Board Compostition and Corporate Social
(ir)Responsibility
The influence of gender diversity and culture on CSR and CSI
Nick Pieter Dekker 10872132 June, 2016 Msc. In Business Administration –
International management University of Amsterdam Faculty of Economics and Business
Statement of originality
This document is written by Student Nick Dekker who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
Table of Content
Abstract 4 1. Introduction 5 2. Theoretical framework 10 2.1 CSR/CSI 10 2.2 Corporate Governance 16 2.3 Gender diversity 192.4 CSR/CSI and gender 24
2.5 Culture 26
2.6 Gender, CSR, CSI and Culture 31
3. Methodology 37
3.1 Database studies 37
3.2 Sample Selection 38
3.3 Independent variable: Gender diversity. 39
3.4 Moderating variable: Board culture 40
3.5 Dependent variable: CSR/CSI 40
4. Results 41
4.1 Descriptive statistics 41
4.2 Regression analysis 43
5. Discussion and conclusion 50
6. Reference list 54
Abstract
The objective of this thesis is to investigate the relations between board
composition and Corporate Social Responsibility (CSR) and Corporate Social
Irresponsibility (CSI) in the Fortune Global 500 companies. Board composition
will be divided into gender diversity and the culture of the members of the board
of directors. A theoretical framework, based on CSR, CSI, corporate
governance, gender diversity and culture provides the basis for the conceptual
model.
This research is conducted by using the KLD-database, complemented
with data about the amount of women en cultural backgrounds of the boards.
The sample of this research covers 380 companies of the 500 companies listed
in the Fortune Global 500.
The conclusions drawn from the regression analysis on the relations
between the variables show that women have a positive influence on CSR
policies. However, they do not influence the relation with CSI policies. The
relation between gender diversity and CSR in moderated by masculine cultures,
which means that the influence of women on CSR policies is bigger in
masculine cultures.
Key words: CSR; CSI; Corporate Governance; Gender Diversity; Culture; Board composition
1. Introduction
In March there is a day called International Women’s Day where women can protest about the inequality they are still feeling. Mostly in the working environment, women feel treated unequally. Things like the glass ceiling or salary differences are hot topics. The magazine Fortune report on their website that of the Fortune Global 500, only 17 women are CEO. Women want to work in higher job positions and it is interesting to research where these possible outcomes of more women in higher position can lead to. In this thesis I will examine whether more women in the board of directors can change the policies about Corporate Social Responsibility (CSR) and on Corporate Social Irresponsibility (CSI). And since people differ across the world, this research will examine whether the culture of members of the board influence the relation between gender diversity and CSR/CSI policies or that this relation is a universal thing.
Since the call for more CSR has grown tremendously it is almost a duty of
companies to act in a social and responsible way. Research on CSR has shown that there can be different kind of motives for more responsible policies (Garriga & Mele, 2004). The first one is that CSR is instrumental, which means CSR is some kind of marketing option to make more money. Secondly, CSR can be a political thing, which means that a company feels the need to behave in a
social way. The third is about ethical responsibility companies have to the society and the last one is the integrative way which is about satisfying the social demands. Examples of CSR are community investment and taking care of environmental issues. The other side of CSR is CSI. Lin-‐hi and Muller (2012) show in their paper that CSR is not only doing good, but also not doing the bad thing, which can be defined as CSI. With CSI, companies do not feel the need to behave in a social responsible way and do not oversee their outcomes towards others. It can be seen as ‘a gain by one party at the expense of the total
system’ (Armstrong, 1977). Examples of irresponsibility’s are bribery and tax evasion.
There are some traits women have that can result in more responsible
outcomes of companies. Croson and Gneezy (2004) showed in their study that women generally are more risk averse, other regarding and are less into
competition. The risk averseness and the being less into competition makes it less likely that women act in an irresponsible way because they wont take the risk of being caught with a bad action and they are also less willing to do bad to ‘beat the competition’. Being more other regarding makes sure that women think about others and the interests of others. This will lead to more social responsible behavior and taking care of others.
Culture can be seen as the programming of the mind that distinguish one group from another (Hofstede, 1980). This culture can be divided into symbols, hero’s, rituals and values. The culture of people influences the behaviors, attitude and outcomes in the workplace (Kirkman, Lowe & Gibson, 2002). This means that in different cultures other outcomes can de preferred over others. Also the way decisions are made in companies differ because of cultures. Choosing between compromising or fighting about decisions are examples of the way the culture of people influence the way they act in decision-‐making processes.
In this research the relation between the variables gender diversity,
culture, CSR and CSI will be examined. The researched question is formulated as follow: How does board gender diversity influence policies on corporate
social responsibility and corporate social irresponsibility and how is this relation influenced by cultures in the board?
To answer this question twelve hypotheses are formulated, two about the direct relation between gender diversity and CSR/CSI. And ten about the moderating effect of culture on these relations. The conceptual model looks like the following:
Relevance
This study builds on existing theories between board composition and
outcomes of this composition. Several studies researched the relation between board gender diversity and corporate social responsibility, but never the
influence of culture has been measured. It is interesting to see whether women act the same all over the world, or that the way women act is influenced by their culture. The moment culture has an influence further research can investigate the optimal board composition further.
This outcome is also interesting for businesses, since it might be possible
that there is an optimal composition of the board of directors and with getting to know what this composition is, companies can make sure that their outcome
is optimal. Another relevance is that women can show that in some cultures, their influence is even more important. This can give women more arguments for getting more women in important business positions.
Structure
This thesis will be structured in the following way. First, in the theoretical framework I will give a literature review about the variables and give a
reasoning why there is a connection between the variables. Secondly, the use of databases, selection of the sample and the operationalization of the
variables will be explained in the methodology chapter. The next chapter will be about the results of the analysis of the data and I will finish with a
concluding chapter.
2. Theoretical framework
In this chapter, first the dependent variables CSR and CSI will be discussed. Then there is a part about corporate governance and gender diversity.
Hereafter the relation between gender diversity and CSR/CSI will be discussed. The final variable culture will be discussed in the part after this and in the final part the relation between culture, gender diversity and CSR/CSI will be argued.
.
2.1 CSR/CSI
In this part both corporate social responsibility as irresponsibility will be
discussed. I will start with defining and looking at the history of CSR. Hereafter I have to look for possible triggers and outcomes of CSR. The latter part of this chapter is about CSI. Again I will give a definition, possible triggers and
outcomes.
CSR has been researched for several decades and the concept has been used since the mid 70’s (Wood, 1991). Carroll (1999) states that CSR actually started in the 50’s and had his big breakthrough in the 70’s and 80’s. After this time the field of CSR grew exponentially during the mid 90’s, and there has been an increasing number of stakeholders and shareholders that are asking companies to be accountable for a set of CSR issues (Tsoutsoura, 2004). Several
researchers have used different definitions for CSR, but an overall consensus about the definition has not been established yet (Dahlsrud, 2006).
McWilliams and Siegel (2001, p.117) define CSR as “actions that appear
to further some social good, beyond the interest of the firm and that which is required by law.” They explicitly write that, for them, CSR is going further than obeying the law. For example, when a company avoids to discriminate
minorities, it is not engaging in a social act. Tsoutsoura (2004, p.3) writes that Business for Social Responsibility defines CSR as “achieving commercial success in ways that honor ethical values and respect people, communities, and the natural environment.” Tsoutsoura (2004, p.3) improves this definition and writes that CSR can be viewed as ‘a comprehensive set of policies, practices, and programs that are integrated into business operations, supply chains, and decision-‐making processes throughout the company and usually include issues related to business ethics, community investment, environmental concerns, governance, human rights, the marketplace as well as the workplace.’
According to Garriga and Mele (2004) CSR can be seen in four perspectives: instrumental, which means that CSR is just an instrument to make money for the company, political, which means that companies should use their power in a responsible way. The integrative perspective is all about satisfying social demands and the ethical view is about the ethical responsibility companies
have to society. Garriga and Mele (2004) came to the conclusion that all four perspectives are interrelated and can not be seen separately. These definitions can be summarized to everything a company does and does not do within the company to improve its surroundings that goes beyond the interest of the firm.
In the 70s, Friedman (1970) claims that CSR does not exist since the only
responsibility a firm has, is making profits. The moment a firm spends money that is not in favor of its stakeholders it can be seen as spending the money of the stakeholders, since their return is not as high as possible. This money has to be earned back, which means that the price to costumers has to get higher and, indirectly, the costumers are paying for the CSR activity of the firm.
Concluding, CSR can be seen as a tax paid by stakeholders and costumers and it would make more sense when governments perform this task.
On the other hand, Tsoutsoura (2004) shows why it does make sense
that firms should have a social responsibility. The OECD (the organization for economic co-‐operation and development) shows that there is a shift of power, since of the 100 largest economies, measured by the GDP, 49 are national economies, and 51 of them are US corporations. This shows that the power shifted from national economies towards corporation and that they should have an increasing role with social problems. Beside their economic power, companies also benefit from a stable environment, so it cannot ignore the
social problems. When a country gets political instable or has other big problems, a firm might have to relocate, which also costs a lot of money (Tsoutsoura, 2004).
A lot of research has been conducted about the outcomes of CSR. At first
sight these investments of firms go beyond their own interest, but it should be clear that companies can also benefit from these investments. It is Interesting that companies providing CSR have higher costs than companies that do not provide CSR, but they will have the same rate of profit (McWilliams and Siegel, 2001). But it is also important to go beyond the idea of profit, since companies have to act authentic to benefit from CSR (Alhouti, Johnson & Holloway (2016). Some studies suggest there is a virtuous circle between CSR and firm
performance (Surroca, Tribó, & Waddock, 2010; Rodriguez-‐Fernandez, 2015). This means that the more social a company is the better it will perform and the better it performs the more a company invests in its social surrounding.
McGuire, Sundgren and Schneeweis (1988) suggest that firm performance is related to CSR. On the other hand, Sen and Bhattacharya (2001) show in their study that it is really important that the issue a company shows its
responsibility is related to their own business, because when it is not, in can decrease the performance.
There are several circumstances that influence whether or not a company acts in a responsible way. Campbell (2007) researched these
circumstances and he claims that companies are less likely to act responsible when their financial performances are low. Another reason for corporate irresponsibility is too much or too little competition. On the other hand, companies will act more responsible when there is strict state regulation and these rules are made in consensus with corporations, government and other stakeholders. Also industries affect corporate behavior, when the industry has a system that is well organized and effective, companies will act more
responsible. In addition, the presence of other stakeholders like the press, NGO’s and social movement organizations influence the way companies behave.
Now that we see that some circumstances can lead to CSI it is important to know how this concept can be defined. Murphy and Schlegelmilch (2012) give pollution, unfair treatment of employees and selling shoddy products as examples of CSI. Armstrong (1977, p.185) defines the concept of CSI as: ‘A socially irresponsible act is a decision to accept an alternative that is thought by the decision maker to be inferior to another alternative when the effects upon all parties are considered. Generally, this involves a gain by one party at the expense of the total system”. In other words, we speak about CSI when a
company chooses to act in a certain way, while the company knows this way has a bad outcome for others. Murphy and Schlegelmilch (2012) also note that CSI is not per definition illegal, but the company does not see a larger role for itself in the society. Lin-‐hi and Muller (2012) suggest that CSR is not only doing good, but also avoiding bad. They claim that in the CSR studies, there is to much focus on the good part and that the other side is not researched enough. They also see CSI as a corporate action that results in harm and/or
disadvantages for other. But it differs from the previous definition because they state that CSI is against the law. Lin-‐hi and Muller (2012) divide CSI into intentional, like bribery or tax evasion and unintentional, which happens when a company aims for a higher level of profit and do not oversee the outcome of their actions. Both mean that CSI is a byproduct of another action. This makes that companies cannot entirely rule out the possibility that they can act in an irresponsible way.
One of the biggest outcomes of irresponsible behavior is bad publicity.
Because the rise of the internet, protest groups have more power than ever before (Coombs, 1998). This means that companies have more pressure to act good, because the moment they do something bad in the eyes of others, the internet will be overloaded with bad news.
2.2 Corporate Governance
In this paper the amount of responsibility and irresponsibility of companies is predicted by gender diversity and culture of the board. The reason for this prediction is that in the board the decisions on the company’s strategy is taken. Therefore, it is important to know some basics of decision making and
corporate governance. In this part I will give a small review about work on corporate governance.
The main activity of the board of directors is to oversee the activities of the company. The board of directors is the part of the company where the CEO is selected, reviewed and supported. Another big task of the board is establishing policies and objectives. This means that decisions around strategies and
responsibilities are made here (Millet-‐Reyes & Zhao, 2010). The board exists of inside directors, who have a direct link with the company, and outside
directors, who do not work or have some kind of stake in the company. The latter one can bring experience and new perspectives to the company. Around the world there is a difference in the structure of companies. In many Anglo-‐ American countries there is a one tier board. This means that there is only one board with executive and non-‐executive members. The latter one has got more of a supervisory role. In the two tier board system there is a division between
these two tasks. The task of the supervisory board is making sure that the management team does it tasks good. The two tier board system occurs more in European countries. Millet-‐Reyes and Zhao (2010) researched the difference in effectiveness of the two systems. They conducted their study in France, since both systems are used here. They did not found any difference in performance between these two systems, also the size of the board did not matter.
The board of directors is one of the most important parts of the
governance structure in large companies (Baysinger & Butler, 1985). Baysinger & Butler (1985) claim that the composition of the board of directors is
important for the effectiveness of companies. Therefore, it is important that companies create a system of corporate governance to make sure that they select the right people for the board. Mainly because there is not a strict legal policy for this selection process, firms have to create it themselves.
The board of directors is the place in companies where the interests of shareholder can be aligned with the outcomes of the company (Baysinger & Butler, 1985). This shows that the opinion and demands of shareholders are really important. The composition of the board is also important since a proper composition can lead to better outcomes. Important is that the board acts as a collective, with both inside as outside directors. Baysinger and Butler (1985) show that outsiders bring more control and extra knowledge and inside
executive’s better alignment with the top management. They show that a mix is best, but there should be more than 50% of insiders.
According to Aoki (2000, P.11) corporate governance can be seen as ‘the structure of rights and responsibilities among the parties with a stake in the firm’. It is important to know that these practices international differ. Aguilera and Jackson (2003) examined this difference. They divided the dimensions of corporate governance into three groups of institutions: management, capital and labor. They showed that these institutions influence the way the decision making in a country is drafted. On the other hand, Haxhi and Aguilera (2014) found that no single institutional domain could explain corporate governance features by itself.
Since the board of directors make the decisions around strategy and in which direction the company goes it is important to know how the composition influences this. In this thesis I will examine how women influence directions around CSR and CSI. And since the corporate governance differs around the world, it is also interesting to see in what cultures the relation between woman diversity and CSR/CSI is more salient.
2.3 Gender diversity
Because the composition of the board influence the way companies behave it is interesting to see in what way the amount of women has its influence. Women are believed to be more responsible and they take more care of each other. In this part I have looked in the literature whether these believes are grounded in the literature and what the outcomes are of more women in the board of directors. A lot of studies have been conducted about differences between men and women. And for this research, it is also important to know what these differences are.
Croson and Gneezy (2004) researched differences in preferences between men and women. They divided his research into three parts, differences on risk preferences, social preferences and competitive references.
The stereotype for women is that they are more risk averse than men
and this lead to jobs with lower salary for women, because they do not want to take the risk you have to take to get a better job. Most of the studies Croson and Gneezy (2004) have analyzed found that women are more risk averse than men. However, men and women that work as managers and professional business people do not have this difference. A reason for this is that people
that are more risk taking tend to choose managerial positions. So those women who are in these positions have similar risk preferences as men.
Another stereotype is that women are more other-‐regarding than men
(Croson & Gneezy, 2004), This means that in general women want to help other people and that they find this more important than their salary. With a study of ultimatum games, men and women are giving the same kind of offers, but women are both less rejected as have rejecting offers. The moment people do not know the gender of the other, women are way more rejected. One of the major differences between men and women on social preferences is that women are more sensitive for social cues in doing the appropriate thing. This means that women are more likely than men to help others. Another thing is that women are more sensitive for social cues. This means that they are more likely to choose the job they think they should do. This can be a reason for the small amount of women in boards (Croson & Gneezy, 2004).
The final preference Croson and Gneezy (2004) have researched is
competitive behavior. They write that under circumstances where only one person can win, men behave completely different than women. Women do not really change their behavior, but men really want to be the winner. Men also choose for a competitive environment quicker than women, even when it is not in their advantage.
A meta-‐analysis performed by Feingold (1994) about gender differences in personality shows that there are differences between men and women. It was found that men have a slightly higher self-‐esteem and are more assertive. Women score higher on extraversion, anxiety, trust and tender-‐mindedness. It is interesting to notice that these difference are constant across nations.
According to the gender socialization, men and women bring different values and traits to their work roles (Betz, O’Connell and Shepard, 1989). Men are more interested in income and advancement; women are more focused on helping others. The structural approach predicts that women will act more like men when they work together. This would mean that gender diversity should not have any influence (Betz, O’Connell and Shepard, 1989). But, Betz,
O’Connell and Shepard (1989) show in their paper that it is two times more likely that men engage in unethical actions, compared to women, so in their study the gender socialization is more clear. It should be noted that this difference is way smaller when buying stock with inside information is excluded.
There are two arguments in favor for gender diversity in corporate boards. The first argument focuses on the ethical importance of equal representation. It can be seen as unethical when women are unequally represented in the society. From this ethical point of view, women and men
should have an equal opportunity to get in corporate boards and gender should not be influencing this opportunity.
The second argument is that gender diversity can have positive
outcomes for companies. A counter argument for the few women in corporate boards is that men can perform the tasks better. But several researches shows that women in the board can give economical benefits to the company.
Terjesen, Sealy and Singh (2009) write that women are more likely to serve in difficult management positions. This makes it more difficult to perform and work effectively for woman, but still boards with more gender diversity perform better. They also show that corporate boards have a better governance performance when there are men and women in the board. Erhardt, Werbel and Shrader (2002) also came to the conclusion that a more gender diverse board leads to more financial performance. Campbell and Minguez-‐Vera (2008) prove that the ratio of women to men on the board has a positive influence of the firm value. The causal effect they prove shows that board gender diversity leads to better firm performance.
Van der Walt and Ingley (2003) researched the influence of diversity on board dynamics. They claim that more diversity can lead to a positive business impact. Having more women on the board is important because they have a different perspective on board processes and decision making. They also see
that women do address more feminine issues like women’s recruitments and development.
One reason why Burgess and Tharenou (2002) claim that women are needed on the board is that they can give other opinions. The way women look at certain topics differ from men and that can make a certain strategy more thought out. Women in the board also give other women a role model to look up to and give a better image to stakeholders. The last point Burgess and
Tharenou (2002) make is that women have other capabilities than men and this can make a company more efficient. They state that having women in key position is associated with long term success and competitive advantage.
2.4 CSR/CSI and gender
Many studies have been conducted about the relation between gender
diversity in the board and CSR. In this part these studies will be explained and with the information about gender and CSR two hypotheses will be
constructed.
Companies that have a more equal representation of men and women are more focused on fulfilling social agency missions (Siciliano, 1996). Boulouta (2011) shows with the study on board gender diversity and social corporate performance that due to the emphatic caring that women can bring to the board, gender diversity can lead to more corporate social performance. Bear, Rahman and Post (2010) show in their article that more women in the
corporate board leads to more CSR and in addition of this the firm can get a better reputation. Another plus for more CSR is that it will lead to more job satisfaction (Brammer, Millington & Rayton, 2007).
Zelezny, Chua and Aldrich (2000) explored the relation between gender
and focus on the environment. They found that women have a bigger focus on the environment than men. This was also found across nations, so the
nationality does not matter on this point. In their study they found that, compared to men, women had higher levels of socialization to be other oriented and social responsible.
Because women are more focused on helping others, being focused to follow social cues and the environment and that they are more likely to address feminine issues I state the following hypothesis:
H1a: A higher percentage of women in the board leads to more corporate social responsibility
The percentage of women on the board also influence the other side of CSR, namely CSI. Because of the facts that companies want to be competitive
(Campbell, 2007) and men are choosing quicker for a competitive environment (Croson & Gneezy, 2004), and that it is two times more likely that men engage in irresponsible actions (Betz, O’Connell and Shepard, 1989) I state the
following hypothesis:
H1b: A higher percentage of women in the board leads to less corporate social irresponsibility
2.5 Culture
Since decisions of companies are made in the board of directors it is important to know if the cultural background of the board member’s matters. In this part I will start with defining culture and see how culture can influence decision making processes. Hereafter I will split culture into the dimensions of Hofstede and have a closer look at them.
Culture can be seen as a collective phenomenon that is shared among the members of a culture which transmit symbols, ideas, knowledge and values between individuals from one generation to the next (Fischer, 2009). Hofstede (1980, p.24) defines culture as: ‘the collective programming of the human mind that distinguishes the members of one human group from those of another.’ He also notices that culture is learned by being with others. Culture can be reflected by symbols, hero’s, rituals and values. Especially values are important in this study since they give people a way to prefer one outcome above another (Hofstede, 2005). According to Kirkman, Lowe and Gibson (2002) national
cultural values are related to workplace behaviors, attitudes and other
organizational outcomes. This combined with the definitions of culture means that one group has other behaviors and organizational outcomes than another group.
Briley, Morris and Simonson (2000) looked at the differences in decision making between cultures. They researched whether people from Hong-‐Kong and America differ in the way they argue to come to their decision. They came to the conclusion that people from America are less likely to compromise
compared to people from Hong-‐Kong. Weber and Hsee (2000) also came to the conclusion that western cultures and Asian cultures differ on the way decisions are made. Chinese think in a more pragmatic way compared to western people, who have a more abstract way of thinking about the decision they have to make.
Hofstede’s framework of culture is one of the most influential and is
widely used. This is not without any limitations. His study was conducted only within IBM and it is not clear if the dimensions he formulated mean the same in every country (Steenkamp, 2001). Also Schwartz (1994) raises concerns about the framework. He argues that the dimensions are not accurate enough and also claims that the employees of IBM are not a good representation of the total population. This gave many scholars the idea of testing the framework and most of the time it has been confirmed as accurate (Drogendijk & Slangen, 2006). Drogendijk and Slangen (2006) even claim that newer and more recent frameworks are not superior to Hofstede’s work and that Hofstede’s work is certainly not outdated or inaccurate. His framework exists of five dimensions:
power distance, uncertainty avoidance, individualism and masculinity. Later he added the item of long-‐term orientation. He started with 40 countries and later expanded it.
Power distance shows the preferred type of decision making (Hofstede
1983). Every society has some kind of inequality. Power distance can be seen as the extent to which less powerful members of a group accept and expect that power is distributed unequally (Hofstede, 1994). When power distance is low it is more likely that social and environmental initiatives emerge and are openly discussed (Ringov & Zollo, 2007). Cohen, Pant and Sharp (1996) even state that there is evidence that companies from a high power distance are more likely to do business in a questionable way. In countries with a high power distance, there is more hierarchy and control in companies. The relations among people within these companies are often with a lot of emotions.
Uncertainty avoidance deals with the society’s tolerance for uncertainty
(Hofstede, 1994). It shows to what extent people from a certain culture feel in unstructured situations. In more uncertainty avoidance cultures there are stricter laws, more safety and security measures. They can be seen as more rule and routine orientated societies (Ringov & Zollo, 2007). They are more resistant to new rules and innovations. In countries low on uncertainty
avoidance, companies are more innovative because they do not feel insecure with new ideas (Hofstede, 2005).
Individualism is the counterpart of collectivism and is the degree in
which individuals are integrated in the group (Hofstede, 1994). In individualistic societies the ties between individuals are loose. People should look out for themselves and the people that are close to them. In the more collectivistic societies, ties are stronger and people are taking care of each other in
exchange for loyalty. In the working area, people in individualistic countries are expected to have some kind of psychological and economical needs and that people take care of these by themselves. In more collectivistic countries the relation between members of a firm can be seen as family ties (Hofstede, 2005)
Masculinity shows the relative importance of job aspects like earning,
recognition, advancement and challenges (Hofstede, 1983). The relation with manager, cooperation and employment security are examples of less important aspects. In more feminine societies it is much like the other way around. The relation in this item is stronger with men then with women (Hofstede, 1994). Societies that score high on masculinity place little value on caring for each other, cooperation and solidarity (Ringov & Zollo, 2007). Masculinity inhibits helping behavior a study of Tice and Baumeister (2004) suggests. In more feminine countries, conflicts at work are taken care of by negotiations and
compromising. In masculine countries the solution for these conflicts are more about arguing with each other.
Values that come up in countries with a long-‐term orientation are thrift and perseverance (Hofstede, 1994). Long-‐term orientated people are willing to commit to social duties, but only when the costs are not that high. Short-‐term societies are more focused on tradition, social obligation and protecting one’s face. These societies want to commit to their social duties and do not really look at the costs (Hofstede, 2005). Companies in long-‐term orientated cultures are more likely to think about the future and make sure they save enough money and are more durable.
2.6 Gender, CSR, CSI and Culture
In this part I will make a connection between the variables used in this thesis. I will start with the connection between gender, CSR and every dimension of culture. Thereafter, I will do the same with CSI, gender and culture.
Since the relation between gender diversity in the board and CSR has been researched a lot it is interesting to see in what kind of cultures this relation is stronger. It is also interesting to see whether the other side of CSR, avoiding bad, is also different in cultures. So because people differ all over the world, it is interesting to see in what cultures the relation between gender diversity and CSR/CSI is stronger.
Maignon and Ralston (2002) researched whether there are differences between countries on their vision on CSR. They found that companies in different countries differ in their vision how important it is to be social
responsible and which areas of CSR are important. They even found that there is a significant difference between the UK, the Netherlands and France, while these countries are relatively close. An explanation for this difference is that these countries differ in culture. Therefore, I suggest that culture has its influence on the relation between gender diversity and culture.
The first item of culture used by Hofstede is power distance. In countries with high power distance the hierarchy is higher and people are less easily
influenced. In countries with low power distance it is more likely that
companies are acting in a social way. In a low power distance country, the ideas and initiatives of women will be more listened to. Therefore, I state the
following hypotheses:
H2a: The percentage of women in the board has a positive influence on the amount of CSR policies and this relation is weaker in countries with high power distance.
Because the ideas and opinions of other men and women are less used in high power distance cultures it is more likely that the negative consequences of a strategy are less thought. Therefore, I state the following hypotheses:
H2b: The percentage of women in the board has a negative effect on the amount of CSI policies and this relation is weaker in countries with high power distance.
The second item is uncertainty avoidance. In countries low on the uncertainty avoidance index new ideas and innovations are more accepted than in
countries high on uncertainty avoidance. So new ideas and more feminine initiatives of women will be used more in low uncertainty avoidance countries. Therefore, I state the following hypotheses:
H3a: The percentage of women in the board has a positive influence on the amount of CSR policies and this relation is weaker in countries with high uncertainty avoidance
On the other hand, countries high on uncertainty avoidance can be seen as a rule and routine societies. More women in the board wont have a big influence since this does not break the routine. The moment that countries are doing irresponsible things, it might be possible they continue to do it since that is the way they always do it. With the definition of Murphy and Schlegelmilch (2012) in mind, these actions do not have to be illegal per se. Therefore, the next hypothesis is:
H3b: The percentage of women in the board has a negative effect on the amount of CSI policies and this relation is weaker in countries with high uncertainty avoidance
The third item is individualism and collectivism. Since individualistic societies have the idea that everyone should take care of themselves, it is more likely that they won’t act with the idea to take care of others. Collectivistic countries live with the idea that people should take care of each other. Because women tend to take care of each other and in more collectivistic countries they have more chance to do this, therefore:
H4a: The percentage of women in the board has a positive influence on the amount of CSR policies and this relation is weaker in individualistic countries
And because of the idea that people should take care of themselves in individualistic societies, it is possible that people do no care for the
consequences of their actions and how that could hurt others and therefore:
H4b: The percentage of women in the board has a negative effect on the amount of CSI policies and this relation is weaker in individualistic countries
The fourth item is femininity and masculinity. In feminine countries people want to take care of each other, in masculine countries it is more about competition. Because in feminine countries people are already taking care of each other, more women in the board does not influence this idea much, since they already doing this. In masculine countries women can show men that competition is not all there is. Therefore, I state the following hypotheses:
H5a: The percentage of women in the board has a positive influence on the amount of CSR policies and this relation is weaker in feminine countries
Women can also show men that negative and irresponsible actions are not necessary to be competitive. They can show that having good relation and working together also can have a good outcome. Therefore:
H5b: The percentage of women in the board has a negative effect on the amount of CSI policies and this relation is weaker in feminine countries
The final item is long-‐term orientation. Thrift and perseverance are already ideas in long-‐term orientated societies. When women give feminine initiatives,
it is likely that people will continue with these ideas. And on the other hand, since people are protecting one’s face in short-‐term orientated countries, women might be hesitant to give initiatives because these might be different than other ideas, therefore:
H6a: The percentage of women in the board has a positive influence on the amount of CSR policies and this relation is stronger in long-‐term orientated countries
The traditional part of short-‐term orientated countries can lead that new initiatives of women on changing irresponsibility’s can be less used and have less influence on the strategy. Therefore, I state the following hypotheses:
H6b: The percentage of women in the board has a negative effect on the amount of CSI policies and this relation is weaker in short-‐term orientated countries
3. Methodology
In this section, I will explain how the research is conducted. The first paragraph is database studies. The next one about an explanation of the sample selection. The other three section are about the way gender diversity, culture and
CSR/CSI are measured.
3.1 Database studies
This research has been conducted through database research. Using database is a form of secondary data collection. An advantage of this strategy is that the data has already been structured and is available for further use. Still, to be able to answer my research question, the database had to be expanded with information about gender diversity and the culture of the board of directors of the researched companies. The goal of this research is to test whether cultural aspects influence the relation between the board composition and social corporate responsibility. One limitation of this research is that the sample size only contains the biggest companies in the world. There is a possibility that the outcomes differ from what is happening with smaller companies. Another limitation is that there are some critics on the KLD database. It is not
of this research design is that the sample contains companies from all over the world and from several industries.
3.2 Sample Selection
In this research a sample of companies that do business in the international field is used. According to Saunders and Lewis (2012) it is simply not practicable to research the whole population and therefore we need to make a sample of this population. It is not possible to research all companies in the world for their relation of board gender diversity, CSR/CSI and culture. Therefore, the sample of this research, through purposive sampling, is the Fortune Global 500.
The Fortune Global 500 will be used since they can be seen as typical
cases for companies that perform in the international field. It is known that they have women in their boards and that there is information about their CSR activities. This means that all three variables can be found in this sample group. Purposive sampling can be used when you want to understand what is
happening (Saunders & Lewis, 2012). This can help to make logical generalizations.
The Fortune Global 500 are the worlds 500 largest companies. The list is an annual ranking of the top 500 companies with the highest revenue
