Yes, this sensor can cause hesitation and can have a big affect on fuel economy, but the code is not for the sensor itself. The sensor is operating within its parameters. The code is for the heating circuit for the sensor.
These sensors do not work when cold, they have to be heated up. The exhaust gasses will heat them up, but that can take up to 10 minutes or so, in the meantime your fuel trim is operating in open loop mode, not the most efficient. The manufacturers put electric heaters inside some of the O2 sensors in order to heat them up faster and get the engine into closed loop operation quicker.
This code can be caused by the heater element inside the O2 sensor or it could be due to a wiring problem external to the sensor. You might get by with disconnecting the sensor, spraying it out with some contact cleaner and then reconnecting it. If that works, the CEL will disappear after about three drive cycles.
Most of the time, this code is caused by the heating element inside the sensor and the sensor must be replaced. As stated above, you cannot use a universal sensor, you must get one with the correct number of wires and connection pattern. It does not need to come from the dealer though. and this is the rear sensor, the one behind the cat.