wright et al. [72] and Helfat and Peteraf [73], we analyze whether a CTO’s varied industry experience strengthens an organization’s core competencies and supports the achievement of ESG goals. We also investigate whether these experiences provide insights important for understanding and fulfilling environmental responsibilities.

Overall, this study examines how a CTO’s diverse work experience influences a corporation’s ability to achieve its ESG goals and pursue sustainable growth. The knowledge and skills gained from various roles and industries can drive sustainable innovation, enhance social responsibility, and strengthen governance within an organization.

Given that the career-related characteristics of CTOs—functional experience, industry experience, and diverse work experience—can influence ESG performance, we posit the following hypotheses:

Hypothesis 3.

CTO career-related characteristics positively affect ESG performance.

• Hypothesis3-1. CTO career-related characteristics positively affect environmental performance.
• Hypothesis3-2. CTO career-related characteristics positively affect social performance.
• Hypothesis3-3. CTO career-related characteristics positively affect governance performance.

2.5. Distinction from Prior Research

Our study differs from the previous literature in two ways. First, while most earlier research has emphasized the relationship between executive roles, such as CEOs, and ESG performance, there is a relative lack of research on the impact of technology leaders such as CTOs. To fill this gap, we focus on the role of CTOs, analyzing their characteristics and impact on ESG performance. The results demonstrate that technological leadership plays an important role in helping corporations achieve sustainable growth and social responsibility, thereby substantially contributing to both research and practice in this area. Second, this study empirically analyzes how the personal, positional, and career-related characteristics of CTOs influence ESG performance through a detailed analysis of these characteristics. By clarifying how CTO characteristics contribute to sustainable organizational performance, rather than merely the presence of technology leadership, this study provides valuable insights for corporations to develop effective technology leadership strategies.

Despite these contributions, the specific impact of a CTO’s personal, positional, and career-related characteristics on a corporation’s ESG performance is not yet clearly understood. This gap underscores the need for systematic research on this relationship. Such research is important for organizations to select the most suitable CTO and maximize their capabilities. It is also important for CTOs to better understand their roles and responsibilities and develop strategies and approaches to achieve ESG goals.

3. Research Methods

3.1. Research Model

This study employs structural equation modeling (SEM) to analyze the impact of CTOs’ personal, positional, and career-related characteristics on ESG performance. Figure 1 illustrates the research model, highlighting the influence of these three characteristics on ESG performance.

To comprehensively analyze the impact of various CTO characteristics on a corporation’s ESG performance, we posit three main hypotheses. First, personal characteristics such as age, education level, and tenure are expected to positively affect overall ESG performance, assuming that these characteristics contribute to achieving ESG goals. Second, positional characteristics such as equity ownership, board membership, and multiple roles are hypothesized to positively affect ESG performance, as these characteristics allow the CTO to exert influence within the organization. Third, career-related characteristics such as functional experience, industry experience, and diverse work experience are anticipated to positively affect ESG performance, providing CTOs with the necessary knowledge and skills to effectively address environmental and social issues and improve governance structures.

3.2. Data Collection

This study uses ESG scores published annually by the Korea Corporate Governance Service (KCGS), Korea’s leading ESG rating agency established in 2002. It is the most commonly used ESG rating system in ESG research and is considered authoritative. As of February 2023, 974 listed Korean corporations subjected to ESG assessments were selected as the initial research sample. Since the 2019 revision of the ESG evaluation model, the evaluation index has been measured in four areas: environmental management, social responsibility management, corporate governance, and integrated ESG evaluation. This study uses 2022 data to ensure the latest and most reliable information.

Utilizing the electronic disclosure system of the Financial Supervisory Service, the researchers categorized CTO characteristics into personal characteristics (age, education level, and tenure), positional characteristics (equity ownership, board membership, and multiple roles), and career-related characteristics (functional experience, industry experience, and diverse work experience) for 763 corporations subjected to ESG evaluation to establish independent variables and conduct an empirical analysis. The final sample consisted of 218 listed corporations that met the ESG evaluation index. Information on CTO characteristics was collected from business reports listed in the electronic disclosure system of the Financial Supervisory Service and each corporation’s website. The factors influencing the ESG evaluation index were examined.

Table 1. Descriptive analysis.

Category	Group	Frequency	%	Group	Frequency	%	Group	Frequency	%
Personal Characteristics	Age			Education Level			Tenure
	~54	85	39	~Bachelor	67	31	~3 years	92	42
	~59	87	40	Master	57	26	~6 years	51	23
	60 and above	46	21	Doctoral	94	43	7 years and above	75	35
Positional Characteristics	Equity Ownership			Board Membership			Multiple Roles
	Does not own	159	73	Non-member	128	59	Does not hold	175	80
	Own	59	27	Member	90	41	Hold	43	20
Career-related Characteristics	Functional Experience			Industry Experience			Diverse Work Experience
	No	190	87	No	178	82	No	111	51
	Yes	28	13	Yes	40	18	Yes	107	49

presents descriptive statistics of the data. In terms of demographic age groups, those aged 54 and under accounted for 39% of the total (85 individuals), the 55–59 age group accounted for 40% (87 individuals), and those aged 60 and over accounted for 21% (46 individuals). Regarding education level, those with a bachelor’s degree or lower accounted for 31% (67 individuals), those with a master’s degree accounted for 26% (57 individuals), and those with a doctorate accounted for 43% (94 individuals). In terms of tenure, 42% (92 individuals) were in the 3 years or less group, 23% (51 individuals) were in the 3–6 years group, and 35% (75 individuals) were in the 7+ years group.

In terms of positional characteristics, 73% (159 individuals) did not own equity, while 59 27% (59 individuals) did. Regarding board membership, 59% (128 individuals) were non-board members, and 41% (90 individuals) were board members. Regarding multiple roles, 80% (175 individuals) did not hold multiple roles, whereas 20% (43 individuals) did.

Finally, in terms of career characteristics, 87% (190 individuals) had no functional experience, while 13% (28 individuals) did. For industry experience, 178 of the 218 individuals (82%) had no industry-related experience, whereas 18% (40 individuals) did. Regarding diverse work experience, 51% (111 individuals) had none, whereas 49% (107 individuals) had some experience.

3.3. Variable Definitions

This study uses several independent variables, including the personal, positional, and career-related characteristics of CTO. The following variables were appropriately coded and used in the analysis: age, education level, tenure, equity ownership, board membership, multiple roles, functional experience, industry experience, and diverse work experience. For personal characteristics, age was coded as “1” for those 54 and younger, “2” for those 59 and younger, and “3” for those 60 and older. Education level was coded as “1” for a bachelor’s degree or less, “2” for a master’s degree, and “3” for a doctorate. Tenure was coded as “1” for three years or less, “2” for three to six years, and “3” for seven years or more. Positional characteristics were coded as “1” for not owning equity and “2” for owning equity. Board membership was coded as “1” for non-board members and “2” for board members. Multiple roles were coded as “1” for not holding multiple roles and “2” for holding multiple roles to analyze the impact of each organizational role and position. For career-related characteristics, “1” was coded for no functional experience and “2” for experience. Industry experience was coded as “1” for no experience and “2” for experience. Diverse work experience was coded as “1” for no experience and “2” for experience to assess the impact of each experience on CTO expertise and job performance.

The dependent variable was ESG performance as assessed by the KCGS. The KCGS evaluates the ESG performance of more than 900 listed corporations and major non-listed financial institutions across environmental (E), social (S), governance (G), and ESG integration categories. Based on the ESG score, corporations are assigned a seven-level rating: S, A⁺, A, B⁺, B, C, and D. This grading system is also reflected in the KRX Socially Responsible Investment Index, recognized as the leading ESG assessment tool in Korea. For each level, S is assigned a value of “7”, A⁺ a value of “6”, A a value of “5”, B⁺ a value of “4”, B a value of “3”, C a value of “2”, and D a value of “1”.

With these definitions of variables and the coding method, we analyzed the interaction of these variables with ESG performance.

4. Results

4.1. Model Fit and Reliability and Validity of Measurement Instruments

To assess the model fit, this study used several statistical indicators. The main measures used to verify the goodness of fit of the structural equation model include the chi-square statistic (χ²), Goodness of Fit Index (GFI), Modified Akaike Information Criterion (AIC), Root Mean Square Error of Approximation (RMSEA), Comparative Fit Index (CFI), Incremental Fit Index (IFI), and Residual Fit Index (RFI).

Table 2. Model fit.

Category	χ2 Test			GFI	AIC	RMSEA	CFI	IFI	RFI
	χ2	Degree of Freedom	Significance Level
Model	134.824	54.000	0.000	0.909	208.824	0.083	0.941	0.942	0.867

presents the model fit, showing that the chi-square statistic is 134.824 with 54 degrees of freedom and a significance level of 0.000. This indicates that the model is highly reliable, implying that it fits the data well. The GFI is 0.909, indicating that the model has a good fit. The AIC is 208.824, which indicates the model’s relative goodness of fit and is useful for comparison with other models. The RMSEA is 0.083, which is generally considered within an acceptable range, although a value of 0.05 or less is ideal [74]. Therefore, the RMSEA of the model in this study is borderline but can be interpreted as acceptable given the overall model fit. The CFI and IFI are 0.941 and 0.942, respectively, indicating a very good fit of the model, while the RFI is 0.867, indicating a high residual fit.

Overall, these statistical indicators suggest that the model fits the data well and that the instrument has sufficient reliability and validity. This is an important factor supporting the reliability and validity of the research findings.

The reliability and validity of the measurement instruments used in this study are summarized in

Table 3. Reliability and validity of the measurement tool.

Category	Non-Standardized Coefficient	Standard Error	Critical Ratio	Standardized Coefficient	AVE	CR
Personal Characteristics → Age	1			0.050	0.075296	0.038084
Personal Characteristics → Education Level	8.373	12.404	0.675	0.368
Personal Characteristics → Tenure	−3.293	5.125	−0.643	−0.141
Positional Characteristics → Equity Ownership	1			0.476	0.541795	0.778708
Positional Characteristics → Board Membership	0.840	0.161	5.203	0.443
Positional Characteristics → Multiple roles	0.648	0.138	4.680	0.382
Career-related Characteristics → Functional Experience	1			0.571	0.673448	0.849881
Career-related Characteristics → Industry Experience	0.715	0.213	3.361	0.610
Career-related Characteristics → Diverse Work Experience	0.377	0.139	2.704	0.278

. The validity and reliability of the personal, positional, and career-related characteristic variables were assessed using SEM.

Among the personal characteristics, age was included in the model with a standardized coefficient of 0.050 and a non-standardized coefficient of 1. The path for education level had a non-standardized coefficient of 8.373, a standard error of 12.404, a critical ratio of 0.675, and a standardized coefficient of 0.368. The path for tenure had a non-standardized coefficient of −3.293, a standard error of 5.125, a critical ratio of −0.643, and a standardized coefficient of −0.141. Among the positional characteristics, the path for equity ownership had a standardized coefficient of 0.476 and a non-standardized coefficient of 1. Board membership had a non-standardized coefficient of 0.840, a standard error of 0.161, a critical ratio of 5.203, and a standardized coefficient of 0.443. The path for multiple roles had a non-standardized coefficient of 0.648, a standard error of 0.138, a critical ratio of 4.680, and a standardized coefficient of 0.382.

Among the career-related characteristics, the path for functional experience had a standardized coefficient of 0.571 and an unstandardized coefficient of 1. Industry experience has an unstandardized coefficient of 0.715, a standard error of 0.213, a critical ratio of 3.361, and a standardized coefficient of 0.610. The path for diverse work experiences had an unstandardized coefficient of 0.377, a standard error of 0.139, a critical ratio of 2.704, and a standardized coefficient of 0.278.

A review of these goodness-of-fit indices generally shows positive results, particularly for the paths of board membership and multiple roles, which have high significance ratios. These findings suggest that these paths make important contributions to the model, highlighting the impact of a CTO’s positional characteristics on ESG performance within an organization. The results show that board involvement can play an important role in improving corporate governance and sustainable performance.

The analysis of reliability and validity indicators showed that the Average Variance Extracted (AVE) for personal characteristics was 0.075, and the Construct Reliability (CR) was 0.038. Positional characteristics had an AVE of 0.542 and CR of 0.779, whereas career characteristics had an AVE of 0.673 and a CR of 0.850. These results suggest that the overall fit of the model was relatively high, with career-related characteristics exhibiting the highest reliability and validity. Fornell and Larcker [75] suggest that an AVE of 0.5 or higher and a CR of 0.7 or higher for each variable indicates sufficient reliability and validity. For positional and career-related characteristics, high AVE and CR values indicated very good reliability and internal consistency within the model. However, the AVE and CR values for the personal characteristics were relatively low.

Overall, the models in this study showed a good fit in multiple statistical tests. However, the relatively low reliability and validity of personal characteristics indicate that further research and improvements are needed in this area.

4.2. Results of the Hypothesis Testing

This study analyzed the impact of three main categories—personal, positional, and career-related–on integrated ESG performance, including environmental, social, and governance factors. Figure 2 illustrates the results of the hypotheses tested using the research model, showing different outcomes for each category. The results were used to determine whether the hypotheses were supported.

Table 4. Results of the hypothesis testing.

Category	Hypothesis	Estimate	Standard Error	p-Value	Supported?
Personal Characteristic → ESG	H1	12.952	19.719	0.511	No
Personal Characteristic → Environmental	H1-1	28.338	42.066	0.501	No
Personal Characteristic → Social	H1-2	33.569	49.826	0.500	No
Personal Characteristic → Governance	H1-3	−10.019	16.344	0.540	No
Positional Characteristic → ESG	H2	5.639	1.032	***	Yes
Positional Characteristic → Environmental	H2-1	3.133	1.225	*	Yes
Positional Characteristic → Social	H2-2	3.477	1.440	*	Yes
Positional Characteristic → Governance	H2-3	7.196	1.312	***	Yes
Career-related Characteristic → ESG	H3	−2.146	0.789	**	No
Career-related Characteristic → Environmental	H3-1	−2.373	1.038	*	No
Career-related Characteristic → Social	H3-2	−3.007	1.239	*	No
Career-related Characteristic → Governance	H3-3	−1.539	0.826	0.062	No

* p < 0.05, ** p < 0.01, *** p < 0.001.

presents the detailed results of the hypothesis testing.

4.2.1. Hypothesis 1: Relationship between Personal Characteristics and ESG Performance

Hypothesis H1, which examined the impact of personal characteristics on overall ESG performance, was not supported. The analysis showed an estimate of 12.952 and a p-value of 0.511. Sub-hypothesis H1-1 (personal characteristics → environmental performance) was also not supported, with an estimate of 28.338 and a p-value of 0.501. Similarly, H1-2 (personal characteristics → social performance) was not supported, with an estimate of 33.569 and a p-value of 0.500. H1-3 (personal characteristics → governance performance) was not supported, showing an estimate of −10.019 and a p-value of 0.540.

4.2.2. Hypothesis 2: Relationship between Positional Characteristics and ESG Performance

Hypothesis H2, which examined the impact of positional characteristics on overall ESG performance, was strongly supported. The analysis yielded an estimate of 5.639 and a p-value of less than 0.001. Sub-hypothesis H2-1 (positional characteristics → environmental performance) was supported, with an estimate of 3.133 and a p-value of less than 0.05. H2-2 (positional characteristics → social performance) was also supported, showing an estimate of 3.477 and a p-value of less than 0.05. H2-3 (positional characteristics → governance performance) was strongly supported, with an estimate of 7.196 and a p-value of less than 0.001.

4.2.3. Hypothesis 3: Relationship between Career-Related Characteristics and ESG Performance

Hypothesis H3, which examines the impact of career-related characteristics on overall ESG performance, indicates that career-related characteristics negatively affect ESG performance, with an estimate of −2.146 and a p-value of less than 0.01. Sub-hypothesis H3-1 (career-related characteristics → environmental performance) shows that career-related characteristics negatively affect environmental performance, with an estimate of −2.373 and a p-value of less than 0.05. Sub-hypothesis H3-2 (career-related characteristics → social performance) also indicates a negative impact on social performance, with an estimate of −3.007 and a p-value of less than 0.05. Finally, sub-hypothesis H3-3 (career-related characteristics → governance performance) presents an estimate of −1.539 and a p-value of 0.062, suggesting no significant impact on governance performance.

5. Discussion

The role of the CTO is becoming increasingly important in an era of rapid change, characterized by artificial intelligence (AI), digital transformation, and ESG considerations. Unlike previous ESG studies focusing on the CEO, this study analyzes the impact of CTO characteristics on ESG performance, specifically examining how personal, positional, and career-related characteristics affect a corporation’s ESG performance. This is consistent with prior research suggesting that the presence and influence of powerful technology leaders, such as CTOs, are linked to improved financial metrics and strategic outcomes for their corporations [76].

This study examines the impact of the personal, positional, and career-related characteristics of CTOs on corporations’ ESG performance through various hypotheses. The results of the hypotheses testing reveal that personal characteristics do not significantly impact any aspect of ESG performance. This suggests that a CTO’s personal characteristics, such as technical competence or leadership style, may indirectly influence ESG performance at a more granular level. For example, this difference may arise from the fact that while a CEO’s personal characteristics directly influence strategic decisions and governance across the organization, a CTO’s role primarily revolves around technical innovation and problem-solving.

Career-related characteristics were found to negatively impact ESG performance. Specifically, career-related characteristics had a negative effect on environmental and social performance, but no significant impact on governance performance. This finding contradicts previous CEO research, which suggests that CEOs use their diverse management and industry experiences to shape the organization’s long-term vision, strategy, and sustainability. Conversely, CTOs use their technical expertise and industry experience to drive technological innovation and enhance an organization’s technological competitiveness. It is suggested that a CTO’s functional experience, industry experience, and diverse work experience are more likely to enhance performance when they are within the same industry, rather than having a broad range of experiences. However, differences in career-related characteristics may exist depending on industry characteristics, such as those between manufacturing and non-manufacturing industries, necessitating further research. Hillman and Dalziel [46] highlight the role of board composition in corporation performance, which may vary across industries. Porter and van der Linde [77] discuss how environmental regulations can drive competitiveness and potentially influence career paths within different sectors.

Our findings indicate that the positional characteristics of the CTO significantly and positively impact a corporation’s ESG performance. This suggests that positional factors such as board membership, equity ownership, and holding multiple roles are critical for improving ESG performance. Specifically, equity ownership and board membership were found to strongly influence environmental and governance performances. Moreover, CTOs who show strong technological leadership and innovation orientation are likely to drive both R&D and ESG initiatives more effectively. Their ability to align technological advancements with sustainability goals can create significant synergies between ESG and R&D efforts, leading to innovations that not only improve corporate performance but also contribute to environmental and social responsibility [10,12,14]. This implies that a CTO can drive environmentally friendly innovation through a technology strategy that improves a corporation’s environmental performance and social responsibility. Given these findings, corporations should support and empower their technology leaders to influence strategic decision-making processes. Such empowerment can lead to enhanced social responsibility, improved environmental sustainability, and sustained competitiveness.

The COVID-19 pandemic has increased the importance of sustainable value creation for corporations [2,3,4]. Several companies have introduced ESG committees to strengthen their efforts in integrating ESG performance. In this context, the role of the CTO becomes important in responding to environmental and social challenges and achieving ESG goals through sustainable technological development [78,79]. Therefore, it is imperative to ensure that the CTO receives the necessary organizational support and resources to achieve ESG performance while leading technological innovation.

These findings can aid corporations in selecting or recruiting CTOs and other executives with the right characteristics, taking into account the roles and expected performance of these positions. Furthermore, these insights can inform the design of board composition and leadership development programs. This study significantly contributes to understanding the relationship between technology leadership and ESG performance, providing valuable information for corporations to develop strategies for sustainable growth and social responsibility.

5.1. Theoretical Implications

This study significantly contributes to organizational theory and technology leadership research by examining the role of the CTO in ESG performance. Through an in-depth examination of the impact of CTOs’ personal, positional, and career-related characteristics on ESG performance, this research provides a novel perspective that strengthens the connection between technological strategies and organizational performance.

Three key theoretical implications emerge from this study. First, it highlights the expanding role of technological leadership. Building on the findings of Taylor et al. [76], this study suggests that CTOs can improve organizational ESG performance by driving environmentally friendly innovations, indicating that technology leadership extends beyond technical problem-solving to influencing strategic decisions. This underscores the significant impact technology leaders can have on an organization’s ability to achieve sustainability and social responsibility goals.

Second, this study emphasizes the importance of position within an organization. While previous studies by Khan et al. [78] and Eccles et al. [79] indicate that technological strategies might have negative effects on ESG performance if focused on short-term gains, this study expands our understanding of how individuals in senior positions, such as the CTO, can use their decision-making power and resource allocation to advance ESG goals.

Finally, this study underscores the link between organizational theory and ESG performance. By applying organizational theory to analyze the characteristics and role of the CTO, this study aligns with Taylor et al.’s [76] suggestion that CTO leadership can drive sustainable practices within corporations, positively influencing their ESG ratings. These findings lay a solid theoretical foundation for understanding the interaction between technology and the environment and offer insights into how corporations can select the most suitable CTOs and use their skills effectively.

These implications provide valuable guidance for future research, suggesting the need to expand the role of technological leadership across different organizational and industrial contexts. Understanding how the actions and decisions of the CTO impact overall ESG performance can help corporations integrate technological innovation with social responsibility and environmental sustainability more effectively.

5.2. Practical Implications

This study offers practical implications for corporate management by examining how the CTO’s personal, positional, and career-related characteristics impact a corporation’s ESG performance. Understanding this relationship can assist organizations in developing more effective management strategies and aligning technology leadership with ESG goals.

This study identifies three key practical implications. First, it emphasizes the importance of selecting and empowering the CTO. By considering the positional and career-related characteristics of potential CTOs, corporations can directly enhance their ESG performance.

Second, this study highlights the promotion of sustainable technological innovation. As demonstrated by Khan et al. [78] and Eccles et al. [79], the CTO plays an important role in improving an organization’s environmental performance through technological innovation. Providing clear goals and resources for sustainable technological development to the CTO and technology teams can help organizations fulfill their environmental and social responsibilities while enhancing long-term value.

Finally, this study underscores the importance of aligning corporate culture and strategy. Aligning with findings by Taylor et al. [76], organizations should redefine the role of the CTO and ensure that their technology strategies align with ESG goals. Embedding sustainability as a core value within the corporate culture and cultivating an environment where all organizational members contribute to ESG goals are important steps.

These practical implications offer valuable guidance for organizations seeking to achieve sustainability and fulfill their social responsibilities. Understanding how technology leadership can be used as a strategic asset can help corporations continuously improve their ESG performance and enhance competitiveness. This approach is essential for long-term success and enables organizations to respond effectively to the challenges and opportunities in today’s business environment.

5.3. Policy and Societal Implications

This study’s results have important implications for both policymakers and corporations. The findings suggest that corporations should consider strategies to strengthen the roles of CTOs and other executives in board composition and leadership development, as positional characteristics were found to positively impact ESG performance. Specifically, equity ownership and board membership were identified as factors that positively influence environmental and governance performance, highlighting the importance of integrating these aspects into corporate governance and strategic decision-making [76].

This study also indicates a need for corporations to provide proper training and support for CTOs, as their career-related characteristics were found to negatively impact ESG performance. This suggests that CTOs, as drivers of technological innovation and ESG goals, require specific attention and development initiatives.

Additionally, the finding that personal characteristics do not directly affect ESG performance suggests that corporations’ HR policies and leadership development programs need to incorporate new evaluation criteria that extend beyond an individual’s technical competencies or leadership styles. Corporations should enhance their training and development programs for all executives, not just the CTO, to promote the internalization of social responsibility and environmental sustainability.

For policymakers, this study highlights the link between technology leadership and sustainable management, offering valuable insights for developing supportive policies. For example, implementing incentives or regulations that encourage technology leaders to drive environmentally friendly innovations can promote corporations’ ESG goals [69].

This study also suggests methods to cultivate a corporate culture that values social responsibility, ensuring that stakeholders recognize the significance of ESG performance and actively participate in strategies emphasizing it. Prioritizing ESG performance can help corporations sustain long-term competitiveness and create social and environmental value [78,79].

When technology leaders, such as CTOs, are strategically used, corporations can establish a strong foundation for ongoing innovation and growth while meeting their ESG goals. This study highlights the critical role of technology leadership in achieving an organization’s ESG goals, offering insights into how technology leaders in senior positions can significantly influence ESG decisions.

These findings can assist corporations in enhancing their ESG performance, creating social and environmental value, and boosting their competitiveness in the global marketplace. Such efforts are essential for the long-term success of organizations and provide an effective approach to addressing the challenges and opportunities encountered by all businesses.

6. Conclusions

This study reveals that a CTO’s positional characteristics positively influence a corporation’s ESG performance, while career-related characteristics have a negative impact, and personal characteristics demonstrate no effect. These findings suggest that a CTO can drive environmentally friendly innovation, thereby improving a corporation’s environmental performance and social responsibility. However, career-related characteristics may hinder ESG performance, likely owing to the focus on short-term technological innovation, which can conflict with long-term ESG goals. The influence of career-related characteristics may vary across industries. When selecting or placing a CTO, corporations should consider their role and performance expectations to ensure they choose the most suitable candidate with the appropriate characteristics. These insights can also inform the design of board composition and leadership development programs.

In conclusion, this study highlights the expanding and critical role of CTOs in integrating ESG considerations into technology development and operations. In addition, by examining how CTOs’ personal, positional, and career-related characteristics affect ESG performance, this study underscores the necessity of extending previous studies on BODs, CEOs, and CSR committees to include the CTO’s impact. This comprehensive approach will provide deeper insights into how technological leadership can drive sustainable business practices and enhance overall corporate ESG outcomes.

Although the present study reveals important findings, it has some limitations. First, the instrument used to measure personal characteristics lacked adequate reliability and validity due to data accessibility limitations and the complexity of the measuring variables. Additionally, although our sample size is sufficiently large, the absence of a more rigorous verification and double-checking mechanism may have affected the robustness of our findings. Second, owing to time and resource constraints, a limited sample of Korean-listed corporations was used. Third, this study did not fully account for the differences in the impacts of industry characteristics and corporation size. Fourth, changes over time were not considered. Fourth, this study analyzed ESG performance by dividing it into environmental, social, and governance categories but did not examine specific indicators within each area, such as carbon emissions, energy efficiency, labor practices, employee welfare, board composition, and ethical management. Finally, this study focused on the impact of CTO characteristics on ESG performance but did not consider other factors related to the CTO, such as the effectiveness of specific technological innovations, the influence of different CTO leadership styles, and the impact of their strategic decision-making processes. Future research will continue to investigate these areas to provide a more comprehensive understanding of how CTOs contribute to ESG performance.

Future research directions for this study should focus on several key areas. First, enhancing the external validity of the findings is important. This can be achieved by obtaining more comprehensive measures of individual characteristics, developing advanced measurement tools, and implementing rigorous verification and double-checking mechanisms. Additionally, extending this study to include a diverse range of countries and industries will further strengthen the generalizability and robustness of the results. Second, it is important to recognize that the impact of CTO characteristics on corporation performance may vary according to industry characteristics and corporation size. Kim and Cho [80] and Kim [81] explored the characteristics of digital transformation, extending their analysis to distinguish between manufacturing and non-manufacturing corporations. Conversely, Lumpkin and Dess [82] and Zahra [83] focused on differences in innovative behavior, such as the speed of response to market changes, between large and small corporations. Therefore, future research should analyze the relationship between CTO characteristics and ESG performance by considering both manufacturing and non-manufacturing industries, as well as corporations of varying sizes. Third, utilizing longitudinal data is essential to capture changes over time. Finally, conducting more in-depth analyses that consider specific indicators of ESG performance and other factors related to CTO on ESG performance will provide more precise insights.