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Business Ethics
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J Bus Ethics (2016) 138:327-347 | J CrossMark
DOI 10.1007/sl0551-015-2613-5
Introduction
Abstract This paper aims to critically review the existing
literature on the relationship between corporate gover
nance, in particular board diversity, and both corporate
During recent years, there has been a growing interest in
social responsibility (CSR) and corporate social responsi
corporate social responsibility (CSR) across a range of dis
bility reporting (CSRR) and to suggest some important
ciplines. CSR in its simplest form is corporations' broader
avenues for future research in this field. Assuming that both
responsibility towards society. Researchers and practitioners
CSR and CSRR are outcomes of boards' decisions, this
strongly believe that corporations should not be judged just
paper proposes that examining boards' decision making
on their economic success (Carroll 1979; Jamali et al. 2008;
processes with regard to CSR would provide more insight
Shahin and Zairi 2007) as they are "... no longer expected to
into the link between board diversity and CSR. Par
be mere contributors to the global economy, but rather to
ticularly, the paper stresses the importance of studies
reconcile and skill-fully balance multiple bottom lines and
linking gender diversity and CSR decision making promanage the interests of multiple stakeholders" (Jamali et al.
cesses, which is quite rare in the existing literature. It also
2008, p. 443). Even though CSR is becoming increasingly
highlights the importance of more qualitative methods and
significant, research still shows that CSR performance and
longitudinal studies for the development of understanding
CSR reporting (CSRR) by some countries are still limited
of the diversity-CSR relationship. compared to others (Chen and Bouvain 2009; Golob and
Bartlett 2007; CPA Australia 2005). Among the possible
Keywords Corporate governance ■ Corporate social reasons for this is that there could be a lack of ability within
responsibility ■ Corporate social responsibility reportingthe major decision makers, in particular, boards of directors
Board diversity • Gender diversity • Decision making who are considered to be key players in firms' CSR
process achievements (Krüger 2009) to make proper decisions with
regard to CSR and CSRR. This is due to the fact that under
the concept of CSR, boards of directors, being major decision
makers, are collectively both responsible and accountable to
An earlier version of this paper was presented at the Asia Pacific
Interdisciplinary Research in Accounting (APIRA) Conference, a wider range of stakeholders. Therefore, examining cor
Kobe, Japan, in July 2013. porate governance (CG) mechanisms, in particular board
composition, and their influence on both CSR and CSRR is
EJ Kathyayini Rao
important.
kath0005@flinders.edu.au
In 2008, Brennan and Solomon, in a special issue on
Carol Tilt
carol.tilt@unisa.edu.au
corporate governance, provided an overview of corporate
governance research within the accounting and finance
l
Flinders Business School, Flinders University, discipline and identified social and environmental reporting
GPO Box 2100, Adelaide, SA 5001, Australia as being among the broader range of accountability
2
University of South Australia Business School, mechanisms being studied and which needs additional re
GPO Box 2471, Adelaide, SA 5001, Australia search (Brennan and Solomon 2008).
Springer
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328 K. Rao, C. Tilt
Research on board
cused on its effect
much less attention
attributes influenc
on board compositi
sues, which has bee
academics and prac
and Lo 2011). It is
versity among boa
financial performa
Rose 2007); however
have been undertak
to non-financial per
CSR and CSRR). In a
that link corporatio
Corporate Governance, Board Composition
diversity (Bear et
and CSR
Coffey 1992; Willi
have a positive effe
Nowadays, boards are increasingly seen as responsible for
Assuming that bo
matters relating to CSR and sustainability (Ingley 2008;
boards' decisions, consideration of boards' decision
CR-INDEX 2014) which is reflected quite often in many
making processes with regard to CSR is important to
studies (Elkington 2006; Jamali et al. 2008; Kakabadse
understand if and how board diversity relates to CSR.
, . , , . , , 2007; Mackenzie 2007; Mahoney and Thorne 2005). These
Diversity of board members is assumed to bnng broad ,. ... , . . . . . , , ,
, , . studies indicate that CSR is a critical item on boards
and heterogeneous perspectives to the decision making
agendas (Kakabadse 2007), and bo
process which is critical to voluntary and complex deci
sponsibility in achieving these object
sions like those regarding CSR. Further, one of the par
In fact, a recent study by Jamali et
ticular board diversity characteristics, gender, is much
corporate governance is what driv
debated and there is a growing amount of literature
ecutives to set goals and objectives in
highlighting the importance of gender diversity in
the board is key in meeting and pr
boardroom decisions. Notwithstanding this, there has been
objectives. A considerable amount o
no research linking board diversity, including gender di
suggesting that various board attr
versity, with the CSR decision making process, with most
nificant influence on CSR (Dunn and
research only considering the board-CSR relationship
2010; Johnson and Greening 1999; Mc
using quantitative analysis of diversity variables. This
Webb 2004; Ayuso and Argandona
paper therefore explores the relationships between cor
. , , , . , , tains a summary of various conceptual/theoretical/review
porate governance, in particular board diversity and de- ,. , __ t
. . ° ,. , , . , . „ studies that examine the link between overall CG structure
cision making processes, and their subsequent influence
and CSR. As can be seen from the table, while r
on CSR/CSRR. This is undertaken by critically reviewing
, . . mixed, there appears to predominantly be a positive rela
the existing literature, and suggesting where gaps exist, ,. , x . . . „„
6,. . , , tionship between governance and CSR, suggesting that CG
and what further research could contribute to under- , , , , . , . „ori ~ , ,
,. , , . . , , and boards play a major role in CSR. Table 1 also shows
standing how boards make decisions about CSR and , ... x. _ , ,
, , , „ , . . , that both quantitative and qualitative studies have been
whether that is reflected in CSR reporting. Moreover, the , . .. .. . TI . . . . .. .
, , , „„ . used to examine this link. However, it is worth noting that
paper suggests that in order to understand the effect of , .. ... _ , , . . ,.
f ., j.. . these studies did not focus on board attributes or diversity,
boards' decisions on CSR/CSRR, more rigorous qualita
the attribute of particular interest in this paper.
tive studies (such as interviews and case studies) are
essential as this type of research enables the researcher to
investigate the real world which in turn helps in gaining a Board Diversity
deeper understanding of the relationships among key
subjects (investors, directors, regulators and managers), Diversity in general is heterogenei
and of the decision making processes that take place bers, and has an infinite number of
(McNulty et al. 2013). This paper adds to the literature from age to nationality, from rel
by providing a critical and comprehensive review of functional background, from task ski
the literature linking CSR and CG, specifically board and from political preference to sex
£) Springer
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Board Diversity and CSR... 329
Table
Table
1 Studies on the link
1 between
Studies
Corporate Governance (CG)/boards
onof directors
the and Corporate
link Social Responsibility
between (CSR) Corpo
Jamali et al. Interrelationships between CG and Qualitative (interviews) CG +ve (CG—necessary pillar for
(2008) CSR (Lebanon) CSR)
Ingley (2008) Board's attitude towards C
Zealand) (focus groups, discussion CSR
sessions and survey)
Rose (2007) Personal ethics and CSR at board level Experimental study Directors'
(US) decisions:
Shareholder value/ +ve
law
Personal
Personal ethics/
ethics/—ve
-ve
CSR
CSR
Wise
Wise and
and Link
Linkbetween
betweenCG
CGand
andethical business
ethical Qualitative
business (case
Qualitative studies)
(case Overall
studies) corporate
Overall +ve -t-ve
corporate
Mahboob processes (CSR) (Bangladesh) governance
Ali (2008)
Shahin and Role of CG in CSR Theoretical study CG +ve (CG drive excellence in CSR)
Zairi (2007)
Hung (2011) Directors'roles in CSR (Hong Kong) Quantitative (regression) Directors'concern +ve
for stakeholders
Kemp (2011) Boards'role in CSR (Australia) Qualitative (interviews) Board +ve (Board is major player in
CSR)
Ayuso
Ayuso andand Whether diverse
Whether stakeholders
diverse on
stakeholders on Review
paper
Review paper Diverse
Diverse stakeholder +ve
stakeholder +ve
Argandoiia
Argandoiia board
board will CSR
will promote promote
activities CSR activities on board
on board
(2007) within
(2007) the the
within firm
firm
DeGraaf
De Graaf
and and How
How CSP CSP Social
(Corporate (Corporate Social Theoretical
Theoretical paper CG CG +ve (CG+ve
paper influences
(CG influencesCSP)
CSP)
Herkstroter
Herkströter Performance)
Performance) institutionalised
institutionalised
(2007)
(2007) within within
the governance
the governance structure
structure
(Netherlands)
Ricart
Ricart et al.et
al.How
How CG integrates
CG integrates sustainable sustainable Qualitative
Qualitative (case study) CG
(case study) CG +ve CG+ve
plays major
CG plays majorrole
role inin
(2005) development
(2005) thinking into them sustainable development
development thinking into them sustainable development
(DJSI)
Kakabadse
Kakabadse How boards
How boards around the the
around worldworld
view view Theoretical
Theoretical paper paper Board's view + ve CSR
Board's view + ve is becoming
CSR board's
is becoming board's
(2007) CSR
(2007) CSR agenda agenda
Wang
Wang and and Examined
Examined boardsboards
of directors'
of directors' Quantitative
Quantitative (mail (mail
Board'sBoard's -Fve
+ve
Dewhirst stakeholder
Dewhirst orientation
stakeholder orientation (US: South(US: South- survey—questionnaire)
survey—questionnaire) stakeholder stakeholder
(1992)
(1992) WestWest
States) States) orientation orientation
Hemingway
Hemingway Whether personal values driveWhether
CSR Theoretical paper personal
Personal values values drive
4- ve (managers personal values CSR
and and drive CSR) drive CSR)
Maclagan
(2004)
Jo
Jo andand Causal effect
Causal effect of of
CG on
CGCSRon CSR Quantitative (regression)
Quantitative (regression) CG CG +ve (CG
+ve causes CSR)
(CG causes CSR)
Haijoto
(2012)
Knippenberg et al. 2004). It can be either visible/observ- (diversity) is common in the diversity literature where
able (race/ethnic background, nationality, gender, age, etc.) several arguments have been put forward both in favour
or less visible (educational, functional and occupational and against diversity. The basic argument in favour of di
background, industry experience and organisational mem- versity is that heterogeneity results in a broader perspective
bership) (Kang et al. 2007). Diversity is largely considered which allows groups to be involved in in-depth conversa
as a "double-edged sword" (Hambrick et al. 1996, p. 668), tions and generate different alternatives (Watson et al.
and hence, debate on homogeneity vs. heterogeneity 1998). This is possible because diverse team members
Springer
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330 K. Rao, C. Tilt
perceive problems f
views are discussed,
lutions and a wide ra
(Robinson and Decha
eile, different/conf
thoroughly process
prevent the group f
action on which the
penberg et al. 2004). can make them to respond more favourably or less
Diversity, however, may have a negative or null effect favourably towards their diverse work grou
on group processes or decision making processes. It di- mately can have a positive or negative effec
vides the group into two sub categories, i.e. the in-group processes or performance (Van Knippenberg
(majority) and out-group (minority) (Westphal and Milton Homan et al. 2007).
2000). The in-group members may tend to favour those In this respect, several studies have recent
who are similar to them and oppose the dissimilar ones and strated that diversity beliefs can moderate the r
as such dismiss or devalue the contributions of out-group between diversity and group performance. F
members (Nielsen 2010). Group members who differ from van Knippenberg and Haslam (2003) indicate
the majority further tend to have lower group loyalty differences are seen as valuable to group fu
(Randpy et al. 2006), lower levels of psychological com- group members may respond more positively
mitment and higher levels of turnover intent and absen- groups than to more homogeneous groups.
teeism (Marimuthu and Kolandaisamy 2009). In addition, vein, using a survey and a laboratory expe
scholars in diversity research recently suggest that diver- Knippenberg et al. (2007) demonstrated that
sity can have a negative effect if the individuals do not ship between diversity and group members' id
value/believe in their diverse work groups (van Knippen- with their work group was moderated by th
berg and Schippers 2007; van Knippenberg and Haslam beliefs. The study particularly indicated that div
2003). Finally, in order to come to any kind of consensus, to be positively related to group identification wh
these two groups inevitably experience challenges, con- members believe in the value of diversity, w
diets and dissatisfaction which further slows down the negatively related when they believe in the v
group process. larity (van Knippenberg et al. 2007). Homan et al. (2007)
Despite these drawbacks, the majority of studies indi- on the other hand showed tha
cate that diversity has the potential to outperform homo- effectively use their informatio
geneity. For Instance, Hambrick et al.'s (1996) study members hold pro-diversity be
indicates that the benefits of diversity (broad gathering of larity beliefs, van Dick et al. (2
information, decision creativity and boldness) are more individuals' diversity belief
than enough to compensate for some of the major draw- between diversity and team
backs of diversity (in-group/out-group bias, conflicts, versity beliefs perspective, they
slowness in decision making and action). In summary, even on ethnic diversity moderates th
though it brings conflicts and misunderstanding within diversity leads to positive or negat
groups, and various perspectives and alternative solutions, (van Dick et al. 2008). This ev
diversity leads to higher quality problem-solving and ulti- diversity has the potential t
mately outperforms homogeneous groups. negative team performance and th
Although there appears little doubt that diversity can play a moderating role in thes
have both positive and negative effects on various group Although various benefits of
processes and performances, more recently, scholars in tified, progress towards board
diversity research have noted that various other factors may Due to its broad nature, resear
play a moderating role on the effects of diversity on group with an agreed upon defin
processes. One promising and recurrent theme is that of has been broadly defined as "
diversity beliefs (van Knippenberg and Haslam 2003; Ely of the BOD (Board of Direc
and Thomas 2001; van Knippenberg et al. 2007; Homan p. 195), which can be either v
et al. 2007). Diversity beliefs is defined as individual be- specifically, with regard to corpora
liefs about the value of diversity to work group functioning is concerned with "board
(van Knippenberg and Haslam 2003), that is, "the extent to combination of attributes,
which individuals perceive diversity to be beneficial for or contributed by individual b
â Springer
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Board Diversity and CSR... 331
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332 K. Rao, C. Tilt
characteristics in the
regard to the link b
two major argument
rectors tend to be m
him and Angelidis 1
ethical aspects of th
(Ibrahim et al. 2003).
pendent board memb
with regulations an
(Zahra and Stanton
regulation and actin
reputation, and such
is important to inde
with more chance
(Lorenzo et al. 2009).
board independence an
relationship between them. government officials and physicians on a board have dif
In addition to independence, the other widely used board ferent values, perspectives and backgrounds toward
diversity characteristic is board tenure. The studies linking performance, and those values and perspectives agai
directors' tenure with CSR issues mainly argue in favour of in for-profit and not-for-profit organisations. Sim
having a balanced board in terms of tenure; however, re- Siciliano (1996) found that the greater the occ
suits are mixed and inconclusive. For example, Hafsi and diversity at board level, the greater the level of fundr
Turgut (2013) argue that as the tenure increases directors and social performance. Their interview results
become familiar with company strategy/management suggested that a variety of viewpoints from diff
practice, but at the same time can become the captive of cupational background compel the board to con
management. Their results showed no effect, suggesting aspects of the decision.
that longer tenured directors may be too close to managers Other diversity characteristics such as edu
and avoid any controversy in decision making process, qualifications, race/ethnicity and functional back
whereas shorter tenured board members are too shy to have been identified to have some influence o
speak up. Such a situation may lead board members to group processes and performances, but studies lin
follow rather than lead when it comes to dealing with social with CSR are very rare. Finally, gender diversity i
responsiveness and responsibility issues (Hafsi and Turgut the most widely used diversity characteristics in
2013). Similarly, Krüger (2009) examined the issue from literature recently. Since one of the major aims of the
both a management friendliness hypothesis (echoing and is to identify the gaps within the literature of
supporting CEO/management, support short term rather versity and CSR decisions, a detailed review of
than long-term outcome) and an experience hypothesis diversity is provided in the next section.
(enhances experience, skills and expertise, more willing to Due to the importance of board diversity chara
confront CEO). His results supported the experience hy- in CSR, recently, studies have begun to exam
pothesis where he found that companies with substantial combination of various diversity characteristics in a s
tenure of board members show lower incidence of negative study linking it with CSR, including specific compo
social outcomes. He further concluded that neglecting CSR of CSR. Most recently, Post et al. (2011) exam
issues is risky, and hence, experienced directors, whether relationship between various board diversity characte
due to commitment to the company or due to self-protec- and environmental corporate social responsibilit
tion of their career, are more likely to support decisions They particularly argued for the value of diff
which are consistent with long-term outcomes. among directors in their access to information ab
As well as independence and tenure, another emerging values regarding, environmental issues. Drawin
diversity characteristic which is gaining attention in the dence of demographic differences in ethical and
CSR literature is age diversity. Particularly with regard to mental attitudes, they found that a higher proporti
age and CSR, even though limited, research still indicates outside board directors, firms with boards com
that age diversity among board members tends to influence three or more female directors, boards whose direc
CSR (Post et al. 2011; Hafsi and Turgut 2013). However, average closer to 56 years in age, and those with
there seems to be no solid argument favouring one age proportion of Western European directors, are p
group when it comes to board processes. Both the associated with favourable ECSR. Similarly,
<£] Springer
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Board Diversity and CSR... 333
â Springer
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334 K. Rao, C. Tilt
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Board Diversity and CSR... 335
Author
AuthorAim Method Board variables Findings
The major aim of the study was to Indicates whether the The various board Indicates whether the relationship is
investigate: study is quantitative attributes included positive (+ve), negative (-ve) or
or qualitative in the study not significant (Not sig)
(Post et al. Relationship between environmental CSR Quantitative Outside directors +ve
2011) and Board composition(US) (regression) Gender diversity +ve
(disclosure—
Age Not sig
proxy)
Cultural +ve
background
Educational Not sig
attainment
(Krüger 2009)
(Kriiger Relationship between CSR and board Quantitative Women director +ve
characteristics (US) (regression) Inside director +ve
Director +ve
experience
Director tenure +ve
(Bear et al. How diversity of board resources and Quantitative Gender diversity +ve
2010) female directors affect CSR ratings (regression) Resource diversity Not sig
(Fortune companies)
(Webb 2004) Structure of the board in socially Quantitative Outside director +ve
responsible firms (US) (regression) Women director +ve
Arora and Association between CG mechanisms and Quantitative Concentrated Both +ve and -ve depending on
Dharwadkar CSR (US) (regression) ownership slack and attainment discrepancy
(2011) Managerial
ownership
Independence
(Huang 2010) Whether CG model impacts on Corporate Quantitative Independence -fve
Social Performance (CSP) (Taiwan) (regression) (CSRR Ownership +ve
proxy) structure
(Jo and The CG effect on choice of CSR (US) Quantitative Board leadership +ve
Haijoto (regression) Independence +ve
2011)
(De Villiers The relationship between environmental Quantitative Board diversity +ve
et al. 2009) performance and board characteristics (regression) Board size +ve
(US)
Independence +ve
<£) Springe:
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336 K. Rao, C. Tilt
Table 2 continued
(Bernardi and Whether companies with a higher Quantitative Women directors +ve
Threadgill proportion of women on boards are (regression)
2010) more socially responsible?
(Ibrahim and Effects of board gender diversity on Quantitative Female directors +ve
Angelidis, Philanthropy (questionnaire)
1991)
(Coffey and Link between board diversity and Quantitative Independence Not sig
Wang, 1998) corporate Philanthropy (98 fortune (regression) Women directors Not sig
companies)
(Williams Women directors' influence on corporate Quantitative Women directors +ve
2003) Philanthropy (Fortune 500 firms) (regression)
(Hafsi and Effect of boardroom diversity on CSP Quantitative Director Age +ve
Turgut (S&P500 firms) Women directors +ve
2013)
Director ethnicity Not sig
Director Not sig
experience
Director tenure Not sig
Director Not sig
independence
CEO duality Not sig
Director Not sig
ownership
(Oh et al. Effect of board ownership structure on Quantitative Outside director— Not sig
2011) CSR (Korea) (regression) share ownership
(Chin et al. Influence of executives' values on CSR Quantitative (GEE CEOs values/ +ve
(Knudsen Boards' mindset, competencies and Quantitative and Board mindset -ve
(interviews) competencies
Compensation -ve
structure
Corporate Governance, Board Composition of corporate governance (Donnelly and Mulcahy 2008),
and CSRR boards of directors become responsible for CSRR. Thus,
the relationship between board composition and
CSR, as mentioned earlier, extends firms' accountability to explored in this section.
wider stakeholders through reporting on their CSR ac- The link between corporate
tivities, i.e. CSRR. Since accountability is an essential part emerges from Jensen and Meckli
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Board Diversity and CSR... 337
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338 K. Rao. C. Tilt
Author Aim
Author Method Board variables Findings
The major aim of the study was to Indicates whether the The various board Indicates whether the relationship is
investigate: study is quantitative attributes included (+ve), negative
positive (Ave), negative (—ve) or not
or qualitative in the study significant (Not sig)
Foreign
Foreign nationals
nationals Not sig
(Htay et al. Governance effect on Social and Quantitative Board size -ve
Institutional
Institutional -ve
ownership
(Lorenzo et al. Link between characteristics of the Quantitative Independence +ve
2009) board and CSR reporting (regression) Diversity -Fve
Ave
Board
Boardactivity
activity Not sig
Chairman Not sig
reputation
Foreign
Foreign nationals
nationals +ve
-Fve
andenvironmental
and environmental reporting
reporting (regression) director
(Australia) Institutional +ve
ownership
Women directors -Fve
Ave
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Board Diversity and CSR... 339
Table 3 continued
(Kent and Explanation for companies adopting Quantitative Audit committee +ve
Monem TBL (Triple Bottom Line)reporting (regression) meeting
2008) (Australia) Environmental and +ve
sustainability
committee
ownership
(Ho and Relationship between CG structure Quantitative Independence Not sig
Wong and the extent of voluntary (regression) Audit committee +ve
2001) disclosure (Hong Kong)
CEO dualit Not sig
Family board —ve
member
(Chau and Relationship between CG and the Quantitative Family ownership -l-ve
Gray extent of voluntary disclosure (regression) Independent +ve
2010) (Hong Kong) chairman
(Cheng and Association between board attributes Quantitative Board size Not sig
Courtenay and level of voluntary disclosure (regression) CEO duality Not sig
2006) (Singapore)
Independence +ve
(Amran Role of the board in sustainability Quantitative Board size Not sig
et al. 2013) reporting quality (Asia Pacific (regression) Independence Not sig
Region)
Women directors Not sig
(Jizi et al. Role of the board on the quality of Quantitative Board size -l-ve
2013) CSR disclosure (US) (regression) Independence +ve
performance. The board's role in strategy and decision of society" (Hung 2011). However, such board-lev
making processes has been highlighted in many previous cisions related to CSR are an understudied area of
studies (Adams and Ferreira 2007; Deegan 1999; Elkington in the CSR literature.
1999; Kent and Monem 2008; Ricart et al. 2005; Walt and The relationship between board diversity and decisions w
Ingley 2003; Wiersema and Bantel 1992; Zahra and Pearce regard to CSR, even though evidence is limited, is still w
II1989; Pugliese et al. 2009; Deloitte 2011) suggesting that supported. For example, Krüger (2009, p. 7) states that t
boards are significantly involved in the decision making
"... board of directors will have a substantial influ
process. With regard to CSR, the board's role is considered , , . . ,
„„ u f, ,, , . . . , . . , . ence on the decision to support local communities or
as a stream of board-level decisions that induce an inte- , ,. , „ ,
, . .. • , j ., . . . the extent to which a firm chooses to provide non
grated set of activities intended to produce social outcomes ,,
fn ,, , ., n , ,. . o.. . . „ ., . monetary and/or monetary benefits to its workforce
favourable to the firm s alignment of its interest with that 3
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340 K. Rao, C. Tilt
(e.g. child-care, e
work/life benefi
director characte
tise will impact t
its (social) risks
mental contamin
tions, managing
responsibly, etc.)". spite the evidence suggesting gender composition is likely
to influence various decisions including decisions related
According to Rose (2007), diversity ensures that corporate
stakeholders, research linking gender with CSR-relat
decisions are taken with a broader view, e.g. including a
decision making is rare and in need of more in-dep
higher degree of stakeholder orientation than merely consideration.
following the notion of maximising shareholder value. In
Table 4 provides a summary of relevant studies under
addition, due to its voluntary nature, decisions with regard
taken on the effect of board attributes on strategy/decis
to CSR become complex and various alternatives, and in
making processes. The majority of the studies in the ta
depth discussion and debate facilitated by diversity will
indicate that board attributes/diversity have the potentia
likely result in high-quality decisions related to CSR issues
influence various strategic outcomes. However, the boar
at board level. Moreover, evidence from previous empirical
diversity effect on CSR strategy/decision is an underst
results shows that, under high environmental uncertainty,
ied area, particularly in more recent times.
heterogeneous teams achieve better performance, although
less heterogeneous teams may be more successful in stable
contexts (Hambrick et al. 1996; Nielsen 2010). Conclusion
Within the literature on board diversity, gender com
position is considered to be an important aspect when Due to globalisation and technology, the nature of or
considering boards' decisions (Bear et al. 2010; Bilimoria ganisations and their relationship with stakeholders h
2000; Fielden and Davidson 2005; Hillman et al. 2002; been evolving and now requires boards of directors to
Johnson and Greening 1999; Peterson and Philpot 2007; move forward from the traditional role of controlling
Singh et al. 2008; Teijesen et al. 2009; Wang and Coffey management, towards a much more proactive role" (H
1992; Williams 2003). Female directors tend to bring dif- 2011, p. 397). In other words, boards' roles and respo
ferent perspectives to the board and can influence various bilities have been extended from the traditional sh
board-level outcomes including the decision making pro- holder-centric one to encompass various stakeholders,
cess. Such unique perspectives could be due to their dif- this has been clearly highlighted as being part of t
ferent experiences of the workplace, marketplace, public broader perspective of corporate governance,
services and community, which are likely to add different Within this broader view, board composition seems
perspectives to the decision making process (Daily and be a major factor which can be assumed to have some
Dalton 2003; Zelechowski and Bilimoria 2004). Support- influence on both CSR and CSR reporting. One of th
ing female presence on boards, Walt and Ingley (2003) emerging and rapidly growing areas of research is bo
suggest that quality decision making requires a balance diversity. Greater diversity among board member cha
between skills and attributes among the board members teristics has been advocated as "a means of improv
which could be achieved by appointing more female di- organisational performance by providing boards with n
rectors. Some authors even argue that female directors are insights and perspectives" (Siciliano 1996, p. 1313). E
more likely to be objective and independent (Fondas 2000) though a reasonable consensus exists in the literatu
and as such tend to ask questions more freely than male suggesting that corporate governance, in particular, boards
directors (Bilimoria and Wheeler 2000). Their presence of directors, plays an important role in ensuring compa
therefore enhances board information, perspectives, debate meet CSR objectives (Mackenzie 2007), limited resea
and decision making (Burke 2000). Nielson and Huse actually examined whether diversity among board mem
(2010b), based on survey data from multiple respondents in bers has any influence on CSR and even less has co
120 Norwegian firms, found that women directors con- ered CSR repotting.
tribute towards board decision making processes and The review conducted in this paper has, in fact, ident
thereby influence board strategy. They examined the effect fied a number of gaps and deficiencies in the literature
female board members have on board operational control board composition to date.
and board strategic control. They find the ratio of women First, the majority of empirical papers focus on e
directors to have a positive direct relationship with board ining the effect of board diversity on corporate financial
£) Springer
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Board Diversity and CSR... 341
(Ö Springe
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342 K. Rao, C. Tilt
Table 4 continued
(Westphal and Boards' effect on strategic change (US) Quantitative Board experience/CEO +ve
Fredrickson (event history experience
2001) analysis)
(Wiersema Relationship between the TMT Quantitative Top management team (TMT):
and Bantel demography and corporate strategic (regression) Age -ve
Education-specialisation +ve
Training -Fve
(Talke et al. How TMT characteristics affect firm's Quantitative Top Management team (TMT): +ve
2011) innovation strategy (Europe and North (structural educational
America) equation Functional -fve
model)
Industry background +ve
(Teijesen How gender diversity on boards Review paper Women directors -fve
et al. 2009) influences CG outcomes (board-level
decisions)
(Nielsen and Contribution of women directors to board Quantitative Women directors -fve
(Adams et al. How values may affect Directors' Quantitative Directors' personal values and -fve/—ve (depending on
2011) strategic decisions in shareholder/ (regression) roles personal values)
stakeholder dilemmas (Sweden)
(Rindova Directors' contribution to strategic Theoretical Directors' problem-solving -fve
(O'Shannassy Interplay of board and CEO in strategy Qualitative Board and CEO's personal Significant
2010) making (Australia) (interviews) power, specialist knowledge,
personality attributes and
political and influencing skills
performance. In addition, most of the prior studies are cross reporting such CSR issues (e.g. whether to report or not to
sectional and hence restricted from identifying causality report certain positive or negative CSR issues to wider
between the diversity and organisational performance. stakeholders). Very little research, however, has directly
Second, since CSR is widely perceived as a strategy, examined decision making by directors facing social re
research should also explore how board processes, in par- sponsibility decisions. Most of the board research studies
ticular decision making processes, with regard to CSR or are quantitative, examining the direct association between
CSRR is taking place in an organisation. This is an im- board diversity and CSR/CSRR resulting in contradictory
portant gap in the literature, and would provide more in- findings. Qualitative methods such as case studies, obser
sight into whether and how boards are involved in decision vation and interviews should be adopted to gain in-depth
making processes with regard to CSR and whether CSR understanding of boards' decision making processes with
and CSRR are outcomes of these decisions. Moreover, the regard to both CSR and CSRR. This lack of qualitative
decision making process is the one where boards collec- methods in the field of corporate governance has been
tively decide upon various CSR initiatives (e.g. whether to highlighted by a recent review paper by McNulty et al.
invest or not to invest in CSR activities) as well as (2013). While providing an overview of published
<£) Springer
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Board Diversity and CSR... 343
qualitative Adams,
research R. B.,1986
between & Ferre
an
that more their methods
qualitative impact onarego
Financial Economics
explore the array of interactions an
Adams, R. B., Licht,
corporate governance.
stakeholders: How do
Third, with regardJournal, 32, diversi
to board 1331-13
Springer
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344 K. Rao, C. Tilt
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