University of Groningen Faculty of Economics and Business
Duarte Calderón – S3533255 d.marruz.moura.calderon@student.rug.nl Supervisor: Dr. R.W. de Vries Co-assessor: Dr. O. Lindahl
MSc in International Business and Management
Master Thesis
Table of Contents
LIST OF FIGURES ...3 LIST OF TABLES ...3 ABSTRACT ...4 1. INTRODUCTION...5 2. THEORY ...8 2.1. LITERATURE REVIEW ...82.1.1. Background on Corporate Social Responsibility (CSR) ...8
2.1.2. Existing Theoretical Framework ...9
2.1.3. CSR and the Board of Directors (BoD) ... 11
2.2. HYPOTHESIS DEVELOPMENT ... 12
2.2.1. BoD Education and CSR ... 12
2.2.2. BoD Nationality and CSR ... 14
2.2.3. BoD Tenure and CSR ... 15
2.2.4. BoD Age and CSR ... 16
2.2.5. BoD Independence and CSR ... 17
3. METHODOLOGY ... 18 3.1. DATA COLLECTION ... 19 3.2. SAMPLE ... 20 3.3. MEASURES ... 20 3.3.1. Dependent Variable ... 20 3.3.2. Independent Variables ... 21 3.3.3. Control Variables ... 23
3.4. EMPIRICAL DATA ANALYSIS ... 24
3.4.1. Multicollinearity ... 26 3.4.2. Issues of Independence ... 26 3.4.3. Heteroskedasticity ... 26 4. RESULTS ... 27 4.1. DESCRIPTIVE STATISTICS ... 27 4.2. REGRESSION RESULTS ... 30 4.3. ROBUSTNESS TEST ... 34 5. DISCUSSION ... 35 6. CONCLUSION ... 40 6.1. IMPLICATIONS ... 41
6.2. LIMITATIONS AND FUTURE RESEARCH ... 42
REFERENCES ... 44
List of Figures
Figure 1: Conceptual Model……….18
List of Tables
Table 1: Descriptive Statistics………..29Table 2: Correlation Matrix………..31
Table 3: Regression Analysis………33
Abstract
Corporate Social Responsibility (CSR) is a concept that has become progressively important across the globe, especially as stakeholders started to demonstrate that they demand from contemporary businesses to “do more than make money and obey the law” (Carroll, 2015). Although the composition and structure of the board of directors has important repercussions for different aspects of the organizational performance, prior studies tend to focus this effect on the financial performance. Yet, the effects of the board composition on the CSR performance remain an under researched and inconclusive field. In this study the diversity of the board composition factors that will be explored are the educational background, nationalities, tenure, age and board independence. The analysis conducted through OLS regressions resulted in a positive effect of the board diversity concerning education and tenure on the MNEs engagement on CSR activities. Moreover, contrary to expectations, the findings regarding the board independence resulted in a negative effect on CSR performance. The findings of this thesis provide significant implications for research on the diversity within the board of directors and the CSR managerial practice.
Key words: Corporate Social Responsibility; Corporate Social Performance; Board of
1. Introduction
In recent years, the debate regarding the corporate awareness and care for the society, in other words, the concept of corporate social responsibility (CSR) has become increasingly important across the globe and in the field of international business. More and more attention has been paid to this ongoing source of debate among practitioners, policy makers and scholars (Campbell, 2007; Mackey, Mackey, & Barney, 2007). In the modern era, Keith Davis was the first to address CSR issues, researching and answer questions like “Can business afford to ignore its social responsibilities?” (Davis, 1960) or “What does the businessperson owe society?” (Davis, 1967). Definitions of CSR are interpreted differently among researchers and for some scholars it is not even an important issue that corporations should pay attention to. In the existing literature there is some research that argues that businesses are only obligated to maximize profits within the boundaries of the law (Friedman, 1962), while other literature have suggested a greater number of obligations towards society and everything composing it (Hinings & Greenwood, 2002).
Cucari, Esposito De Falco, & Orlando, 2018). Yet, these authors focused mainly on US companies, leaving a gap of whether these factors are also important and common in other countries, such as European.
By being aware of which elements at the board level are having a significant impact on their CSR performance, MNEs can adjust their corporate strategy in order to allocate their resources more efficiently. Every year, the corporate board of an organization approves budgets for CSR related expenditures and usually selects standing committees dealing with CSR related matters (Walls, Berrone, & Phan, 2012). This indicates that the board of directors (BoD) of an MNE is essential when it comes to a firm’s CSR operations. Therefore, the research question of this paper is: Do board level characteristics, such as education, nationality, tenure, age and board independence have an impact on engaging in CSR activities?
The next chapter provides an overview of the existing literature regarding the CSR topic, the concept definitions, its relationship and interaction with the BoD and the improving concern of the corporate world regarding a sustainable development. The focus on diversity and the effect it has on the CSR performance is the core focus of this thesis. It has been argued that diversity within the BoD can accelerate and simplify almost every function, process and decision-making of the BoD’s within an organization (Ali, Ng, & Kulik, 2014).
ages of the directors and whether they are independent from the board or not. These elements are capturing various causes of differences in the way that board members may interpret and act towards CSR policies and strategies.
In order to measure the CSR activities done by the MNEs, I will use the Environmental, Social and Governance (ESG) ratings that measure the CSR performance of a company. The Thomson Reuters ESG scores are designed to transparently and objectively measure the European organizations’ CSR performance across ten domains (resource use, emissions, innovation, workforce, human rights, community, product responsibility, governance management, shareholders and CSR strategy). The ESG combined score ranges from 0 to 100, where the greater score amounts (100) amounts to an excellent performance within the domains used in their ratings and it provides a comprehensive evaluation of the firm’s ESG performance based on the information of the ESG pillars: environmental, social, governance and ESG controversy. The ESG controversy combines in one category the aggregate controversies and scandals across all the ten domains mentioned before, it is fully automated and objective score using 23 controversy measures (Thomson Reuters, 2018).
2. Theory
2.1. Literature Review
In this section I will summarize some of the most important theories, concepts and existing literature applied to this thesis and to the hypotheses developed for the purpose of this study. Further, I will provide an analysis of some of the most important research in the field of CSR and the relationship with the BoD’s characteristics and its diversity.
2.1.1. Background on Corporate Social Responsibility (CSR)
Over the past years, CSR has become an increasingly relevant topic in the business practice and environment, however, there are still many diverse opinions when reaching to a definition. Moreover, most of these existing definitions are very broad, which made the concept of CSR to evolve into a debate for numerous concepts like corporate social performance, stakeholder management, business ethics or corporate citizenship, that are not always distinguished in the international business and management literature (Carroll, 2015). In order to make the concept measurable and more specific, this thesis adopts the Commission of the European Communities’ definition in which “CSR is a concept whereby companies integrate social and environmental concerns in their business operations and in their interaction with their stakeholders on a voluntary basis” (CEC, 2002). Also, the Commission defines CSR as “the responsibility of enterprises for their impact on society” and it further considers that enterprises should have a developed process to integrate social, ethical, environmental, human rights and consumer concerns into their strategy and business operations, always in close cooperation with the interested stakeholders (CEC, 2011).
Commission of the European Communities considers the obligation to the environment, the society, the involvement of the several stakeholders (customers, potential investors or employees) and the economic development. Finally, it does not exclude the engagement on CSR practices to pursue objectives such as improved financial growth and social status.
The CSR debate firstly gained ground in the 1960s and was mainly focused on the environmental issues related to the deforestation and the carbon dioxide emissions (Katsoulakos, Koutsodimou, Matraga, & Williams, 2004). At this time, several environmental protection agencies were founded throughout the globe and in 1972 the United Nations Environment Programme (UNEP) was formed. During the 1970’s and 1980’s the CSR movement kept on growing and introduced several new social issues, such as social inequity, poverty and terms of trade. This was a period where several governments in different countries started to order multinationals to report their environmental and social performance (Katsoulakos et al., 2004). From the 90’s and with special significance since the 2000’s with the fast growing of technology, CSR practices and policies became very common and, in some cases, mandatory throughout the world. Nearly every publicly listed multinational enterprise publishes yearly sustainability reports with a summary of their practices, accomplishments and future goals to be achieved.
2.1.2. Existing Theoretical Framework
The existing literature regarding the relationship of the board factors and CSR activities relies mainly on three theoretical views: the agency theory (Jensen & Meckling, 1976), the resource dependence theory (Pfeffer & Salancik, 1978) and the upper echelons theory (Hambrick, & Mason, 1984).
supervise the behaviors of the company’s managers behaviors by using incentives to reinforce their monitoring roles. Consequently, firms are expected to engage more in CSR activities when they implement some sort of incentive structure, rather than just doing it out of their own initiative. Most empirical studies conclude that the higher the levels of director ownership (board incentives) and outsider representation (board independence), the higher the probability of engaging on CSR activities. So far, the existing literature tells us, so far, that these factors are positively associated with the CSR performance of organizations (Chang et al., 2012; Johnson & Greening, 1999).
In contrast, while agency theory focuses on the board’s supervising role, the attention of the resource dependence theory (Pfeffer & Salancik, 1978) is more focused on the board’s provisioning role of their resources, which are scarce and critical to a firms’ survival and success. Companies seek to create and strengthen relationships with other firms and stakeholders so as to obtain access to these valuable resources. Moreover, organizations tend to acquire control of the resources in order to minimize their dependence on other companies. According to this theory, directors can be a critical channel to valuable information and resources, while at the same time advice and counsel the firm towards success. Since an effective implementation of CSR activities requires a comprehensive knowledge of several stakeholders’ interests and demands, diversified qualities, skills and backgrounds, a diversity of directors can help a company to improve their CSR performance (Siciliano, 1996; Webb, 2004; Williams, 2003).
theory. Moreover, it is confirmed by the vast number of books that reviewed and researched on this theory (Wang et al., 2016).
The perspective of the theory argues that managers are unable to retrieve and process all the information that is available from the external and internal environment. As a result, the information is analyzed and selected according to their own interpretation which is influenced by the individual’s values, beliefs and personal experience acquired during their life. Additionally, the upper echelons theory states that the managers’ decision-making reflects their personal differences because they are unable to act as fully rational mechanisms (Slater, & Dixon-Fowler, 2010).
Recent studies have also found that these effects are present in international environments, NGOs, public agencies and both in new and mature organizations (Carpenter, Geletkanycz, & Sanders, 2004). Furthermore, a recent study using a meta-analysis of 308 studies, concluded that accordingly to the upper echelons theory regarding the CEO’s characteristics, like education and tenure, has a significant effect on their company’s strategic decision-making (Wang et al., 2016).
2.1.3. CSR and the Board of Directors (BoD)
Recent literature suggests that CSR is the outcome of some of the board’s decisions, which leads to a strong link between these two concepts. Another assumption made in these studies is that the board is highly involved in the stakeholder management (Jain & Jamali, 2016; Rao & Tilt, 2016).
BoD’s responsibility to oversee the top management’s activities in order to ensure that they act in line with the shareholders’ interest and all the expected behaviors. Pfeffer and Salancik (1978) argued that the ability of the BoD to provide resources may help to reduce a firm’s resource dependence from external sources, which ultimately reduces uncertainty, transaction cost and may ensure fundamental resources.
The existing literature has emphasized the role of the BoD as strategic advisors (Johnson, Daily, & Ellstrand, 1996; Zahra, & Pearce, 1989). Moreover, some scholars suggested that a diverse BoD, i.e., a board with directors with different backgrounds, experiences and personal attributes, among others, may be able to accomplish more effective and efficient strategic outcomes (Hillman, Keim, & Luce 2001). In this context, the debate of the diversity within the BoD gained special attention in the international business and management research. Several studies proposed that the BoD have an important function in decision-making processes and in the formulation and application of the firm’s CSR strategies and procedures (Ali, Ng, & Kulik, 2014; Jamali, Safieddine, & Rabbath 2008).
2.2. Hypothesis Development
In this section, the theoretical relationship between a company’s engagement in CSR activities and the diversity of the BoD’s Education, Nationality, Tenure, Age, and Board Independence will be discussed. The conceptual model (Figure 1) sheds light on the dependent variable, CSR Performance, and the links with the five independent variables.
2.2.1. BoD Education and CSR
The existing literature shows that previous studies have obtained mixed results and findings in the effort to explain the effective role of the degree of education held by the top management people. Previous authors have focused on the influence that the universities and their education system have in shaping the individuals’ perception of social responsibilities (Browning, & Zabriskie, 1983; Jones, & Gautschi, 1988; Kidwell, Stevens, & Bethke, 1987; Lane, Schaupp, & Parsons, l988; Rest, & Thoma, 1985; Serwinek, 1992). Within the studies of these authors, education seems to have a proponent role in the growth and modeling of individuals, however, some of those researchers state that there is no possibility to change a student’s personality during the period that they are attending graduate or post-graduate programs (Lane et al., l988; Dubinsky, & Ingram, 1984; Kidwell et al., 1987; Serwinek, 1992). Quazi (2003) has focused his research on the individual’s perceptions and concluded that managers and directors with a postgraduate education perceive CSR initiatives as a means to increase organizational efficiency, profitability and reduce costs. His findings imply that even though ethics courses do not influence an individual’s behavior, they are able to shape a commitment of these managers and directors towards CSR activities.
A few recent studies (Mandina, Maravire, & Masere, 2014; Margolis, & Walsh, 2001; Orlitzky, Schmidt, & Rynes, 2003) state that students who have obtained an MBA and studied business ethics courses have a perception that engaging on several CSR activities with good performance, will be reflected in higher financial performance and social reputation. As a result, directors with an MBA are aware of the importance that CSR practices have in obtaining advantages from the competition.
the ability of understanding better the relationships of an organization and their stakeholders as well as aligning their interests. I assume that there is a positive correlation between higher education (for the purposes of this study, the achievement of an MBA) and CSR initiatives, and I will investigate this assumption empirically. In previous empirical studies, this question has not been researched, and for that reason additional investigation is needed (Waldman, & Siegel, 2008). Taking this into consideration, my first hypothesis is stated as follows:
Hypothesis 1: There is a positive relationship between the board of director’s education diversity and the organizations’ CSR activities.
2.2.2. BoD Nationality and CSR
Since multinationals enterprises operate in several countries, often the BoD of these companies are composed by people with different nationalities. There is a vast literature regarding the difference between cultures and nationalities and their impact on the individuals, groups, organizations and societies. Individual’s values, knowledge and behavior are shaped depending on the culture, nationalities, the contexts they were born in and also where they grew up and formed as an individual (Hofstede, 2011).
diversity on CSR (Harjoto et al., 2015; Zhang, 2012). Considering their social background, ethnic minorities usually are more worried about the personal and professional social and environmental responsibility (Wang, & Coffey, 1992). Zhang (2012) also found that when boards include ethnic minorities, the organization’s public image gets better reputation and legitimacy. Similarly, foreign nationalities can be more sensitive when it comes to embracing new ideas and perspectives.
Foreign directors may bring advantages to the organization, such as setting and engaging in international stakeholder relations or knowledge about other markets (Adams, Hermalin, & Weisbach, 2010; Ben-Amar et al., 2013). Still, the relationship with CSR has not yet been deeply researched. Considering these findings, my second hypothesis is:
Hypothesis 2: There is a positive relationship between the nationality diversity within the board of directors and the organizations’ CSR activities.
2.2.3. BoD Tenure and CSR
The BoD’s tenure is directly related to the directors’ knowledge of the organization. Long term directors are more familiar with the environment, processes, strategies and the firm’s practices (Hafsi, & Turgut, 2013). On the other hand, experienced directors are often averse to change and have stale ideas which can lead to difficulties in innovative and creative thinking. Prior studies found that CSR is part of the organizational culture and it has a long-term perspective, further, these authors suggest that longer tenure in the BoD is necessary to set a CSR friendly culture (Melo, 2012).
positively influences the BoD, since they are more distant to the CEO and they can especially influence their capabilities when the CEO is not in favor of engaging in CSR activities.
Therefore, a balanced BoD with a tenure diversity may benefit the organization for including more perspectives, sensitivity and knowledge when taking care of the stakeholders’ interests and the decision-making about CSR activities. Keeping this in mind, my third hypothesis goes as follows:
Hypothesis 3: There is a positive relationship between the tenure diversity within the board of directors and the organizations’ CSR activities.
2.2.4. BoD Age and CSR
Regarding the BoD’s age, it refers to the diversity of ages that the directors presented on the board of the organization have. The age of a person can reflect their individual values, maturity, experience and the interpersonal behavior whether it is considered in the personal life or the corporate world (Rhodes, 1983). Although there is already some research on the diversity of ages in the BoD, the outcomes are still not very aligned if a diverse BoD in terms of age have indeed a positive effect on the CSR performance of an MNE. There are some studies which found a positive effect (Hafsi & Turgut, 2013) and others where the results concluded a negative effect (Harjoto et al., 2015) of the diversity of ages within the BoD on the engagement of CSR activities of their organizations. Thus, these findings conclude that the research done so far is inconclusive and limited.
research (Ali et al., 2014; Gardyn, 2003; Jhunjhunwala, & Mishra 2012) shows that younger directors, which usually hold higher degrees than the older directors, are usually more concerned with CSR issues and tend to engage in sustainable solutions for their companies.
However, as expected, when there are different people working together, the outcomes may not be the ones that have been predicted before. Additionally, there may exist a certain degree of age diversity that could result in a disadvantageous wide generation gap, that could ultimately obstruct the organization’s decision-making processes. In line with this reasoning, my fourth hypothesis is:
Hypothesis 4: There is a positive relationship between the board of director’s age diversity and the organizations’ CSR activities.
2.2.5. BoD Independence and CSR
Prior studies have mostly investigated the board independence concept as an independent variable or as diversity indicator influence on CSR activities (Shaukat, Qui, & Trojanowski, 2016; Zhang, 2012). There has also been some research where the independence of the board members was used as a measure for the structural composition rather than to the individual extent. Even so, in this context, this thesis incorporates the BoD independence variable as an independent variable in order to analyze its effect on CSR performance.
Following the resource dependence theory perspective, independent directors are more concerned with the ethical aspects of the company, the several needs of the stakeholders, and the external environment (Ibrahim, Howard, & Angelidis, 2003). Additionally, from the agency theory perspective, a BoD with more independent directors can supervise and monitor tasks better than dependent directors as they are not so embedded in the organization’s internal management and environment (Fama & Jensen, 1983). Hence, the fifth hypothesis of this thesis goes as follows:
Hypothesis 5: There is a positive relationship between the board of director’s independence diversity and the organizations’ CSR activities.
Figure 1: Conceptual Model
3. Methodology
3.1. Data Collection
In order to explore the relationship between the diversity of the board characteristics on the firm’s CSR activities, I will apply a quantitative approach. Regarding the sources of the secondary data I will use databases, such as DataStream and BoardEx, that are accessible for students of the University of Groningen, as well as publicly existing data.
The data for the dependent variable CSR Performance is based on the Thomas Reuters Corporate Responsibility Ratings collected from the ASSET4 ESG database. Considering the independent variables, Education, Nationality, Tenure, Age and Board Independence the data for the BoD is obtained via the database BoardEx which contains information of over 1.7 million global organizations. The data for the control variables Firm Size, Firm Age, Revenue and Board Size is mainly collected from Datastream, the Orbis database and complemented by the organizations’ annual report in the cases of missing values.
3.2. Sample
With several treaties, agreements, actions, protocols and conventions, Europe can be considered as having a leading role in the engagement of environmental and social activities, as well as CSR issues, the sample for this thesis focusses on European MNEs. Since the European Union has been giving a lot of attention to CSR practices and disclosure for companies based in European soil, I will only include MNEs that are headquartered in the European Union (Harjoto et al., 2015).
Some of the reasons for this sample choice are that these several countries have a similar legal and corporate framework that creates a more diverse sample than just focusing in one country. Additionally, MNEs are legally compelled to disclosure financial information, which can lead to the expectation to have more sufficient, available and reliable data in order to have consistent results to answer the research question proposed in this thesis.
Given the rule that each variable of a sample should have a minimum of 10 observations, counting with the dependent variable, the five independent variables and the four control variables, this thesis should have at least 100 observations (Harrell, 2001). The sample in this study is represented by 3,092 directors, which are distributed within 256 MNE’s headquartered in 18 different European countries.
3.3. Measures
3.3.1. Dependent Variable
All the data obtained through the database is updated from sources such as annual reports, stock exchange fillings or news sources and it is publicly available and objective (Ribando, & Bonne 2010). The scores for each category have a value from 0 to 100, where 100 is the highest score and it indicates a strong performance, while 0, on the other hand, represents a significant weakness in that specific category or the combined score. Finally, the ASSET 4 also considers the Integrated Rating, which results from the weighted average between the scores of the four pillars that constitute the ASSET 4 framework: economic, environmental, social and corporate governance.
3.3.2. Independent Variables
Education. In order to measure the type of diversity of education received by the BoD, the parameter considered in this thesis is the obtainment of an MBA. In this case, the sample will be divided into two groups: the first group includes all the directors that have obtained an MBA, while the second group includes all the directors without an MBA. On the one hand, the group related to the directors that have obtained an MBA are associated with the number 1, on the other hand, the group associated with the directors that have not obtained an MBA during their educational path is linked to the number 0 (see Appendix B).
4, concerns the BoD that have eight to nine different nationalities within the BoD (see Appendix B).
Tenure. This variable is measured by the years which each director has spent on their BoD. In order to measure this variable, it will be divided in five groups depending on the number of years that the director is on that BoD. The first category considers that the directors have been in that BoD for less than three years and it is attributed with the number 0, and the last category concerns the directors that were more than twelve years in that BoD and it is associated with the number 4. As for the in-between categories, they range with a gap of three years, i.e., the category associated with number 1 concerns directors that have been in their BoD between three to six years; the category linked to the number 2 concerns the directors that have been in that BoD between six to nine years; finally, the category associated with the number 3 respects the directors that have been in their BoD between nine and twelve years (see Appendix B).
Age. The value attributed to this variable is distributed between five categories and it is related to the age of the directors that compose their BoD. The first category, with the number 0, respects directors with an age of less than 40 years old. The last category, associated with the number 4, regards directors with an age of more than 69 years old. The in between categories range of 10 years each and is associated with the numbers 1 (ages between 40 and 49 years old), the number 2 (ages between 50 and 59 years old) and the number 3 (ages between 60 and 69 years old) (see Appendix B).
by the firm or have any other financial interest in the organization. The ratio of independent directors is obtained by dividing the number of independent directors by the total composition of the BoD (see Appendix B).
3.3.3. Control Variables
Firm Size. The firm size can be measured by several factors, wherby this thesis adopts the size of an organization for the total number of employees that it has. It has been said that larger organizations have easier access to more and better resources. Following this thought, a larger organization has been associated with increased engagement on CSR activities, and also with a higher external pressure to improve their CSR performance. Moreover, Vogel (2005) argues that a larger company has more responsibilities regarding the society and the environment.
Firm Age. Firm age is related to the years of activity of the organization. Badulesco and his colleagues (2016) found evidence that younger companies are less worried on engaging on CSR activities. The main explanation for younger organizations to engage less in CSR activities is that their priorities are still set in other aspects such as sales, internal processes, distribution and blueprinting business models. While older organizations, on the other hand, are able to set more resources and capital to CSR related activities.
Board Size. Board size respects the total number of directors on the board of a determined company. Prior studies state that larger boards have more independent directors and thus they have more external advantages such as relationships with more stakeholders or access to more resources (Post et al., 2011). Thus, board size may affect whether an organization engages in CSR activities and also the length of their sustainable projects and aids.
3.4. Empirical Data Analysis
The hypotheses that are presented in this thesis are evaluated using the Stata/SE (Version 15). A multiple linear regression analysis based on the ordinary least square (OLS) will be applied, since this thesis examines several independent variables to explain one dependent continuous variable, CSR Performance. In order to ensure an adequate interpretation of the main regression results, the preliminary requirements for linear regression are tested and further explained in this section.
diversity within a variable that has several intervals, i.e., more than two, and it uses the formula below expressed: !"#$%& ()*+, = 1 − 0 1 23 4 256
In this formula, P stands for the proportion of directors on the BoD in each category of a variable, and k stands for the total number of categories that each independent variable has. Take the independent variable Tenure for instance, k would stand for five since there are five categories (less than 3 years, 3 to 6 years, 6 to 9 years, 9 to 12 years and more than 12 years that the directors have spent on their BoD) and P would stand for the proportion of directors in each category (how many directors are included on the first category, on the second, and so on). The Blau’s Index would then be one minus the square of the sum of each of the proportions of directors in each category. This index can have values that range between 0 and (486)4 , where 0 means that there is a perfectly homogenous category and (486)4 stands for a completely heterogenous group. Consequently, the final value of the diversity index of each organization will depend on the total number of categories that exist within each independent variable calculated with this formula (Harrison & Klein, 2007).
3.4.1. Multicollinearity
The term collinearity suggests that two variables are near perfect linear combinations of one another. In the case where there are more than two variables involved, it is often called multicollinearity. So as to ensure that the standard errors for the coefficients do not get inflated and the regression model estimation of the coefficients become unstable, the multicollinearity test was performed (see Appendix C). The results of the test show us that multicollinearity is not present in the models used in this thesis. When the variance inflation factor (VIF) has a value greater than 10 it needs further investigation because it means that multicollinearity is present in the model tested. However, in these results, the VIF values are all between 1 and 1,58 which ensure that multicollinearity is not present in the models used to test the conceptual model presented in this thesis.
3.4.2. Issues of Independence
The independence of errors test regards the supposition that the errors associated with one observation from the population used in the model, are not correlated with errors of any other observation. To understand if there are issues of independence I conducted the Durbin-Watson statistic test and the results show values close to 2 (see Appendix D), which is in the accepted range between 1.5 and 2.5 (Field, 2009). Therefore, the requirement of issues of independence in this thesis is fulfilled.
3.4.3. Heteroskedasticity
non-significant for all the models, the values of the tests are 0, heteroskedasticity is not present and do not disturb the results when they amount less than 0.05. Hence, after the tests performed, we can conclude that heteroskedasticity is not present in the regression models used to answer the research question of this thesis.
4. Results
In this section, I will present the results of the several analyses performed. First, the descriptive statistics will be shown and also the correlation matrix of the data gathered. After, the results of the regression analysis that test the five hypotheses of this thesis follow. Finally, I will present the results of the robustness test.
4.1. Descriptive Statistics
The descriptive statistics are presented in Table 1. It gives us an overview of the sample used in this study, which is represented by 3,092 directors, that are distributed within 256 MNE’s headquartered in 18 different European countries. More than half of the companies are headquartered in four countries: The United Kingdom (58), France (40), Switzerland (29), and Germany (26) (see Appendix A).
Regarding the dependent variable, CSR Performance, the ESG ratings that were retrieved from the year of 2017 are spread from 22.95 and 89.61, which indicates that the scores differ considerably among the gathered sample. The mean of this variable is very centred and the score amounts to almost 54 (Mean=53.77; SD=16.92), that reveals that the scores are equally distributed among the organizations sampled.
an MBA. The Nationality variable is measured by the number of the directors’ different nationalities a BoD is composed of. These values range between 0 and 9 (Mean=1.374; SD=0.929), which means that the minimum value, 0, concerns a company only composed by domestic directors, i.e., directors that have the same nationality as the country where the MNE is headquartered. While the maximum value respects an organization with nine different nationalities within the BoD. Regarding absolute values, the total number of foreign directors is 796. In the matter of the Tenure variable, this ranges from 0.003 years in that BoD and 40.87 years (Mean=4.6; SD=4.44). The minimum value is close to zero since the director that is applied to this condition has only been on that BoD for a couple of days. The maximum value of almost 41 years, is translated in the fact that the director has been in that BoD for almost 41 years. The Age variable ranges between 29 years and 95 years old (Mean=60.7; SD=8.56). In this case, the youngest director is 29 years old and the oldest director is 95 years old. The average of the ages of the directors sampled in this study is almost 61 years old. As far as the last independent variable, Board Independence, which measured in the percentage of independent directors in each BoD, the values range from 0% (where there are no independent directors) to 100% (where the BoD is fully independent) (Mean=54%; SD=23.5%). In total, the sample is composed by 1,667 independent directors which is roughly more than half of the population used in this thesis.
SD=4.67). These control variables are very heterogenous and range from very different values, there is a big amplitude of scores in each of the variables.
Correlations
The correlation matrix is presented in Table 2. Regarding the dependent variable, CSR Performance, there is a significant correlation (p<0.01) with three independent variables (Education, Tenure and Board Independence) and with all the control variables. The two independent variables which have no significant correlation with the dependent variable are Nationality and Age. Moreover, from all these significant correlations, only Tenure is not as highly significant as the others (p<0.05), while Education and Board Independence have a significance at 1% level.
of the variables used in this thesis. Within the independent variables, only Education with Nationality and Tenure with Age are significantly and positively correlated (p<0.01).
Finally, concerning the control variables, there are significant correlations with most of the variables applied in this thesis. For each of the control variables (Firm size, Firm age, Revenue and Board size), there are only two variables that have non-significant correlations with each other. This is already an indicative of good control variables choices for this study.
4.2. Regression Results
The results of the OLS regression are presented in Table 3. The regression table is composed of seven models, where the first one tests the effects of the control variables on the independent variable CSR Performance; the next five models test the effects of each independent variable alone, controlled by four variables, on CSR Performance; lastly, the seventh model tests the effects of all the independent variables together, as well as all the control variables, and their effect on the independent variable.
In model 1, it is tested the effect of the control variables Firm size, Firm age, Revenue and Board size on the dependent variable CSR Performance. In my sample, all the control variables have a significant explanatory power on the dependent variable. Firm size, Firm age and Revenue have a very significant power (p<0.01), while the last control variable Board size has a not so significant power when comparing to the other variables (p<0.05).
Table 2: Correlation Matrix
CSR
Performance Education Nationality Tenure Age
Board
Next, in model 3, the second hypothesis is tested. The independent variable Nationality is separately added to the first model, which regards to the number of different nationalities within the BoD. Unlike it was predicted, the results for this model suggest that there is no significant effect of this variable on the dependent variable CSR Performance.
To test the third hypothesis, the model 4 was added, which tests the effect of the independent variable Tenure on the dependent variable CSR Performance. The hypothesis tests the diversity of the years that the directors have been on the board. The results show that there is a positive effect (B=0.552) with a 5% significant level (p<0.05). With this observation it can be said that the third hypothesis is supported. This result suggests that an increase of one unit on the independent variable Tenure will lead to an increase on the CSR Performance of the company by 0.552 points.
In order to test the fourth hypothesis, the model 5 was performed, where the independent variable Age was separately added to the first model. This hypothesis is related to the diversity of the ages of the directors present on the boards. The results suggest that there is no significant level effect of this variable on the dependent variable, CSR Performance.
In model 6, which tests the fifth hypothesis, the independent variable Board Independence was added to the first model, which concerns to the diversity of independent directors on their board. The results show a 5% significant level effect (p<0.05), however, unlike it was predicted, it respects a negative effect (B=-2.906) on CSR Performance. The results suggest that an increase of one unit (independent director) on the independent variable Board Independence will lead to a decrease of the CSR performance score by 2.906 points. Unlike the prediction of previous existing literature, this hypothesis is not supported with the data gathered for this study.
shows that the results of the individual independent variables that have a significant effect on the dependent variable are the consistent. The independent variables Education (B=7.899), Tenure (B=0.656) and Board Independence (B=-3.646) have a significant effect regarding the dependent variable CSR Performance, with a p value of (p<0.01), (p<0.01) and (p<0.05) respectively. However, the 5% significant level effect of the independent variable Board Independence on the dependent variable of this thesis, is translated in a negative relation, which was not expected a priori.
Table 3: Regression Analysis
CSR Performance
Model 1 Model 2 Model 3 Model 4 Model 5 Model 6 Model 7
Control variables
-2.17e-05*** -2.11e-05*** -2.22e-05*** -2.15e-05*** -2.18e-05*** -2.18e-05*** -2.14e-05*** (3.31e-06) (3.31e-06) (3.36e-06) (3.31e-06) (3.32e-06) (3.31e-06) (3.38e-06)
0.0495*** 0.0506*** 0.0491*** 0.0492*** 0.0494*** 0.0512*** 0.0520***
(0.00477) (0.00477) (0.00479) (0.00477) (0.00477) (0.00483) (0.00486)
-6.37e-08*** -6.59e-08*** -6.39e-08*** -6.42e-08*** -6.36e-08*** -6.42e-08*** -6.71e-08*** (6.12e-09) (6.15e-09) (6.13e-09) (6.12e-09) (6.13e-09) (6.12e-09) (6.16e-09)
-0.118** -0.0539 -0.118** -0.116** -0.116** -0.178*** -0.119* (0.0561) (0.0594) (0.0561) (0.0561) (0.0562) (0.0630) (0.0664) Independent variables 7.535*** 7.899*** (2.334) (2.448) 0.289 0.0943 (0.314) (0.334) 0.552** 0.656*** (0.234) (0.241) 0.128 0.455 (0.324) (0.335) -2.906** -3.646** (1.393) (1.422) 54.41*** 52.12*** 54.10*** 54.95*** 54.07*** 56.69*** 54.19*** (0.877) (1.127) (0.940) (0.905) (1.236) (1.402) (1.733) Observations 3,092 3,092 3,092 3,092 3,092 3,092 3,092 R-squared 0.106 0.109 0.106 0.107 0.106 0.107 0.113 Adj R-squared 0.104 0.107 0.104 0.106 0.104 0.105 0.110 F-stat. 91.14 75.22 73.08 74.13 72.92 73.86 43.41
4.3. Robustness Test
5. Discussion
The key objective of this thesis is to provide to the field of international business and management a better inside knowledge of the board diversity on CSR performance, by examining the effects of Education, Nationality, Tenure, Age and Board Independence mixture in the boards of the biggest European public companies. Additionally, it will test the effect on the individual diversity factors and whether it will improve the general knowledge of what types of boards the organizations should follow in order to have a high CSR performance score and engage in sustainable activities. Generally, the findings of this thesis are consistent with some of the existing literature, however, not all the independent variables in this study are supported by the sampled researched and analyzed. Taking this into consideration, organizations should always reflect on which are the most efficient solutions that adapt to their specific case. While the diversity in Education and Tenure seems to be an important factor on whether a company has better ratings regarding their engagement on CSR activities, the diversity on the board of Nationality and Age does not appear to have a significant role on the score of their organization’s CSR performance. Moreover, the independent variable Board Independence plays a significant effect, but with a negative relation, unlike most of the existing literature states. Therefore, while the diversity of many factors on the board seems to influence the engagement on CSR activities from the MNEs, it is important to differentiate the several kinds of diversity that is present on the BoD.
CSR engagement, might attract different types of directors because it might reflect their personal focus and interest for social responsibility.
What respects the third hypothesis, the effects of the diversity of number of years in which the directors have been in that position, the independent variable Tenure, the results of this thesis find a significant effect of it on the CSR Performance of the companies. Consistent with some existing literature (e.g.: Melo, 2012), the diversity of Tenure in the BoD is positively related to organizations that are socially responsible, having a high score on their CSR Performance. Tenure may suggest familiarity and experience with the organizational processes, structure, and management, but differences in these characteristics seem to have influence on whether the board is more or less concerned about their standards regarding their engagement on CSR activities. What concerns the diversity in tenure of the sample used in this thesis, the results reflect that the more diversity of directors with different tenure in their board will lead to a more serious and strategic engagement on CSR activities. However, it is not yet clear who should claim more responsibility about their concern for the CSR practices, whether it is the directors with more tenure or with less. In this study I found that the BoD with predominantly more long-term directors and with short-term directors are similarly situated in their CSR performance scores. Yet, it is clear that the diversity of tenure in the BoD is significantly positive associated with a high CSR performance score in their MNEs.
predictor of the firms’ CSR performance. Some of the reasons for this variable to not provide significant implications are related to the proportions of directors that are included in each category created for the purposes of the analysis of the age diversity in the BoD. The sample gathered shows that in the BoD analyzed, there is a low age variation and it could affect the outcomes in terms of diversity. Moreover, most of the directors in the sample of this study are situated in the categories 2 and 3, which comprehend directors with ages between 50 to 59 and 60 to 69 years old, respectively, while the rest of the categories are underrepresented. Therefore, the differences between the boards are expected to be small and consequently the diversity in terms of ages in the BoD is not meaningful. The fact that other groups of ages are not abundantly represented in the sampled BoD, might disturb the board dynamics and their effectiveness during the processes of decision-making and team involvement. Another explanation that might be behind the lack of positive effect of the diversity of ages in the BoD on the engagement of CSR practices, can be related to the fact that unlike older directors, the younger ones are usually more concerned about the society’s well-being and environmental issues (Ali et al., 2014; Gardyn, 2003). In the matter of the sample gathered in this study, the younger directors are not as well represented as the older directors.
management as inside directors, are more likely to make decisions from the perspectives of profit maximization instead of sustainable practices. Often, social and environmental goals are in conflict with earnings maximization, which can create divergences of opinions and decisions within the BoD (Rose, 2007). Furthermore, non-independent directors are usually more attached to the company and may feel a bigger connection and empathy with the firm, which can lead to desired goals of wanting their MNE to be well recognized and gain social legitimacy from the public opinion. Thus, inside directors may have a growing preference of engaging in CSR activities and increasing the firm’s social status.
6. Conclusion
This study provides additional findings to the research on board diversity by answering the following research question: Do board level characteristics, such as education, nationality, tenure, age and board independence have impact on engaging in CSR activities? This thesis uses a unique dataset comprised by 256 European MNEs and 3,092 directors covered in the period 2015 to 2017. The results provide new insights and support the diversity of education and tenure within the BoD and its positive effect on CSR performance. Although the BoD’s diversity may have an impact, it needs to be analyzed in each specific corporate context and it might be more conclusive if combined with other variables. Next, in the Table 4 an overview of the hypotheses and the consequent findings is presented.
Table 4: Hypotheses Overview
Hypotheses Results
Hypothesis 1: There is a positive relationship between the board of
directors’ education diversity and the organizations’ CSR activities. Supported Hypothesis 2: There is a positive relationship between the board of
Hypothesis 3: There is a positive relationship between the board of
directors’ tenure diversity and the organizations’ CSR activities. Supported Hypothesis 4: There is a positive relationship between the board of
directors’ age diversity and the organizations’ CSR activities. Not supported Hypothesis 5: There is a positive relationship between the board of
director’s independence diversity and the organizations’ CSR activities. Not supported
6.1. Implications
What respects the theoretical implications of this study, it contributes to the field of international business, specifically the diversity on the BoD and its links with the corporate engagement on CSR activities. First, the findings of this thesis support some existing literature related to the diversity in education and tenure within the BoD and its positive effect on the CSR performance of the MNEs (Mandina, Maravire & Masere, 2014; Margolis & Walsh, 2001; Orlitzky, Schmidt & Rynes, 2003).
The results of this study are aligned with the assumption that the BoD’s diversity has low explicatory power on the organizations’ CSR performance. The regression models performed and analyzed only explain a reduced percentage of the links tested, which seems to be an important issue in the CSR field. In consistence with prior research, the construct of CSR is influenced by an abundant number of diverse and unknown variables (Boulouta, 2013).
6.2. Limitations and Future Research
References
Adams, R. B., Hermalin, B. E. & Weisbach, M. S. (2010). The role of boards of directors in corporate governance: a conceptual framework & survey. Journal of Economic Literature, 48: 58–107.
Ali, M., Ng, Y. L. & Kulik, C. T. (2014). Board age and gender diversity: A test of competing linear and curvilinear predictions. Journal of Business Ethics, 125: 497-512.
Badulescu, A., Badulescu, D., Saveanu, T. & Hatos, R. (2016). Opportunities and Risks in the Contemporary Business Environment, 963-975.
Bear, S., Rahman, N. & Post, C. (2010). The Impact of Board Diversity and Gender Composition on Corporate Social Responsibility and Firm Reputation. Journal of Business Ethics, 97: 207-221.
Ben-Amar, W., Francoeur, C., Hafsi, T. & Labelle, R. (2013). What makes better boards? A closer look at diversity and ownership. British Journal of Management, 24: 85-101. Blank, H. (2013). Thomson Reuters Corporate Responsibility Ratings: Rating and Rankings
rules and methodology. Thomson Reuters 2013.
Blau, P. M. (1977). Inequality and Heterogeneity: A primitive theory of social structure. New York: Free Press.
Boulouta, I. (2013). Hidden connections: The link between board gender diversity and corporate social performance. Journal of Business Ethics, 113: 185-197.
Browning, J. & Zabriskie, N. B. (1983). How ethical are industrial buyers? Industrial Marketing Management, 12(4), 219-224.
Carpenter, M. A., Geletkanycz, M. A. & Sanders, W. G. (2004). Upper echelons research revisited: Antecedents, elements, and consequences of top management team composition. Journal of Management, 30(6), 749-778.
Carroll, A. B. (2015). Corporate social responsibility: The centerpiece of competing and complementary frameworks. Organizational Dynamics, 44: 87-96.
Carter, D. A., D’Souza, F., Simkins, B. J. & Simpson, W. G. (2010). The gender and ethnic diversity of US boards and board committees and firm financial performance. Corporate Governance: An International Review, 18: 396-414.
Chang, Y. K., Oh, W. Y., Jung, J. C., & Lee, J. Y. (2012). Firm size and corporate social performance: The mediating role of outside director representation. Journal of Leadership & Organizational Studies, 19, 486–500.
Chang, Y., Oh, W. Y., Park, J. & Jang, M. (2017). Exploring the Relationship Between Board Characteristics and CSR: Empirical Evidence from Korea. Journal of Business Ethics, 140(2), pp. 225-242.
Commission of the European Communities (2002). Communication from the Commission. Corporate social responsibility: a business contribution to sustainable development. Retrieved from: http://trade.ec.europa.eu/doclib/docs/2006/february/tradoc_127374.pdf
Commission of the European Communities (2011). Communication from the commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: A renewed EU strategy 2011-14 for CSR. Retrieved from:
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52011DC0681
Cucari, N., Esposito de Falco, S. & Orlando, B. (2018). Diversity of Board of Directors and Environmental Social Governance: Evidence from Italian Listed Companies. Corporate Social Responsibility and Environmental Management, Vol. 25, pp. 250-266.
Management Review, 2, pp. 70-76.
Davis, K. (1967). Understanding the Social Responsibility Puzzle: What Does the Businessman Owe to Society? Business Horizons, 10, pp. 45-50.
Detomasi, D. A. (2008). The political roots of corporate social responsibility. Journal of Business Ethics, 82: 807–819.
Dubinsky, A. J., & Ingram, T. N. (1984). Correlates of salespeople's ethical conflict: An exploratory investigation. Journal of Business Ethics, 3(4), 343-353.
Fama, F. & Jensen, M. (1983). Agency problems and residual claims. Journal of Law and Economics, 26: 327–349.
Field, A. (2009). Discovering Statistics using SPSS. London: Sage Publications.
Friedman, M. (1962). The Social Responsibility of Business is to Increase its Profits. New York Times, Sept. p.126.
Gardyn, R. (2003). Eco-friend or foe? American Demographics, 25(8): 12-13.
Hafsi, T. & Turgut, G. (2013). Boardroom diversity and its effect on social performance: conceptualization and empirical evidence. Journal of Business Ethics, 112, 463-479. Hambrick, D. C. & Mason, P. A. (1984). Upper echelons: The organization as a reflection of
its top managers. Academy of management review, 9(2), 193-206.
Harjoto, M., Laksmana, I. & Lee, R. (2015). Board diversity and corporate social responsibility. Journal of Business Ethics, 132: 641-660.
Harrell, F.E. Jr. (2001). Regression modeling strategies. New York: Springer-Verlag.
Harrison, D. A. & Klein, K. J. (2007). What’s the difference? Diversity constructs as separation, variety, or disparity in organizations. Academy of Management Review. 32: 1199–1228.
Hofstede, G. (2011). Dimensionalizing cultures: The Hofstede model in context. Online Readings in Psychology and Culture, 2.
Hillman, A., Keim, G. & Luce, R. (2001). Board composition and stakeholder performance: Do stakeholder directors make a difference? Business & Society, 40: 295-314.
Hinings, C. R. & Greenwood, R. (2002). Disconnects and Consequences in Organization Theory? Academy of Management Journal, Vol. 45, No. 1, pp. 58-80.
Ibrahim, N. A., Howard, D. P. & Angelidis, J. P. (2003). Board members in the service industry: an empirical examination of the relationship between corporate social responsibility orientation and directorial type. Journal of Business Ethics. 47: 393-401. Jain, T. & Jamali. D. (2016). Looking inside the black box: The effect of corporate governance
on corporate social responsibility. Corporate Governance: An International Review, 24: 253–273.
Jamali, D., Safieddine, A. M. & Rabbath, M. (2008). Corporate governance and corporate social responsibility synergies and interrelationships. Corporate Governance: An International Review, 16: 443–459.
Jensen, M. C. & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3, 305–360.
Jhunjhunwala, S., & Mishra, R. K. (2012). Board diversity and corporate performance: The Indian evidence. IUP Journal of Corporate Governance, 11(3): 71–79.
Johnson, J., Daily, C. & Ellstrand, A. (1996). Boards of directors: A review and research agenda. Journal of Management, 22: 409-438.
Johnson, R. A., & Greening, D. W. (1999). The effects of corporate governance and institutional ownership types on corporate social performance. Academy of Management Journal, 42, 564–576.
executives. Journal of Business Ethics, 7(4), 231-248.
Jost, J. T. (2006). The end of the end of ideology. American Psychologist, 61: 651–670. Jost, J. T., Glaser, J., Kruglanski, A. W. & Sulloway, F. (2003). Political conservatism as
motivated social cognition. Psychological Bulletin, 129: 339–375.
Katsoulakos, P., Koutsodimou, M., Matraga, A. & Williams, L. (2004). A historic perspective of the CSR movement. CSRQuest Sustainability Framework.
Kidwell, J. M., Stevens, R. E. & Bethke, A. L. (1987). Differences in ethical perceptions between male and female managers: myth or reality? Journal of Business Ethics, 6(6), 489-493.
Knippenberg, D., Dreu, C. K. W. & Homan, A.C. (2004). Work group diversity and group performance: An integrative model and research agenda. Journal of Applied Psychology, 89: 1008–1022.
Lane, M. S., Schaupp, D. & Parsons, B. (1988). Pygmalion effect: An issue for business education and ethics. Journal of Business Ethics, 7(3), 223-229.
Li, J., Chu, C. W. L., Lam, K. C. K., & Liao, S. (2011). Age diversity and firm performance in an emerging economy: Implications for cross-cultural human resource management. Human Resource Management, 50: 247–270.
Li, N. & Wahid, A. S. (2017). Director tenure diversity and board monitoring effectiveness. Contemporary Accounting Research, Research Collection School of Accountancy. Lima Crisostomo, V., de Souza Freire, F., & Nobre Parente, P. H. (2014). An analysis of
corporate social responsibility in brazil: Growth, firm size, sector and internal stakeholders involved in policy definition. Pensamiento & Gestión, (37), 125-149. Lumley, T., Diehr, P., Emerson, S. & Chen, L. (2002). The importance of the normality
Mackey, A., Mackey, T. & Barney, J. (2007). Corporate Social Responsibility and Firm Performance: Investor Preferences and Corporate Strategies. Academy of Management Review, Vol. 32, No.3, pp. 817-835.
Mandina, S. P., Maravire, C. V. & Masere, V. S. (2014). Effectiveness of Corporate Social Responsibility in Enhancing Company Image. The Journal of Applied Business and Economics, 16(3), 152.
Margolis, J. D. & Walsh, J. P. (2001). People and profits? The search for a link between a company's social and financial performance. Psychology Press.
Masulis, R. W., Wang, C. & Xie, F. (2012). Globalizing the boardroom — the effects of foreign directors on corporate governance and firm performance. Journal of Accounting and Economics, 53: 527–554.
Melo, T. (2012). Determinants of corporate social performance: The influence of organizational culture, management tenure and financial performance. Social Responsibility Journal, 8: 33-47.
Orlitzky, M., Schmidt, F. L. & Rynes, S. L. (2003). Corporate social and financial performance: A meta-analysis. Organization studies, 24(3), 403-441.
Pearce, J. A. & Zahra, S. A. (1991). The relative power of the CEOs and boards of directors: Associations with corporate performance. Strategic Management Journal, 12: 135–153. Pfeffer, J., & Salancik, G. R. (1978). The external control of organizations: A resource
dependent perspective. New York: Harper and Row.
Post, C., Rahman, N. & Rubow, E. (2011). Green governance: Boards of directors’ composition and environmental corporate social responsibility. Business & Society, 50: 189 –223.
Rao, K. & Tilt, C. (2016). Board composition and corporate social responsibility: The role of diversity, gender, strategy and decision making. Journal of Business Ethics, 138: 327-347.
Rest, J. R. & Thoma, S.J. (1985). Relation of moral judgment development to formal education. Developmental Psychology, 21(4), 709-714.
Rhodes, S. R. (1983). Age-related difference in work-attitudes and behavior: A review and conceptual analysis. Psychological Bulletin, 93: 328-367.
Ribando, J. M. & Bonne, G. (2010). A new quality factor: Finding alpha with ASSET4 ESG data. Starmine Research Note, Thomson Reuters.
Rose, G. (2007). Corporate directors and social responsibility: ethics versus shareholder value. Journal of Business Ethics, Vol. 73, pp. 319-31.
Schwartz, S. (1996). Value priorities and behavior: Applying a theory of integrated value systems. In U. C. Seligman, J. M. Olson, and M. P. Zanna (eds.), The Psychology of Values: The Ontario Symposium, 8: 1–24. Hillsdale, NJ: Erlbaum.
Serwinek, P. J. (1992). Demographic & related differences in ethical views among small businesses. Journal of Business Ethics, 11(7), 555-566.
Shaukat, A., Qiu, Y. & Trojanowski, G. (2016). Board attributes, corporate social responsibility strategy, and corporate environmental and social performance. Journal of Business Ethics, 135: 569-585.
Siciliano, J. I. (1996). The relationship of board member diversity to organizational performance. Journal of Business Ethics, 15, 1313–1320.
Slater, D. J. & Dixon-Fowler, H. R. (2010). The future of the planet in the hands of MBAs: An examination of CEO MBA education and corporate environmental performance. Academy of Management Learning & Education, 9(3), 429-441.
cure depend on the politics of the beholder? Administrative Science Quarterly, 45: 293– 326.
Thomson Reuters. 2018. Thomson Reuters ESG Scores. Retrieved from:
https://financial.thomsonreuters.com/content/dam/openweb/documents/pdf/financial/esg -scores-methodology.pdf
Udayasankar, K. (2008). Corporate social responsibility and firm size. Journal of Business Ethics, 83(2), 167-175.
Vogel, D. J. (2005). Is there a market for virtue? The business case for corporate social responsibility. California Management Review, 47 (4): 19–45.
Waddock, S. & Graves, S. (1997). The corporate social performance-financial performance link. Strategic Management Journal, 303-319.
Waldman, D. A. & Siegel, D. (2008). Defining the socially responsible leader. The Leadership Quarterly, 19(1), 117-131.
Waldman, D. A., Sully de Luque, M., Washburn, N., House, R. J., Adetoun, B., Barrasa, A., Bobina, M. & Wilderom, C.P.M. (2006). Cultural and leadership predictors of corporate social responsibility values of top management: a GLOBE study of 15 countries. Journal of International Business Studies, 37: 823-837.
Walls, J., Berrone, P. & Phan, P. (2012). Corporate Governance and Environmental Performance: Is There Really a Link? Strategic Management Journal, 33(8), 885-913. Wang, J. & Coffey, B. S. (1992). Board composition and corporate philanthropy. Journal of
Business Ethics, 11: 771–778.
Wang, G., Holmes, R. M., Oh, I. S. & Zhu, W. (2016). Do CEOs matter to firm strategic actions and firm performance? A meta-analytic investigation based on upper echelon theory. Personnel Psychology.
Management and Governance, 8, 255–277.
Williams, R. J. (2003). Women on corporate boards of directors and their influence on corporate philanthropy. Journal of Business Ethics, 42, 1–10.
Zahra, S. & Pearce, J. (1989). Boards of directors and corporate financial performance: A review and integrative model. Journal of Management, 15: 291-344.
Appendices
Appendix A: Country Frequencies
Appendix B: Blau’s Index Coding Country frequencies Country Frequency Austria 5 Belgium 9 Czech Republic 1 Denmark 10 Finland 8 France 40 Germany 26 Greece 3 Ireland 8 Italy 11 Luxembourg 3 Netherlands 10 Norway 7 Portugal 3 Spain 12 Sweden 13 Switzerland 29 United Kingdom 58 256
Blau's Index Coding
Variable Category Description
Education 0 No MBA
1 MBA
Nationality 0 1 nationality (non-foreign) 1 2 and 3 nationalities 2 4 and 5 nationalities 3 6 and 7 nationalities 4 8 and 9 nationalities
Tenure 0 Less than 3 years
1 3 to 6 years 2 6 to 9 years 3 9 to 12 years 4 More than 12 years
Age 0 Younger than 40 years
