Integrating Corporate Social Responsibility (CSR) into Corporate Governance Structure: The Effect of Board Diversity and Roles-A Case Study of Saudi Arabia

Abstract

Research Purpose: the purpose of this paper is to determine the board diversity characteristics that affects on board roles in order to improve the integration of Corporate Social Responsibility (CSR) into Corporate Governance (CG) structure. This objective has been achieved by reviewing (CG) and (CSR) literature, and surveying various deliberations on offer at the first; second, by examining how the board diversity characteristics effect on their roles towards the adoption of CSR within case study context of two companies operating in Saudi Arabia. A qualitative case study was adopted by conducting in-depth interviews with participants at various levels of board and management in the two Saudi companies. The findings suggested that board diversity characteristics are an essential to improve the effectiveness of board roles (monitoring, services and strategic) towards the integration of CSR in to governance structure. Based on the findings, three theoretical propositions have been developed to assist and direct further research on the topic. These findings are important and motivating; indicating that recent concern of reforming CG Codes in emerging countries is starting to be balanced by some notice/attention to CSR, with growing of board of directors' role in protecting stakeholders. This paper makes two important contributions. First, it contributes to our understanding of board diversity characteristics and roles that improve CG codes in the context of engaging with stakeholders. Second, the paper develop a number of theoretical propositions that can assist as the foundation for future research on this issue, particularly in emerging countries, given that the data and propositions are derived from emerging country settings. This study highlights the need for enhancing election criteria when it comes to appointing BODs, especially in the case of an organisational shift towards a socially responsible business. The implications for policy makers can be found in the need for regulatory and judicial systems' capacity improvements to enhance institutional pressures to increase CSR adoption rate via coercive and normative methods.

Corporate Commitments to Stakeholders over Time and Across Countries: A European Comparative Study (2000–2010)

“…This is also the position adopted by . An alternative model considers CSR as a component of CG (Ho 2005;Jo and Harjoto, 2012;Alshareef and Sandhu, 2015). A third model is the one advanced by Bhimani and Soonawalla (2005), who view CG and CSR as two dimensions or constituents belonging to the same continuum (i.e., corporate accountability).…”

Business Ethics and Corporate Social Responsibility: Bridging the Concepts

“…While still contested, most scholars interpret business ethics and CSR as having a close relationship. In support of the aforementioned argument, It suggested from an interviews with participants at various levels of board and management in petrochemical company which operates in Saudi Arabia, "that the majority of participants consider Corporate Governance (CG), whose aim is to engage the Board of Directors (BOD) in supervising CSR activities and the process of integrating these practices into the company's operations, is an essential foundation for sustainable CSR activities" [23]. The aforementioned provides a clear support to the relationship under investigation since Corporate Governance enforces transparency and ethical business behavior as well as CSR.…”

Adoption of Corporate Social Responsibility: Board Competencies and Roles

“…Consequently, reinforcement of the codes and rules for non-executive directors has occurred. In the context of the US, the Sarbanes-Oxley Act (2002) and the new New York Stock Exchange listing rules (2003) assert that publicly traded companies should have boards composing of a majority of independent directors and the same goes for the audit committees which should be made up of independent directors entirely (Aguilera et al, 2006;Pass, 2004;Sarbanes, 2002;Zattoni & Cuomo, 2010;Alshareef & Sandhu, 2015). In the UK context, changes in the board composition recommendations can be traced back to the review undertaken by Sir Higgs in 2003.…”

“…The adoption of CSR is buttressed by CG structures and procedures (Cadbury, 1992;Alshareef & Sandhu, 2015).…”