Looking Inside the Black Box: The Effect of Corporate Governance on Corporate Social Responsibility

Abstract

Manuscript Type: ReviewResearch Question/Issue: This study provides a systematic multi-level review of recent literature to evaluate the impact of corporate governance mechanisms (CG) at the institutional, firm, group, and individual levels on firm level corporate social responsibility (CSR) outcomes. We offer critical reflections on the current state of this literature and provide concrete suggestions to guide future research. Research Findings/Insights: Focusing on peer-reviewed articles from 2000 to 2015, the review compiles the evidence on offer pertaining to the most relevant CG mechanisms and their influence on CSR outcomes. At the institutional level, we focus on formal and informal institutional mechanisms, and at the firm level, we analyze the different types of firm owners. At the group level, we segregate our analysis into board structures, director social capital and resource networks, and directors' demographic diversity. At the individual level, our review covers CEOs' demography and socio-psychological characteristics. We map the effect of these mechanisms on firms' CSR outcomes. Theoretical/Academic Implications: We recommend that greater scholarly attention needs to be accorded to disaggregating variables and yet comprehending how multiple configurations of CG mechanisms interact and combine to impact firms' CSR behavior. We suggest that CG-CSR research should employ a multi-theoretical lens and apply sophisticated qualitative and quantitative methods to enable a deeper and finer-grained analysis of the CG systems and their influence on CSR. Finally, we call for cross-cultural research to capture the context sensitivities typical of both CG and CSR constructs. Practitioner/Policy Implications: Our review suggests that for structural changes and reforms within firms to be successful, they need to be complemented by changes to the institutional makeup of the context in which firms function to encourage/induce substantive changes in corporate responsible behaviors.

Dampak Karakteristik Dewan Direksi Terhadap Pengungkapan Corporate Social Responsibility Pada Perusahaan Pertambangan Di Indonesia

“…Secara lebih spesifik kajian mengenai karakteristik dewan direksi menjadi penting. Karakteristik dewan direksi tersebut mencakup diversitas dewan (Muttakin, Khan, dan Subramaniam, 2015) seperti keberadaan perempuan dalam dewan direksi (Fuente et al, 2017;Huang, 2013;Jain dan Jamali, 2016), lama menjabat (Huang, 2013;Lewis, Walls, dan Dowell, 2014;Rao dan Tilt, 2016a), keberadaan direktur asing (Barka dan Dardour, 2015;GarciaSanchez, Cuadrado-Ballesteros, dan Sepulveda, 2014) dan ukuran dewan (Fuente et al, 2017;Jain dan Jamali, 2016).…”

Does board composition have an impact on CSR reporting?

“…With this in mind, the link between board composition and CSR reporting is given emphasis throughout, even though such an explicit research framework does not exist in the literature so far. We have relied on a broad research structure suggested by Jain and Jamali (2016). An analysis of multilevel corporate governance mechanisms implies that there are institutional-level, firm-level, group-level, and individual-level corporate governance mechanisms.…”

“…The adoption of the Directive 2014/95/EU in the European member states has great implications for board diversity and CSR reporting (Federation of European Accountants, 2015; Johansen, 2016; Monciardini, 2016), as specific PIEs must prepare a non-financial declaration and a diversity report as part of the corporate governance statement. The relationship between board composition and CSR reporting is also a growing topic of empirical research from an international perspective (Jain and Jamali, 2016;Malik, 2015). Prior empirical research has focused on the link between board composition variables such as internal corporate governance and measures of CSR reporting and, over the last few years, a growing number of studies have been carried out that have incorporated a statistical examination of the impact of specific board composition variables (e.g., gender diversity) on the quality and quantity of CSR reports .…”

The Implications of Mandatory Corporate Social Responsibility—A Literature Review Perspective

“…However, CSR can also be strategic whereby it can combine economic and social benefits (Husted and Salazar [43]). Jain and Jamali [44] argue that the outside-in ap- Attracting and retaining human resources is central for the success of an organisation. Companies with high corporate social performance are more appealing to job seekers that those with low CSP (Albinger and Freeman [45]) and companies with good social credentials have better employee retention rates (Peterson [46]).…”