Int. J.

Production Economics 231 (2021) 107835

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International Journal of Production Economics

journal homepage: http://www.elsevier.com/locate/ijpe

Drivers and value-relevance of CSR performance in the logistics sector: A

cross-country firm-level investigation
Kannan Govindan a, b, *, Merve Kilic c, Ali Uyar d, Abdullah S. Karaman e
a
China Institute of FTZ Supply Chain, Shanghai Maritime University, Shanghai, 201306, China
b
Centre for Sustainable Supply Chain Engineering, Department of Technology and Innovation, Danish Institute for Advanced Study, University of Southern Denmark,
Odense M, 5230, Denmark
c
Department of International Trade and Management, Samsun University, Samsun, Turkey
d
La Rochelle Business School, Excelia Group, La Rochelle, France
e
College of Engineering and Technology, American University of the Middle East, Kuwait

A R T I C L E I N F O A B S T R A C T

Keywords: The purpose of this study is to explore the drivers and value-relevance of corporate social responsibility per­
Logistics sector formance in the logistics sector by particularly focusing on board characteristics and ownership structure.
Corporate social responsibility Corporate social responsibility performance is measured with a composite ESG (environmental, social, and
Drivers
governance) score and with its three sub-dimensions between 2011 and 2018. Fixed Effects regression analysis
Board characteristics
was run to test the hypotheses, and subsequently, Ordinary Least Squares regression was run to test the
Firm value
robustness of the results. The results suggest that board gender diversity is positively associated with overall
corporate social responsibility performance and governance performance. Moreover, the firms which have a
sustainability committee are more likely to have greater corporate social responsibility performance (both
overall and social) than those do not. Furthermore, firms with diffused ownership structures are more likely to
show greater performance in the Social Pillar of corporate social responsibility. Board independence has a weak
association with only governance performance. Contrary to expectations, the results regarding the value-
relevance of corporate social responsibility performance did not produce significant positive outcomes. These
findings confirm that women on boards and corporate social responsibility committees are an essential factor to
achieve corporate social responsibility goals. However, the insignificant relationship between board character­
istics and the Environmental Pillar of corporate social responsibility performance is quite surprising, and the
discovery sparks various queries. Finally, logistics firms need to reconsider the competency or role of indepen­
dent directors in corporate social responsibility issues as currently they are weakly influential.

1. Introduction 2019b). Although logistics performance has conventionally oriented

Over the past few decades, serious environmental problems,
including the overuse of natural resources, the air, water, and noise
pollution, and the rapid disappearance of rainforests, have posed threats
to the quality of life across the world (Wu and Dunn, 1995). Logistics
companies have a crucial role in the supply chain’s social and envi­
ronmental initiatives because they connect companies in the network
(Piecyk and Bjo €rklund, 2015) and their activities depend heavily on
fossil fuel and energy consumption that result in high carbon emissions
(Herold and Lee, 2017). There is no doubt that sustainable logistics is
crucial for achieving economic growth and decreasing negative social
and environmental impacts (Abbasi and Nilsson, 2016; Khan et al.,
towards cost, time, and accuracy, logistics companies are now subject to
intense pressure from governments and other stakeholders (i.e., cus­
tomers) regarding their compliance with responsible practices (Shaw
et al., 2010).
As concerns about sustainable and green logistics increase, the fac­
tors impacting corporate social responsibility (CSR) efforts in the lo­
gistics sector gain more importance. External (i.e., the institutional
environment) and internal (i.e., the board of directors) mechanisms can
influence CSR strategies, policies, and efforts. The board of directors can
have a significant role in promoting a company to balance financial and
non-financial goals (Liao et al., 2015), managing stakeholder interests
(Burke et al., 2019), providing negotiation between diverse stakeholder

* Corresponding author. China Institute of FTZ Supply Chain, Shanghai Maritime University, Shanghai, 201306, China.
E-mail address: kgov@iti.sdu.dk (K. Govindan).

https://doi.org/10.1016/j.ijpe.2020.107835
Received 6 November 2019; Received in revised form 5 June 2020; Accepted 10 June 2020
Available online 25 June 2020
0925-5273/© 2020 Published by Elsevier B.V.
K. Govindan et al.
groups with conflicting demands (Liao et al., 2015), and improving
corporate CSR performance (Hussain et al., 2018). In that context, board
composition and structure are an important factor in corporate decision
making related to environmental and social issues (Post et al., 2011).
Although there is significant progress towards understanding the link
between board structure and CSR performance (Hussain et al., 2018), no
prior study has yet investigated that link in the logistics sector. The
motivation behind the realization of the current study is to address this
gap in the literature by analyzing the relationship between a set of board
characteristics and CSR performance in the logistics context.
CSR involvement may seek help to companies to establish strong
relations with key stakeholders, to mitigate firm-specific risks (i.e., the
risk of fines) (Gregory et al., 2014), to enhance their brand value (Dey
et al., 2011), and to improve their operational and economic perfor­
mance (Dey et al., 2011; Pazirandeh and Jafari, 2013; He et al., 2017).
By contrast, irresponsible corporate practice can damage corporate
reputation, cause loss of future customers, and reduce corporate profits
and stock market returns (Lo and Sheu, 2007; Govindan et al., 2018). In
the prior literature, the relationship between CSR performance and firm
value has been studied by a considerable number of papers (Criso �stomo
et al., 2011; Khan and Qianli, 2017; Wang and Sarkis, 2017). Although
these studies offer useful insights to the understanding of the link be­
tween CSR performance and firm value, this study would provide
valuable evidence to the literature by investigating the relationship
between CSR performance and firm financial performance with a
particular focus on the logistics sector.
Consequently, this study explores whether the board characteristics
and ownership structure are associated with the adoption and imple­
mentation of CSR practices by logistics companies. While doing this, the
study incorporates board size, board gender diversity, board indepen­
dence, CEO and board chair separation, and CSR committee into the
study model to explore their role in adopting environmental, social, and
governance dimensions of the CSR performance. Further, it analyzes the
impact of CSR performance on firm value in the logistics sector. Thus,
this study answers the following two research questions:
RQ1. What are the board-level drivers of CSR performance in the lo­
gistics sector?
RQ2. What is the association between CSR performance and firm value
in the logistics sector?
To answer these research questions, this study compiled data that
belonged to 100 logistics companies maintained in the Thomson Reuters
(TR) EIKON database for 2011–18. The study adopted a Fixed Effects
panel data analysis methodology to test the hypothesized relationships.
The current paper provides contributions to the literature in several
ways. First, while the logistics discipline has mainly paid attention to
legal and economic considerations, it has paid limited attention to CSR
issues (Murphy and Poist, 2002; Piecyk and Bjo €rklund, 2015; Rashidi
and Cullinane, 2019) and examined a single country case, such as China
(Miao et al., 2012; He et al., 2017), Italy (Ciliberti et al., 2008), the US
(Murphy and Poist, 2002). This study extends past research by exam­
ining CSR in the logistics sector on a worldwide sample which reinforces
its findings’ generalizability. Second, to date, an extensive part of CSR
research in the logistics discipline has examined specific logistics pro­
cesses such as sustainable transportation (Shi et al., 2019; Mehlawat
et al., 2019), sustainable warehousing (Tan et al., 2010; Fichtinger et al.,
2015), sustainable purchasing (Chkanikova, 2015; Kannan et al., 2020;
Kannan, 2018), reverse logistics (Sheu, 2008; Nikolaou et al., 2013;
Darbari et al., 2019; Mardani et al., 2020) and has studied environ­
mental aspects as a subset of sustainability performance (Colicchia et al.,
2
International Journal of Production Economics 231 (2021) 107835
2013; Lam and Dai, 2015; Rashidi et al., 2020).1 However, this paper
adopts a more holistic approach in measuring CSR performance and
utilizes a composite environmental, social, and governance (ESG) score
and all three pillars of ESG in the logistics sector, without focusing on a
particular aspect (i.e., environment) or a specific process. As adopted in
this study, ESG covers a wide range of indicators related to the envi­
ronment, social responsibility, and corporate governance (Cucari et al.,
2018). Third, while prior studies on the link of corporate governance
structure and CSR have mostly focused on reporting practices (Khan
et al., 2013; Rossi and Tarquinio, 2017), a limited number of studies
have investigated the influence of corporate governance on actual CSR
performance (Hussain et al., 2018). This paper contributes to the
corporate governance research by analyzing the influence of board
structure on logistics companies’ actual CSR performance using the ESG
score as a proxy for this purpose (Luo et al., 2015; Wang et al., 2018).
Fourth, in particular, to the best of authors’ knowledge, this is one of the
first attempts to examine the association between the board character­
istics and CSR performance in the logistics sector. Fifth, this study an­
alyzes the association between the presence of a specific committee on
sustainability issues (i.e., CSR or sustainability committee) and CSR
performance which has been rarely examined by the prior literature
(Hussain et al., 2018).
The remainder of the article is structured as follows. The second
section reviews the literature and explains the relevance of CSR for the
logistics sector. The third section presents the theoretical fundamentals
of the study and formulates the hypotheses. The fourth section describes
the research methodology, followed by the results in section five. The
sixth section discusses the findings in connection with prior studies
which is followed by the provision of implications and presentation of
the conclusions. In the end, the limitations of the study are set, and
future research avenues are proposed.
2. Literature review
Companies are likely to review their supply chain policies in the light
of social and environmental concerns of the stakeholders (Halldo �rsson
et al., 2009) and to engage in responsible practices, including
low-carbon logistics (He et al., 2017), green packaging (Cosimato and
Troisi, 2015), green distribution (Khan et al., 2019a), green ware­
housing (Khan et al., 2019a), green transportation (Cosimato and Troisi,
2015), philanthropy (Wu and Dunn, 1995), employee training (Piecyk
and Bjo€rklund, 2015), and health and safety (Wu and Dunn, 1995) as a
good corporate citizen. Logistics social responsibility has emerged as a
way of integrating sustainability into the supply chain process from raw
material provision to the service and product delivery to customers
(Miao et al., 2012). In that sense, a growing body of literature has
focused on the integration of sustainability with logistics (Ahi and
Searcy, 2015) and studied sustainability-related issues in the logistics
field.
While prior research has examined sustainability efforts in the
overall supply chain (Khan and Qianli, 2017 Zhu et al., 2017),2 few
studies have particularly examined the role and importance of logistics
operations in implementing environmental and social initiatives (Cil­
iberti et al., 2008; Nikolaou et al., 2013; Pazirandeh and Jafari, 2013;
Bjo€rklund et al., 2016). For example, Ciliberti et al. (2008) provided a
taxonomy of the logistics social responsibility activities and evaluated
whether, and to what extent, these practices are adopted by firms.
Nikolaou et al. (2013) examined the social responsibility performance of
reverse logistics systems based on social, environmental, and economic
1
Please see the papers of Pazirandeh and Jafari (2013), Oberhofer and
Dieplinger (2014), Lun et al. (2015), Abbasi and Nilsson (2016), Bj€
orklund et al.
(2016), He et al. (2017), Aldakhil et al. (2018), and Liu et al. (2018).
2
See the paper of Brandenburg et al. (2014) for a comprehensive literature
review on sustainable supply chain management.
K. Govindan et al.
aspects (triple bottom line approach). Further, Pazirandeh and Jafari
(2013) analyzed whether and how transportation greening efforts in­
fluence logistics efficiency and effectiveness at Nordic multinationals.
Another strand of research examined the adoption of environmental
initiatives by logistics companies (Colicchia et al., 2013; Abbasi and
Nilsson, 2016).3 Piecyk and Bjo €rklund (2015) and Massaroni et al.
(2016) explored CSR reporting practices in the logistics industry.
Additionally, some papers examined the association between logistics
performance and social, environmental, and economic sustainability
indicators at the country level (Zaman and Shamsuddin, 2017; Liu et al.,
2018).
A further strand of research has documented evidence on drivers of
logistics social responsibility practices (Miao et al., 2012; Colicchia
et al., 2013). For instance, Miao et al. (2012) conducted a mail survey
with MBA students who are working for manufacturing companies in
China and found that business ethics, clan culture, pressures from cus­
tomers, and regulations are important antecedents of logistics social
responsibility of a company. Using a case study approach, Colicchia
et al. (2013) analyzed institutional factors that motivate logistics service
providers to adopt environmental initiatives. With regard to challenges
in developing environmentally responsible logistical practices, Abbasi
and Nilsson (2016) determined that low customer willingness to pur­
chase the environmentally responsible logistics services, managerial
complexity, technological and legislative uncertainties, and network
imbalance are amongst the main challenges in making logistics services
environmentally sustainable. Likewise, using the method of multiple
case study and literature analysis, He et al. (2017) documented that the
inconsistency and incompleteness in regulations, the lack of low-carbon
awareness, the unreasonable infrastructure and facilities, the scarcity of
qualified logistics professionals, the low efficiency in logistics operations
management, and the disordered transport modes are the main barriers
in developing low-carbon and sustainable logistics services.
The aforementioned studies showed that while CSR-related issues
have been studied in the logistics sector, country-and company-level
factors impacting CSR performance of logistics companies need more
attention. Corporate governance is considered as a mechanism that
effectively delineates the rights and responsibilities of various stake­
holder groups in the company (Ho and Wong, 2001) and develops and
implements social obligations to society (Cucari et al., 2018). When CSR
practices are not rooted in corporate governance, they cannot be effec­
tive in responding to the needs of the corporate stakeholders (Naciti,
2019). Since CSR efforts are impacted by those who involved in taking
and formulating decisions in the companies (Khan et al., 2013), the
structure and composition of the boards are likely to influence corporate
decisions on sustainability matters (Liao et al., 2015). This justifies
studying the board-level drivers of CSR performance in the logistics
sector.
Corporate CSR performance may lead to better financial results since
responsible corporate practice can be rewarded by investors with a
higher valuation in the market (Lo and Sheu, 2007). Nevertheless,
empirical research on the association between corporate sustainability
performance and the firm performance and value indicated mixed and
contradictory results in different contexts such as in Brazil (Criso �stomo
et al., 2011), UK (Humphrey et al., 2012), Pakistan (Khan et al., 2019a).4
These cited country-specific studies’ inconclusive findings justify further
investigation on the link between CSR performance and firm value.
3 et al., 2017), promotes the implementation of sustainability initiatives
See the paper of Marchet et al. (2014) for a comprehensive literature review
of research on environmental sustainability in the transportation and logistics
sector.
4
While (Cris�ostomo et al., 2011) found CSR is value destroying, Humphrey
et al. (2012) found CSR has no significant effect on firm value, whereas Khan
and Qianli (2017) and Khan et al. (2019a) found that CSR and green supply
chain practices improve organizational performance.
3
International Journal of Production Economics 231 (2021) 107835
3. Theoretical framework and hypotheses
Agency theory and stakeholder theory are the two common theories
that are used to understand the link between corporate governance and
sustainability performance (Shaukat et al., 2016; Crifo et al., 2018;
Hussain et al., 2018; Naciti, 2019). Agency theory predicts that com­
panies protect investors and to reduce agency conflicts using control
mechanisms, such as the corporate governance structures (Jensen and
Meckling, 1976). Stakeholder theory argues that it is important for
companies to establish strong relations with stakeholders to maintain
and improve corporate legitimacy (Michelon and Parbonetti, 2012).
Concerning this theory, effective corporate governance can convey to
the society that the firm is well-managed, and the interests of stake­
holders are taken into account (Michelon and Parbonetti, 2012). From
this perspective, CSR management and its reporting are crucial for ful­
filling stakeholders’ expectations (Velte, 2016). Drawing on theories of
agency and stakeholder, this study examines the association between a
set of corporate governance characteristics and ownership structure and
CSR performance in the logistics sector.
3.1. Board size
The size of the board is assumed to be one of the main drivers of its
effectiveness (Amran et al., 2014). A common view suggests that board
size negatively influences the controlling and monitoring functions of
the boards and, as a result, reduces their effectiveness (Hussain et al.,
2018). By contrast, another view argues that larger boards could better
manage conflicts between insider owners and minority shareholders
(Allegrini and Greco, 2013). In that view, the inclusion of more directors
may prevent discretionary behaviors of managers (de Andres and Val­
lelado, 2008), improve the monitoring capacity of the board (Akhtar­
uddin et al., 2009), and enhance its ability to encourage value-creating
activities (Akhtaruddin et al., 2009). Accordingly, there is no consensus
in the current literature regarding the link between board size and
sustainability performance. While Allegrini and Greco (2013) and
Tamimi and Sebastianelli (2017) documented a positive association
between board size and voluntary sustainability initiatives, many others
revealed an insignificant association (Amran et al., 2014; Velte, 2016;
Hussain et al., 2018). Following the theoretical argument that the size of
the board enhances its effectiveness, it is expected that companies with
larger boards are likely to adopt and implement sustainability initia­
tives. Thus, the following hypothesis is formulated:
H1. Board size has a positive association with ESG performance in the
logistics sector.
3.2. Board gender diversity
The gender composition of the corporate boards is considered a main
factor related to corporate governance that impacts sustainability per­
formance (Velte, 2016). Because female directors tend to have different
backgrounds (i.e., education, competency, and expertise) from those of
male directors, they may provide different perspectives to the board
discussions (Erhardt et al., 2003; Bear et al., 2010) and bring
stakeholder-related values to the boards (Shaukat et al., 2016). This may
lead the board to make better decisions and enhance its ability to
effectively address sustainability issues (Bear et al., 2010). Gender di­
versity improves the oversight function of boards (Erhardt et al., 2003),
enhances board effectiveness in stakeholder management (Ben-Amar
(Ben-Amar et al., 2017), and encourages companies to act more envi­
ronmentally responsible (Seto �-Pamies, 2015). Regarding the empirical
evidence, Shaukat et al. (2016) documented that companies with more
female directors are more likely to develop a comprehensive and pro­
active CSR strategy and, hence, achieve better environmental and social
performance. Likewise, Post et al. (2011), Seto �-Pamies (2015),
K. Govindan et al.
Ben-Amar et al. (2017), and Hussain et al. (2018) determined a positive
association between board gender diversity and the adoption of CSR
practices. Following theoretical arguments and prior empirical findings,
female directors on the board are expected to enhance the corporate
decision-making process and improve stakeholder management that
may lead to a greater level of sustainability performance. Thus, the
following hypothesis is suggested:
H2. Board gender diversity has a positive association with ESG per­
formance in the logistics sector.
3.3. Board independence
Agency theory argues that independent board members can effec­
tively control and monitor the actions of the agents (i.e., managers)
(Hussain et al., 2018) and, hence, they can improve the board’s moni­
toring effectiveness (Duru et al., 2016). From the perspective of this
theory, boards should appoint a greater number of independent (i.e.,
external and outsider) directors to reduce agency costs arising from the
opportunistic behavior of managers (Shaukat et al., 2016). In the view of
stakeholder theory, board independence is expected to have a positive
association with a greater level of sustainability performance because
external directors are subject to less pressure from managers and
shareholders than internal directors (Hussain et al., 2018). In that
context, independent directors can connect a company with its external
stakeholders by considering their interests (Amran et al., 2014).
Therefore, board independence can improve the board’s objectivity,
enhance its ability to represent multiple perspectives on the social and
environmental responsibility of the company, and ensure balance
among interests of different stakeholders (Michelon and Parbonetti,
2012).
Although Naciti (2019) found that a higher proportion of indepen­
dent directors is negatively associated with sustainability performance,
most prior empirical research presented positive results on the link be­
tween board independence and sustainability performance (Jo and
Harjoto, 2011; Shaukat et al., 2016; Cucari et al., 2018; Hussain et al.,
2018). Following these studies and arguments of agency and stakeholder
theories, board independence is assumed to enhance the implementa­
tion and adoption of sustainability initiatives. Thus, the following hy­
pothesis is proposed:
H3. Board independence has a positive association with ESG perfor­
mance in the logistics sector.
3.4. CEO and board chair separation
CEO duality means that the same person holds the positions of CEO
and board chair (Michelon and Parbonetti, 2012; Duru et al., 2016). CEO
duality assigns greater power and authority to a single person, which
may enable him to undertake decisions without taking account of the
stakeholders’ interests (Khan et al., 2013). The divergence of interests
between managers and stakeholders regarding the use of corporate re­
sources may lead to failure in the maximization of the utility function of
the latter (Prado-Lorenzo and Garcia-Sanchez, 2010). Therefore, while
CEO duality may lead to negligence of involvement in social or com­
munity activities (Khan et al., 2013), CEO and board chair separation
may encourage companies to engage more in socially and environ­
mentally responsible practices considering the interests of their stake­
holders. Therefore, companies that separate CEO and board chair
positions are more likely to implement sustainability initiatives. Thus,
the following hypothesis is suggested:
H4. CEO and board chair separation has a positive association with
ESG performance in the logistics sector.
4
International Journal of Production Economics 231 (2021) 107835
3.5. Sustainability committee
Companies establish a sustainability committee (i.e., CSR) to
formulate sustainability policies (Amran et al., 2014) and to improve the
stakeholder engagement (Michelon and Parbonetti, 2012). The exper­
tise, knowledge, and skills of such a committee may play a significant
role in integrating the CSR perspective into corporate policies and
strategies (Amran et al., 2014). Therefore, the presence of a CSR com­
mittee can be regarded as a means of managing relations with stake­
holders and an effective monitoring mechanism for improving the
sustainability performance of companies (Michelon and Parbonetti,
2012). With regard to empirical research, Velte (2016), Cucari et al.
(2018), and Hussain et al. (2018) documented that the existence of a
CSR committee fosters the environmental and social performance of
companies. Therefore, the existence of a sustainability committee (i.e.,
CSR) is expected to promote the adoption of sustainability initiatives
and to improve corporate sustainability. Thus, the following hypothesis
is formulated:
H5. The existence of a sustainability committee (i.e., CSR) has a pos­
itive association with ESG performance in the logistics sector.
3.6. Ownership structure
Listed companies are likely to undertake CSR practices because they
are more visible to the media and general society and, hence, subject to
intense public scrutiny (Piecyk and Bjo €rklund, 2015). By contrast, the
concentration of ownership gives firms less freedom to pursue sustain­
ability policies because these activities may be considered costly and a
waste of firm resources (Liao et al., 2015). Piecyk and Bj€
orklund (2015)
documented that logistics companies listed on the stock exchange are
likely to disclose a broader range of CSR aspects within their reports,
implying the impact of stakeholder pressures on their CSR practices.
Likewise, Liao et al. (2015) stated that ownership concentration nega­
tively impacts environmental transparency. In this sense, it is expected
that ownership diffusion positively impacts corporate sustainability
performance. Thus, the following hypothesis is proposed:
H6. Ownership diffusion has a positive association with ESG perfor­
mance in the logistics sector.
3.7. Firm value
From a theoretical perspective, there are two schools of thought on
whether ESG performance is value-adding or value-destroying (Mer­
velskemper and Streit, 2017). One school of thought argues that un­
dertaking ESG practices increases costs and puts companies at an
economic disadvantage that may result in lower market values (Aup­
perle et al., 1985). Another school of thought argues that engaging in
ESG practices enhances corporate reputation and generates competitive
advantages by differentiating the organization from its competitors (Dey
et al., 2011; Miao et al., 2012; Cosimato and Troisi, 2015; He et al.,
2017). Strengthening competitive position aside, a better social and
environmental performance of a logistics company is likely to have a
positive impact on their economic performance by improving opera­
tional efficiency (Wu and Dunn, 1995) and reducing costs (Piecyk and
Bjo€rklund, 2015), resulting in higher market values (Lo and Sheu, 2007;
Mervelskemper and Streit, 2017). For example, any reduction in
greenhouse gas emissions from freight transport is directly related to the
amount of fuel used and may result in decreased operating costs which,
in turn, may improve operational and economic performance (Pazir­
andeh and Jafari, 2013; Cosimato and Troisi, 2015; Piecyk and
Bjo€rklund, 2015). Furthermore, Khan and Qianli (2017) documented
that green supply chain practices have a significant positive influence on
economic performance. Additionally, CSR engagement can also improve
firm value by reducing potential conflicts between the company and its
stakeholders and mitigating agency conflicts (Jo and Harjoto, 2011).
K. Govindan et al. International Journal of Production Economics 231 (2021) 107835

Table 1
List of all variables.
Variables Definition Source

ESG score The overall firm score derived from the self-disclosed information combining ESG pillar scores. Thomson Reuters (TR)
EIKON
Environmental Pillar The Environmental Pillar assesses a firm’s influence on living and non-living natural ecosystems, including the land, water, TR EIKON
score and air.
Social Pillar score The Social Pillar measures a firm’s competence to create faith and devotion with its customers, employees, and society. TR EIKON
Governance Pillar score The Corporate Governance Pillar evaluates a firm’s processes and systems and its executives’ and board of directors’ acts to TR EIKON
guarantee long-term shareholder value.
Tobin Q (Tobin’s Q The ratio of total debt and market capitalization to total assets Author’s calculations
ratio)
Board Size The number of board of directors TR EIKON
Board Gender Diversity The percentage of the female board of directors TR EIKON
Board Independence Indicating the existence of policy about the independence of its board TR EIKON
CEO Board Chair Indicating either the CEO instantaneously leads the board or the board chairperson is the CEO of the company TR EIKON
Separation
Sustainability Indicating whether the CSR or sustainability committee or team exist in the company TR EIKON
Committee
Free Float Percentage The percentage of shares outstanding TR EIKON
Total Assets The total assets owned by the company TR EIKON
Leverage The ratio of total liabilities to total assets Author’s calculations
ROA (Return on assets) The ratio of net income (minus taxes) to total assets Author’s calculations

With regard to empirical research, Humphrey et al. (2012) docu­
mented that there is neither a financial cost nor a benefit from investing
in firms with good ESG scores. Likewise, Velte (2017) determined that
while ESG performance enhances firm profitability, it does not impact
firm market value. Further, Criso �stomo et al. (2011) found a negative
impact of the adoption of CSR practices on firm value. By contrast, Lo
and Sheu (2007) determined a significant positive association between
CSR performance and firm value. Following the arguments of the
value-adding role of ESG engagement, the following hypothesis is
proposed:
H7. Sustainability performance has a positive association with the firm
value in the logistics sector.
4. Research methodology
The outline of the empirical research methodology is as follows:
initially, we built the statistical models to test the hypotheses formulated
in the preceding section. Then, we identified and collected the data sets.
Next, the data sets were cleansed, transformed, and get readied for the
analysis. After that, the statistical models were verified and analyzed. In
the end, the results were compiled, contemplated, and interpreted.
4.1. Statistical models
profitable, and leveraged firms have more reasons or resources for
achieving superior CSR performance (Drobetz et al., 2014; Karaman
et al., 2018; Uyar et al., 2020). The second statistical model (Model 2)
linked the firm performance (Tobin Q) to ESG performance while con­
trolling for the corporate governance variables (mentioned above) and
other firm characteristics (Kuzey and Uyar, 2017). Both of the statistical
models were written down below, respectively:
Model 1:
ESG Scorei j Pillar Scorei ¼ β0 þ β1 Board Sizei þ β2 Board Gender Diversityi
þ β3 Board Independencei
þ β4 CEO Chair Separationi
þ β5 Sustainability Committeei
þ β6 Free Float Percentagei
þ β7 LnðTotal AssetsÞi þ β8 Leveragei
þ β9 ROAi þ εi
Model 2:
Tobin Qi ¼ β0 þ β1 ESG Scorei j Pillar Scorei þ β2 Board Sizei
þ β3 Board Gender Diversityi þ β4 Board Independencei
þ β5 CEO Chair Separationi þ β6 Sustainability Committeei
þ β7 Free Float Percentagei þ β8 LnðTotal AssetsÞi
þ β9 Leveragei þ β10 ROAi þ εi

The first model (Model 1) related the ESG performance of the lo­
gistics companies to their corporate governance characteristics
including Sustainability Committee, CEO Board Chair Separation, Board
Gender Diversity, Board Size, Board Independence, and Free Float Per­
centage (proxy for ownership diffusion) while controlling for the
leverage, profitability (proxied by return on assets [ROA]), and the
natural logarithm of the total assets (proxy for company size). Prior
studies also utilized free float percentage as a proxy for ownership
structure in CSR reporting or performance studies (Kiliç et al., 2015;
Kuzey and Uyar, 2017; Uyar et al., 2020); Free float refers to the publicly
traded portion of shares of a company on an organized stock exchange
(Kiliç et al., 2015). It is expected that the higher the free float, the more
dispersed ownership structure is, and the more likely a firm exhibits
higher CSR performance considering the information need of a wide
spectrum of shareholders and other stakeholders (Gamerschlag et al.,
2011; Kuzey and Uyar, 2017). Moreover, numerous studies incorporated
firm size, profitability, and leverage into their study model as potential
drivers of CSR reporting or performance highlighting that larger, more
The predicted variable, in the first model, is the ESG score self-
disclosed by the company combining the ESG Pillar scores (conse­
quently the individual ESG Pillar scores, respectively). The subsequent
dependent variable Tobin Q, in the second model, expressed the firm
performance in a given year. The corporate governance characteristics
were the predictor variables in both models. Besides, the ESG disclosure
(ESG score or the individual ESG Pillar scores, respectively) was used as
a predictor variable in the second model. In both models, firm size,
leverage, and ROA are controlled. The size variable, Total Assets, was
log-transformed to induce less skewness in the models. All the variables’
definitions are listed in Table 1.
Entity and time dimensions were also included in the models trans­
forming Model 1 and Model 2. The Fixed Effects models (with both time
and entity fixed effects) for both the ESG performance (Model 3) and the
firm performance (Model 4) incorporating time fixed effects and time
variation within cross-sectional observations were presented below,
respectively:

5
K. Govindan et al.
Model 3:
ESG Scorei;t j Pillar Scorei;t ¼ β1 Board Sizei;t þ β2 Board Gender Diversityi;t
þ β3 Board Independencei;t
þ β4 CEO Chair Separationi;t
þ β5 Sustainability Committeei;t
þ β6 Free Float Percentagei;t
þ β7 LnðTotal AssetsÞi;t þ β8 Leveragei;t
þ β9 ROAi;t þ αi þ λt þ εi;t
Model 4:
TobinQi;t ¼ β1 ESG Scorei;t j Pillar Scorei;t þ β2 Board Sizei;t
þ β3 Board Gender Diversityi;t þ β4 Board Independencei;t
þ β5 CEO Chair Separationi;t þ β6 Sustainability Committeei;t
þ β7 Free Float Percentagei;t þ β8 LnðTotal AssetsÞi;t þ β9 Leveragei;t
þ β10 ROAi;t þ αi þ λt þ εi;t
In line with previous studies, including but not limited to Giannar­
akis et al. (2014), Limkriangkrai et al. (2017), Ben-Amar et al. (2017),
Ioannou and Serafeim (2017), and Yang and Baasandorj (2017), the
authors adopted a Fixed Effects panel data analysis methodology. While
other studies including Cucari et al. (2018) followed a Random Effects
model, the Hausman test specified that in this setting the Fixed Effects
methodology is more appropriate. While structural equation modeling
(SEM) is another viable methodology, SEM is more suitable for multi­
faceted, hardly direct measurable, not well-defined hypothetical con­
structs which allow testing for multiple, series, and independent
complex models (Raykov and Marcoulides, 2006; Nunkoo et al., 2013;
Kline, 2015 ). Besides, SEM also considers potential measurement errors
in observed variables, specifically in explanatory variables (Raykov and
Marcoulides, 2006). In the context of longitudinal studies, however,
multiple regression-based approaches are more preferable (Nusair and
Hua, 2010). Assuming the exogeneity of predictor variables, Fixed Ef­
fects estimators are unbiased, can address unobserved individual het­
erogeneity, and across all time periods, the idiosyncratic errors do not
correlate with predictor variables (Wooldridge, 2010, 2016).
4.2. Data sources
The ESG scores, corporate financial variables, and board character­
istics were downloaded from the TR EIKON database, which covers 99%
of the worldwide market capitalization. The TR EIKON database main­
tains 7000þ company ESG scores globally. The TR Eikon database
computes ESG scores using firm-reported data and calculates a firm’s
ESG achievement, engagement, and effectiveness. The database cap­
tures and maintains 178 related and comparable ESG measures to be
used in the scoring process. These measures are first grouped across 10
categories: resource use, environmental product innovation, emissions,
community, product responsibility, workforce, human rights, share­
holders, management, and CSR strategy. Then, a combination of 10
categories is formulated to the ESG Pillar scores (Thomson Reuters,
2019a).
The overall ESG score combines the ESG Pillar scores and is a
comprehensive firm score dependent on self-disclosed information. The
Environmental Pillar score categorically combines the emissions,
resource use, and innovation scores (Thomson Reuters, 2019a). The
Environmental score assesses a company’s influence on living and
non-living ecosystems. The score considers the company’s efforts to
evade environmental risks and prosper environmental prospects. The
Social score includes the workforce, community, human rights, and
product responsibility facets which aim to evaluate how well a firm
maintains equal opportunity and diversity among employees, respects
human rights, engages in community development, and considers
human health and safety in delivery of services and goods (Thomson
6
International Journal of Production Economics 231 (2021) 107835
Reuters, 2019a). The Governance Pillar score incorporates CSR strategy,
shareholders, and management dimensions which aim to assess a firm’s
ability to implement corporate governance regulations, to treat share­
holders equally, to devise antitakeover provisions, and to communicate
its CSR practices with stakeholders (Thomson Reuters, 2019a).
Thomson Reuters uses a percentile ranking methodology to calculate
the relative ranks of firms in each ESG measure and the category score.
The relative ranks depend on the number of firms that have (a) a score at
all, (b) a lower score than the firm under consideration, and (c) the same
score with the current firm. First, the percentile ranks for the individual
ESG measure are derived for all the ESG measures in the category. Then,
an average category score is computed for each firm. Next, the percentile
ranking methodology is applied to finalize the category percentile ranks
for all firms. Finally, the ESG Pillar scores and the overall ESG score are
computed by the weighted sum of the category and the Pillar scores,
respectively.5 The ESG score and individual Pillar scores fluctuate be­
tween zero and 100, with a greater score representing superior perfor­
mance (Thomson Reuters, 2019a).
The authors calculated Tobin Q considering the company’s total debt
and market capitalization and rationing to total assets. Tobin Q is used
as a proxy for company appraisal in many previous studies (Bhagat and
Black, 1999; Kuzey and Uyar, 2017; Karaman et al., 2018; and Singh
et al., 2018). All the other variables’ definitions and corresponding data
sources were listed in Table 1. The data downloaded belonged to 100
logistics companies maintained in the TR EIKON database for the period
2011–18. The sample consisted of courier, postal, airfreight &
land-based, marine freight & logistics (including inland water freight,
deep-sea freight, marine logistics), integrated logistics, and ground
freight & logistics (freight trucking, railway freight, truck rental,
warehousing) firms as adopted from the Thomson Reuter’s business
classification for logistics industry (Thomson Reuters, 2019b). The
initial sample included 519 firm-year observations. However, 15 ob­
servations were missing for the board gender diversity. Hence, a final set
of 504 observations were included in the analysis. The list of the com­
panies was displayed in Table A1 in the Appendix. In the sample, the
nations with which firms are affiliated are from both developed and
developing countries that reinforce the findings’ generalizability
worldwide.
4.3. Descriptive statistics
The descriptive statistics of the variables included in the analysis are
reported in Table 2. During the period 2011–18, the average ESG score
was 50.02 while the average Environmental Pillar score was 50.87, the
average Social Pillar score was 51.08, and the average Governance Pillar
score was 47.82. The ESG scores fluctuated significantly between 2.76
and 96.15. The average Tobin’s Q ratio was 1.27 and changed from 0.18
to 5.39. During the period of interest, a board of ten members on average
oversaw the companies although the smallest board had four members,
and the largest had twenty-three members. The percent of women on
corporate boards was 11.49% on average whereas the maximum only
reached 50%. More than half of the boards (56%) had a policy about
their independence. In 44% of the cases, either the CEO chair the board
at the same time or the chairperson of the board instantaneously was the
CEO of the company. Exactly half of the companies from 2011 to 18 had
a sustainability committee or team. The free float percentage of
outstanding shares slightly exceeded 75%. The average of total assets
was around twelve billion dollars and the mean leverage was 59.37%.
Finally, the mean ROA was 4.25% for the period 2011–18.
5
Illustrations of ESG score and Pillar score computaions are given in
Thomson Reuters (2019a).
K. Govindan et al. International Journal of Production Economics 231 (2021) 107835

Table 2
Descriptive statistics.
Variables Obs. Mean Std. deviation Minimum Maximum

ESG score 519 50.02 17.38 10.82 87.63

Environmental Pillar score 519 50.87 23.46 6.21 96.15
Social Pillar score 519 51.08 21.31 7.63 94.58
Governance Pillar score 519 47.82 21.00 2.76 93.69
Tobin Q 519 1.27 0.76 0.18 5.39
Board Size 519 10.03 3.40 4 23
Board Gender Diversity 504 11.49 11.69 0 50
Board Independence 519 0.56 0.50 0 1
CEO Board Chair Separation 519 0.44 0.50 0 1
Sustainability Committee 519 0.50 0.50 0 1
Free Float Percentage 519 75.08 25.42 0 100
Total Assets 519 11,700,000,000 21,600,000,000 334,000,000 243,000,000,000
Leverage 519 59.37 22.13 0 160.55
ROA 519 4.25 6.84 39.00 66.60

4.4. Correlation coefficients
Table 3 presents correlation coefficients (the Pearson’s) and their
significance. The correlations among the ESG scores were highly sig­
nificant. In particular, the correlation coefficient between the ESG and
Environmental Pillar score was r ¼ 0.8562 (p < .01), the ESG and Social
Pillar score was r ¼ 0.8659 (p < .01), and the ESG and Governance Pillar
score was r ¼ 0.6235 (p < .01). Differently, the correlation between the
ESG scores and Tobin Q was insignificant except for the Environmental
Pillar score where they were negatively correlated (r ¼ 0.1206, p <
.01). The ESG scores were moderately correlated with board size and
board gender diversity. However, Tobin Q was not correlated with board
size but positively correlated with board gender diversity (r ¼ 0.2374, p
< .01). The Tobin Q was also correlated with board independence (r ¼
0.2699, p < .01). Among the ESG scores, only the Governance Pillar
score was correlated with board independence (r ¼ 0.2269, p < .01).
The correlations between ESG scores and CEO Board Chair Separation
were negligible (except for the Governance Pillar score where r ¼
0.1025, p < .05); however, the correlation between Tobin Q and CEO
Board Chair Separation was r ¼ 0.2696 (p < .01). In addition, the ESG
scores and presence of a sustainability committee or team, and the ESG
scores and company size were moderately/highly correlated.
5. Results
First, the association between the ESG performance of the logistics
companies to their corporate governance characteristics was considered.
Initially, a pooled Ordinary Least Squares (OLS) regression using Model
1 was conducted to study the relationship between the ESG score and the
predictor variables. Then, the company fixed effects were included in
Model 1. These models were run for preliminary analyses that can also
be considered as robustness checks. After that, both time fixed effects
and time variation within cross-sectional observations (using Model 3)
were considered. The outputs of Model 3 are the main results on which
the hypotheses are accepted or rejected in the succeeding paragraphs.
Model 3 was also analyzed for the individual Pillar scores. Both the OLS
and Fixed Effects regression analysis results were illustrated in Table 4.
All the regression models were statistically significant (with the F
statistics’ p-values less than 0.01). The pooled OLS regression (column 2
in Table 4) explained 61% of the variability in the ESG performance. The
OLS results showed that there were positive and statistically significant
associations between the ESG score and the Board Size (β1 ¼ 0.572),
Board Gender Diversity (β2 ¼ 0.261), Sustainability Committee (β5 ¼
10.479), and Free Float Percentage (β6 ¼ 0.060) with p-values < .01 for
all. Thus, the firms having a larger board, with a higher number of
females on board, with a sustainability committee, and with more
dispersed ownership structure demonstrate better CSR performance.
After introducing the company fixed effects in Model 1 (column 3 in
Table 4), quite similar results were obtained with some minor differ­
ences; Board Independence was positively significant, and CEO Board
Chair Separation was negatively significant.
Furthermore, both time fixed effects and time variation within cross-
sectional observations using Model 3 were considered (columns 4–7 in
Table 4). The Fixed Effects results in the fourth column showed that
there were positive and statistically significant associations between the
ESG performance and the Board Gender Diversity (β2 ¼ 0.224) and the
ESG score and the Sustainability Committee (β5 ¼ 3.201), with p-values
< .01 for both variables. On the other hand, the Fixed Effects results in
the fifth column showed no statistically significant links between the
Environmental Pillar and other explanatory variables. Next, the
regression results in column 6 indicated that there were positive and
statistically significant associations between the Social Pillar score and
the Sustainability Committee (β5 ¼ 6.091) and the Social Pillar and the
Free Float Percentage (β6 ¼ 0.148), with p-values < .01 for both vari­
ables. Finally, the regression results in column 7 revealed that there
were positive and statistically significant associations between the
Governance Pillar and Board Gender Diversity (β2 ¼ 0.552) with p-
value < .01, and the Governance Pillar and Board Independence (β3 ¼
4.208) with p-value < .1. Contrary to expectations, Board Size and CEO
Board Chair Separation are not significant predictors of composite ESG
score as well as sub-pillars’ score; thus, H1 and H4 are firmly rejected.
However, Board Gender Diversity is a significant predictor for aggregate
ESG score along with the Governance Pillar; hence, H2 is accepted.
Although significant, Board Independence is weakly associated with
only Governance Pillar; hence H3 is supported. Besides, the establish­
ment of the Sustainability Committee is significantly and positively
associated with composite ESG score as well as the Social Pillar; there­
fore, H5 is accepted. Finally, diffused ownership structure as proxied by
Free Float Percentage is positively associated with only Social Pillar
which provides limited support to H6.
Second, the relationship between the Tobin Q and ESG performance
was studied. At first, a pooled OLS regression using Model 2 was carried
out to explore the relationship. Then, the company fixed effects were
integrated in Model 2. Next, both time fixed effects and fixed effects
within cross-sectional observations were considered (Model 4). Model 4
was also executed for the individual ESG Pillar scores. The regression
analyses were presented in Table 5.
All the regression models were statistically significant (with the F
statistics’ p-values less than 0.01). The pooled OLS regression (second
column in Table 5) explained 41% of the variance in Tobin Q. The OLS

7
K. Govindan et al. International Journal of Production Economics 231 (2021) 107835

results showed no association between the Tobin Q and the ESG score.

14
After introducing the firm fixed effects to Model 2 (third column in

1
Table 5), the ESG score was found to be negatively associated, although
weak, with Tobin Q. Additionally, both time and firm fixed effects using

0.1363a
Model 4 were analyzed (columns 4–7 in Table 5). The Fixed Effects re­
sults in the fourth column specified that there was a negative and sta­
13

1
tistically significant (but weak) link between Tobin Q and the ESG score
(β1 ¼ 0.004) with p-value < .1.

0.0877b
0.2008a
In the same way, the Fixed Effects results in columns 5 and 7 indi­
cated no statistically significant links of Tobin Q with the Environmental
12

1
and Governance Pillar scores. However, the regression results in column
6 indicated that there was a negative and statistically significant asso­

0.2272a
0.0194
ciation between Tobin Q and the Social Pillar score (β1 ¼ 0.005) with

0.06
p-value < .01.
11

1
Overall, the results of Model 2 and 4 suggest that CSR performance is
not a value driver in the logistics sector; hence H7 is rejected. The po­
0.1514a
0.3146a
0.1763a
0.0192 tential reasons for this unanticipated outcome are elaborated in the
10

Implications section of the study. Table 6 summarizes the decisions

1

about the acceptance or rejection of all the hypotheses.

0.1235a
0.107b
0.1964a

0.1658a
0.0442

6. Discussions
9

According to the results, the board size and the separation of the
board chair and CEO have no significant association with CSR perfor­
0.0483
0.1957a

0.2040a

0.1530a
0.0592
0.0478

mance. This implies that the board size is not a good predictor of CSR
performance in the logistics sector which might be the consequence of
8

the conflict of the following two competing views; large boards better
(Allegrini and Greco, 2013) or worse in monitoring and controlling
0.0937b
0.2781a

0.2744a
0.2653a
0.2097a

0.2529a
0.074

functions (Hussain et al., 2018). An alternative implication is that board

7

composition may matter more than board size in carrying out its
monitoring function. This finding of the study is not surprising since
0.0647

0.0835

0.0326

some previous studies found similarly insignificant results between

0.1894a
0.1377a

0.2431a

0.5411a
0.1770a

board size and sustainability initiatives (Amran et al., 2014; Velte, 2016;
6

Hussain et al., 2018). Concerning the insignificant association between

CEO separation or duality, prior studies have inconclusive results too.
0.1082b
0.1515a
0.0717

While Jo and Harjoto (2011) documented a positive link between CEO

0.2374a
0.2699a
0.2696a

0.2335a

0.5542a
0.0666

duality6 and CSR performance, Naciti (2019) determined a positive as­

5

sociation between separation of CEO and board chair with CSR perfor­
mance, and Michelon and Parbonetti (2012) found an insignificant
0.1025b

association.
0.1964a
0.3239a
0.2269a

0.2864a
0.2091a
0.3444a
0.1464a
0.018

0.005

However, board gender diversity is positively associated with CSR

performance as well as governance performance. This finding validates
4

prior studies that demonstrated a positive association of board gender

diversity with CSR performance (Seto �-Pamies, 2015; Hussain et al.,
0.0339

0.0524
0.3085a

0.4662a
0.2876a

0.5297a
0.1391a
0.5274a
0.2854a
0.0046
0.0058

2018; Naciti, 2019) and confirms that females are effective monitors for
firms (Erhardt et al., 2003). This result justifies the assertion that female
3

directors promote sustainability engagement (Ben-Amar et al., 2017),

enhance corporate citizenship (Seto �-Pamies, 2015), and foster stake­
0.1206a

0.1339a
0.0424
0.6898a
0.2623a

0.3716a
0.2908a

0.4942a

0.6074a
0.3187a
0.0153

0.0616

holder engagement (Ben-Amar et al., 2017). Bear et al. (2010) argue that
board diversity, with an appropriate blend of skills, experience and
2

abilities, is an important asset for firms, and it enables boards to realize

better monitoring functions for CSR issues. Hence, the results confirm
0.0861b
0.0768

0.0283
0.8562a
0.8659a
0.6235a

0.4460a
0.3795a

0.5632a
0.1660a
0.6355a
0.3245a
0.0662

that female directors enhance board effectiveness and monitoring

functions (Adams and Ferreira, 2009; Jiraporn et al., 2019) which lead
1

to higher CSR performance (Kiliç et al., 2015). Although female di­

Significance level (2-tailed) is: .05.
Significance level (2-tailed) is: .01.

rectors are influential in improving overall CSR and the Governance

Correlation coefficients (Pearson’s).

CEO Board Chair Separation

Environmental Pillar score

Pillar performance, they are not at all in the Environmental and Social
Sustainability Committee
Governance Pillar score

Board Gender Diversity

Pillar. The authors posit that this might be the consequence of insuffi­
Free Float Percentage
Board Independence

cient number of female directors on corporate boards (i.e., currently

Social Pillar score

Ln (Total Assets)

11.49% on average). Therefore, a higher number of female directors on

corporate boards of logistics firms with greater empowerment may
Board Size
ESG score
Variables

Leverage
Tobin Q

foster corporate environmental and social agenda (Terjesen and Singh,

ROA

2008; Post et al., 2011).

Table 3

10
11
12
13
14
1
2
3
4
5
6
7
8
9

6
b

That is combining the positions of CEO and chairman.

a

8
K. Govindan et al. International Journal of Production Economics 231 (2021) 107835

Table 4
Regression analysis for ESG scores.
Variables Pooled OLS Fixed Effects Fixed Effects Fixed Effects Fixed Effects Fixed Effects

ESG score Dependent Variable Dependent Variable Dependent Variable

Environmental Pillar score Dependent Variable
Social Pillar score Dependent Variable
Governance Pillar score Dependent Variable
Board Size 0.572 (0.170)*** 0.456 (0.256)* 0.189 (0.258) 0.169 (0.349) 0.266 (0.345) 0.497 (0.441)
Board Gender Diversity 0.261 (0.047)*** 0.353 (0.058)*** 0.224 (0.066)*** 0.113 (0.090) 0.050 (0.089) 0.552 (0.113)***
Board Independence 1.669 (1.064) 3.771 (1.242)*** 1.568 (1.326) 0.326 (1.796) 1.113 (1.777) 4.208 (2.269)*
CEO Board Chair 1.585 (1.031) 3.010 (1.253)** 1.537 (1.269) 0.935 (1.718) 0.631 (1.700) 3.264 (2.171)
Separation
Sustainability Committee 10.479 (1.066)*** 2.015 (1.177)* 3.201 (1.189)*** 1.530 (1.610) 6.091 (1.593)*** 1.699 (2.035)
Free Float Percentage 0.060 (0.021)*** 0.060 (0.036)* 0.044 (0.035) 0.015 (0.047) 0.148 (0.047)*** 0.013 (0.060)
Ln (Total Assets) 5.815 (0.480)*** 10.612 (1.709)*** 9.802 (1.734)*** 6.424 (2.348)*** 10.721 (2.324)*** 12.498 (2.967)***
Leverage 0.101 (0.022)*** 0.098 (0.050)* 0.103 (0.049)** 0.170 (0.067)** 0.069 (0.066) 0.069 (0.085)
ROA 0.121 (0.080) 0.070 (0.064) 0.067 (0.062) 0.054 (0.085) 0.007 (0.084) 0.153 (0.107)
Constant 104.118 (9.907) 197.262 (37.284) 182.332 (38.720) 108.506 (52.440) 206.045 (51.894) 237.029 (66.264)
*** *** *** ** *** ***
No. of observations 504 504 504 504 504 504
Firm Fixed Effects No Yes Yes Yes Yes Yes
Year Fixed Effects No No Yes Yes Yes Yes
p-value <.001 <.001 <.001 <.001 <.001 <.001
Adjusted R2 .61

Note: Std. error in parentheses; ***p < .01; **p < .05; *p < .10.

Table 5
Regression analysis for firm performance (Tobin Q).
Independent Variables Pooled OLS Fixed Effects Fixed Effects Fixed Effects Fixed Effects Fixed Effects

ESG score 0.004 (0.002) 0.004 (0.002)* 0.004 (0.002)*

Environmental Pillar score 0.000 (0.001)
Social Pillar score 0.005 (0.001)***
Governance Pillar score 0.001 (0.001)
Board Size 0.000 (0.009) 0.024 (0.011)** 0.027 (0.010)*** 0.028 (0.010)*** 0.026 (0.010)*** 0.027 (0.010)***
Board Gender Diversity 0.007 (0.003)*** 0.003 (0.003) 0.005 (0.003)* 0.006 (0.003)** 0.005 (0.003)** 0.005 (0.003)*
Board Independence 0.204 (0.059)*** 0.045 (0.052) 0.004 (0.052) 0.001 (0.052) 0.004 (0.051) 0.002 (0.052)
CEO Board Chair Separation 0.284 (0.057)*** 0.030 (0.052) 0.017 (0.050) 0.012 (0.050) 0.015 (0.049) 0.014 (0.050)
Sustainability Committee 0.206 (0.064)*** 0.040 (0.049) 0.039 (0.047) 0.050 (0.047) 0.021 (0.047) 0.049 (0.047)
Free Float Percentage 0.001 (0.001) 0.000 (0.001) 0.001 (0.001) 0.001 (0.001) 0.000 (0.001) 0.001 (0.001)
Ln (Total Assets) 0.080 (0.030)*** 0.369 (0.074)*** 0.416 (0.071)*** 0.452 (0.069)*** 0.399 (0.069)*** 0.441 (0.070)***
Leverage 0.001 (0.001) 0.002 (0.002) 0.003 (0.002) 0.003 (0.002) 0.003 (0.002) 0.003 (0.002)
ROA 0.054 (0.004)*** 0.008 (0.003)*** 0.009 (0.002)*** 0.010 (0.002)*** 0.010 (0.002)*** 0.009 (0.002)***
Constant 2.541 (0.603)*** 11.192 (1.590)*** 10.606 (1.558)*** 11.285 (1.530)*** 10.257 (1.531)*** 11.077 (1.546)***
No. of observations 504 504 504 504 504 504
Firm Fixed Effects No Yes Yes Yes Yes Yes
Year Fixed Effects No No Yes Yes Yes Yes
p-value <.001 <.001 <.001 <.001 <.001 <.001
Adjusted R2 .41

Note: Std. error in parentheses; ***p < .01; **p < .05; *p < .10.

Further, board independence has a weak association with only the
Governance Pillar score. This is a bit surprising since independent di­
rectors are less exposed to shareholder pressure and are expected to
better balance shareholders and stakeholders’ interests (Naciti, 2019) to
contribute to effective functioning of the boards (Duru et al., 2016).
Although there are some exceptions (Michelon and Parbonetti, 2012;
Naciti, 2019),7 most prior studies proved a positive association between
the board independence and CSR engagement (Jo and Harjoto, 2011;
Post et al., 2011; Kiliç et al., 2015; Hussain et al., 2018). The absence of
strong predictability of this variable on CSR performance might be
related to quality or actual independence of independent directors since
prior studies point out that genuinely independent directors create value
through the allocation of resources (Gordon, 2010; McCabe and Nowak,
2008). Another plausible explanation is that a board of directors with
excessive independent director ratios may weaken its monitoring and
controlling function (Bhagat and Black, 1999).
Moreover, the firms which have a sustainability committee are more
likely to have higher CSR performance (both overall and social) than
those do not. This finding corroborates the outcomes of several prior
studies (Velte, 2016; Cucari et al., 2018; Hussain et al., 2018; Burke
et al., 2019). The rationale behind this finding is that a particular CSR
committee is likely to have the necessary expertise and skills (Amran
et al., 2014), and to be more committed to pursuing CSR achievements
of corporations. However, according to the findings, the CSR committees
are not significantly influential in the Environmental and Governance
Pillars of CSR. This finding corroborates the relative effectiveness of CSR
committees rather than in absolute terms (Burke et al., 2019). Ineffec­
tiveness of CSR committees in the Environmental Pillar might expose
logistics firms to susceptible to some operational risks. In recent years,
logistics operations are undergoing a transformation towards more
sustainable supply chain practices such as green packaging (Cosimato

7
The first study found insignificant association, whereas the second one
found a negative association between board independence and CSR disclosure
and performance, respectively.

9
K. Govindan et al. International Journal of Production Economics 231 (2021) 107835

Table 6
Summary of acceptance/rejection decisions of the hypotheses.
Hypotheses Decisions

H1: Board size has a positive association with ESG performance in the logistics sector. Rejected
H2: Board gender diversity has a positive association with ESG performance in the logistics sector. Accepted for composite ESG score and Governance
Pillar
H3: Board independence has a positive association with ESG performance in the logistics sector. Accepted for Governance Pillar
H4: CEO and board chair separation has a positive association with ESG performance in the logistics sector. Rejected
H5: The existence of a sustainability committee (i.e., CSR) has a positive association with ESG performance in the logistics Accepted for composite ESG score and Social Pillar
sector.
H6: Ownership diffusion has a positive association with ESG performance in the logistics sector. Accepted only for Social Pillar
H7: Sustainability performance has a positive association with the firm value in the logistics sector. Rejected

and Troisi, 2015), green distribution (Khan et al., 2019a), green ware­ Second, the logistics sector might be pursuing non-financial objectives
housing (Khan et al., 2019a), green transportation (Cosimato and Troisi, such as community development and corporate legitimacy rather than
2015), and low-carbon logistics (He et al., 2017). It is hoped that financial objectives out of CSR efforts (Wang and Sarkis, 2017). Third,
highlighted sustainable logistics practices help the sector alleviate its shareholders might consider CSR investment as a fundamental obliga­
negative environmental impacts while supporting the economic devel­ tion of logistics firms (Chen and Lee, 2017).
opment (Abbasi and Nilsson, 2016; Khan et al., 2019b). Therefore, all
these developments suggest CSR committees pay particular attention to
6.1. Implications
and prioritize the environmental aspect of CSR practices in the logistics
firms and shape the corporate agenda accordingly. Moreover, effec­
These results provide some important theoretical, practical, and
tiveness of CSR committee in the Governance Pillar may play a key role
policy implications. First, particularly female directors and CSR com­
in configuring overall management structure towards more alignment
mittees are the control mechanisms that help to alleviate agency con­
with CSR orientation of the firms by integrating green human resource
flicts between managers and investors by supporting CSR practices.
practices into the management structure (Jabbour and de Sousa Jab­
Otherwise, weakness or lack of CSR commitment might cause logistics
bour, 2016). This might help logistics firms shape their overall human
firms to bear some environmental and social risks that eventually have
resources structure from top management to lower levels of the orga­
negative effects on investors’ wealth. In line with stakeholder theory,
nization structure with a domino effect.
female directors and CSR committees are successful in addressing
Additionally, firms with diffused ownership structures are more
stakeholders’ concerns and meeting their expectations. However, as an
likely to show higher performance in the Social Pillar of ESG. This might
important mechanism of corporate governance, independent directors
be due to the fact that shareholders are impressed by socially responsible
do not play a significant role at all in CSR achievements of firms and,
activities rather than other dimensions of ESG. Prior studies have mostly
thereby, do not consider stakeholders’ non-financial interests. This
found a positive association between dispersed ownership structure and
might be because of their over-engagement with the financial interests
CSR commitment (Li and Zhang, 2010; Gamerschlag et al., 2011; Kiliç
of the firms or due to ignorance of environmental and social aspects.
et al., 2015) although there are exceptions (Kuzey and Uyar, 2017).
Moreover, the study tests for the first time the link between CSR per­
However, the insignificant association between free float and the Envi­
formance and firm value in the logistics sector. In this respect, the study
ronmental Pillar might imply lack of interests of dispersed ownership
finds no significant association between the two variables which might
structure in ecological issues which is a missing link in CSR performance
imply a conflict of two contrasting views on that link; value-adding or
of logistics firms. As the sector is under stakeholder scrutiny due to the
the value-destroying role of CSR performance on firm value. In addition
environmental degradation it causes, the broad shareholder base should
to these theoretical implications, the following paragraph highlights the
also be concerned with what firms are practicing in attenuating these
practical implications of the study.
concerns. The evidence concerning the association between ownership
The practical implications for firms, board members, investors, and
structure and CSR performance extends Piecyk and Bjo €rklund (2015)’s
stakeholders can be summarized as follows. First, as the minimum,
study.8
mean, and maximum value of ESG indicators in descriptive statistics
Contrary to expectations, the results regarding the value-relevance of
indicate, although there are high CSR performers, there are very poor
CSR performance did not produce a significant positive outcome. While
performers as well. The wide gap between these two sides implies that
composite ESG score has a weak negative association with firm value,
the logistics sector is quite diverse and has moderate performance, on
the Social Pillar of ESG has a strong negative association. Prior evidence
average, in terms of engagement with CSR initiatives. Thus, there is a
on the association between CSR performance and corporate perfor­
room for improvement for low performers to whom high performers
mance is not also consistent as there are positive (Lo and Sheu, 2007; Jo
might represent a benchmark. Second, empirical findings imply that
and Harjoto, 2011 ), negative (Criso �stomo et al., 2011), and insignificant
female directors and the existence of the CSR committee make a dif­
(Humphrey et al., 2012) outcomes.9 For lack of positive significant link
ference in stimulating companies to undertake CSR initiatives. This
between CSR performance and firm value, there might be some possible
finding supports the view that female directors bring incremental skills,
justifications. First, stock exchange is not adequately efficient to reflect
expertise, and perspectives to the boards regarding the sensitivity of the
firms’ CSR practices and disclosures on share prices (Youn et al., 2015).
firms towards CSR issues. This finding justifies the appointment of more
women to corporate boards and even suggests meeting a certain women
director ratio in overall board size. Therefore, firms that do not already
8 possess female directors or exhibit weak female representation on
The researchers showed that companies listed on the stock exchange (i.e.,
not particularly ownership structure like ours) are likely to disclose more boards are advised to diversify their boardrooms to enhance the
comprehensive CSR reports. decision-making process directed to CSR policies and practices.
9
These studies are conducted neither in logistics sector nor in another spe­ Descriptive statistics show that female director ratio of logistics firms is,
cific sector; they are country-specific studies executed in the US (first two pa­ on average, 11.49% ranging between minimum 0 and maximum 50%.
pers), Pakistan, Brazil, and the UK, respectively. Hence, this figure signals that some firms should proactively recruit

10
K. Govindan et al.
female directors on board with necessary skills and experiences for CSR.
Moreover, the companies that do not have a CSR committee are sug­
gested to establish a committee to shape corporate CSR strategy, to
pursue CSR engagements, and to evaluate the progress in this respect.
Establishment of the CSR committees with knowledgeable and expert
members in the logistics companies might help the sector better align
with sustainability goals and alleviate the ecological concerns of stake­
holders. These committees can also help logistics sectors configure their
employment and management structure towards greener supply chain
practices. Eventually, CSR committees and accordingly shaped human
resource structures might facilitate establishment of an information
system to track and report CSR performance in three dimensions. Ac­
cording to the descriptive statistics, half of the firms in the sample do not
have a CSR committee; thus, this study draws their attention to the value
of establishing such a committee as it reinforces CSR commitment of the
firms. Third, beyond firms’ authority, national logistics sector repre­
sentatives might undertake an active role to stimulate and facilitate
sectoral CSR commitment by suggesting or launching some innovative
CSR practices. Fourth, stakeholders including employees, public,
governmental authorities, and media might show their awareness of and
sensitivity to undesired environmental and social outcomes of logistics
operations. In order for the logistics sector to alleviate concerns of so­
ciety over environmental degradation, its representatives are advised to
formulate overall CSR strategies. Fifth, the insignificant association
between all test variables and environmental indicators of CSR perfor­
mance is quite surprising, and it sparks various queries. This casts doubts
over the efficacy of female and independent directors and CSR com­
mittees on environmental issues in the logistics companies. Due to the
sector’s dependence on energy and fossil fuel and emitting greenhouse
gases, addressing environmental concerns should be among the prior­
ities of the board of directors and CSR committees. Focusing on this issue
and developing environmentally friendly solutions (alternative energy
sources and recyclable materials) may contribute to the legitimacy of the
sector in the society. Thus, this finding suggests boards of the logistics
sector review their corporate CSR agenda and prioritize ecological is­
sues. Sixth, CSR performance is not rewarded by higher market value
which may be attributable to several reasons. As the alignment of lo­
gistics operations towards greener practices, the firms may incur addi­
tional costs such as procurement of costly packaging materials,
employee training costs, safety precautions, recycling technologies,
pollution prevention, and waste filtering. Therefore, investors may think
that these practices do not contribute to the profitability of the firms
and, hence, do not value their CSR performance. However, they should
also be aware that not undertaking those precautions and not addressing
ecological concerns may cause firms to incur some other costs such as
fines of incompatibility, questionable legitimacy, and weakening
competitive position (as more customers demand green logistics prac­
tices). Furthermore, investors might not be sufficiently informed about
firms’ CSR practices which means that share prices do not reflect CSR
engagement of firms realistically. This last point may signal weakness or
lack of efficient communication strategy of the firms concerning CSR
engagements; thus, they are advised to use traditional and novel
communication techniques including website and social media effec­
tively in communication with investors and other stakeholders. This
may also contribute to the efficient functioning of stock markets as the
investors will have more information to incorporate in their trading
11
International Journal of Production Economics 231 (2021) 107835
activities.
In addition to implications to firms, boards, CSR committees, female
and independent directors, sector representatives, investors, and stake­
holders, the study suggests implications for policymakers as well. The
policymakers can consider the findings of the study in better formulating
corporate governance codes of the countries which have binding re­
quirements for firms. The codes can mandate the establishment of CSR
committees or meeting a certain female proportion in their boards of
directors. Indeed, some European countries have already mandated a
minimum female ratio on their boards. Besides, the policymakers may
also specify characteristics of genuinely independent directors so that
they can act independently from the management to consider all
stakeholders including shareholders.
7. Conclusions and limitations
The results showed the number of members on boards does not play a
significant role in firms’ CSR engagements. The separation of CEOs and
board chairs is indifferent to CSR commitment of the logistics firms as it
neither positively nor negatively affects CSR performance. However,
female directors particularly enhance the governance dimension of CSR
performance as well as overall CSR engagement. Furthermore, firms that
have CSR committees are more likely to outperform their counterparts
without CSR committees in terms of both overall and social CSR in­
dicators. Unexpectedly, the study found that independent directors on
the boards are not influential at all in achieving higher CSR perfor­
mance. Overall, these results suggest that board composition rather than
its size matters in pursuing CSR engagement in the logistics sector.
Moreover, firms with diffused ownership structures are more successful
in addressing the social concerns of stakeholders. It is noteworthy to
highlight that none of the tested hypotheses was supported in terms of
environmental indicators of CSR performance in the logistics sector.
Again, contrary to expectations, the study could not find a significant
association between CSR commitment and firm value. This insignificant
finding for the firm value justifies further research to explore why CSR
initiatives do not yield higher market value.
Despite outlined very important findings of the study for advancing
CSR commitment of logistics firms, the study has two primary limita­
tions: time interval of the study and sampling. The sample consists of the
logistics companies listed in the TR Eikon database between 2011 and
2018; thus, the consequences should be considered and evaluated
accordingly. The time constraint is because of the reason that firms’ CSR
practices might evolve over time. The sampling limitation requires
caution while generalizing the results over non-listed and small logistics
firms. Besides, the reader should be cautious about the validity of the
findings on non-logistics firms since firm and board characteristics
might be changing from sector to sector. Hence, this allows testing the
hypothesized relationships in non-listed and small logistics firms as well
as other industries. The study is a company-level investigation that in­
corporates firm characteristics; thus, future studies might be designed to
incorporate country-level institutional factors that might play a role in
encouraging the logistics sector to actively engage with CSR initiatives.
It is noteworthy that the set of variables incorporated in this study is not
a significant predictor of the Environmental Pillar; thus, which factors
could explain environmental performance in the logistics sector de­
serves to be the focus of a future study too.
K. Govindan et al. International Journal of Production Economics 231 (2021) 107835

APPENDIX

Table A1
List of firms included in the analysis.

Country of Headquarters Company Name Country of Headquarters Company Name

Australia Aurizon Holdings Ltd Taiwan Evergreen International Storage & Transport Corp
Australia Qube Holdings Ltd Taiwan Evergreen Marine Corp Taiwan Ltd
Austria Oesterreichische Post AG Taiwan U-Ming Marine Transport Corp
Belgium Bpost SA Taiwan Wan Hai Lines Ltd
Bermuda Team Tankers International Ltd Taiwan Yang Ming Marine Transport Corp
Brazil Cosan Logistica SA UK Clarkson PLC
Brazil Rumo SA UK James Fisher and Sons PLC
Canada Canadian National Railway Co UK Northgate PLC
Canada Canadian Pacific Railway Ltd UK Royal Mail PLC
Canada TFI International Inc UK Stolt-Nielsen Ltd
Chile Compania Sud Americana de Vapores SA UK Wincanton PLC
China COSCO Shipping Energy Transportation Co Ltd USA Air Transport Services Group Inc
China COSCO SHIPPING Holdings Co Ltd USA Amerco
China Daqin Railway Co Ltd USA ArcBest Corp
China Sinotrans Ltd USA Atlas Air Worldwide Holdings Inc
Denmark AP Moeller - Maersk A/S USA C.H. Robinson Worldwide Inc
Denmark Dampskibsselskabet Norden A/S USA CAI International Inc
Denmark DSV A/S USA Covenant Transportation Group Inc
France ALD SA USA CSX Corp
Germany Deutsche Post AG USA Daseke Inc
Germany Hapag Lloyd AG USA Eagle Bulk Shipping Inc
Hong Kong LI & Fung Ltd USA Echo Global Logistics Inc
Hong Kong Orient Overseas (International) Ltd USA Expeditors International of Washington Inc
Hong Kong Pacific Basin Shipping Ltd USA FedEx Corp
India Container Corporation of India Ltd USA Forward Air Corp
Italy Poste Italiane SpA USA FRP Holdings Inc
Japan Kamigumi Co Ltd USA Genco Shipping & Trading Ltd
Japan Kawasaki Kisen Kaisha Ltd USA Genesee & Wyoming Inc
Japan Mitsui OSK Lines Ltd USA Heartland Express Inc
Japan Nippon Express Co Ltd USA Hub Group Inc
Japan Nippon Yusen KK USA J B Hunt Transport Services Inc
Japan Seino Holdings Co Ltd USA Kansas City Southern
Japan SG Holdings Co Ltd USA Kirby Corp
Japan Yamato Holdings Co Ltd USA Knight-Swift Transportation Holdings Inc
South Korea CJ Logistics Corp USA Landstar System Inc
South Korea Hyundai Glovis Co Ltd USA Macquarie Infrastructure Corp
South Korea Hyundai Merchant Marine Co Ltd USA Marten Transport Ltd
South Korea Pan Ocean Co Ltd USA Matson Inc
Kuwait Agility Public Warehousing Co KSCP USA Mobile Mini Inc
Monaco Costamare Inc USA Norfolk Southern Corp
Monaco Scorpio Bulkers Inc USA Old Dominion Freight Line Inc
Netherlands PostNL NV USA Ryder System Inc
New Zealand Freightways Ltd USA Saia Inc
New Zealand Mainfreight Ltd USA Schneider National Inc
Singapore Singapore Post Ltd USA Union Pacific Corp
South Africa Grindrod Ltd USA United Parcel Service Inc
South Africa Imperial Logistics Ltd USA Universal Logistics Holdings Inc
Spain Compania de Distribucion Integral Logista Holdings SA USA Werner Enterprises Inc
Switzerland Kuehne und Nagel International AG USA XPO Logistics Inc
Switzerland Panalpina Welttransport Holding AG USA YRC Worldwide Inc

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