Skip to main content
SpringerLink
Log in

The Role of Board Environmental Committees in Corporate Environmental Performance

Journal of Business Ethics volume 140, pages 423–438 (2017)Cite this article

Abstract

This study explores the relationship between board environmental committees and corporate environmental performance (CEP). We propose that board environmental committees will be positively associated with CEP. Moreover, we argue that the composition of the committee (i.e., stakeholder representation) as well as the presence of a sustainability manager will influence this relationship. Our results find support for a positive association between board environmental committees and CEP. Further, the presence of a senior-level environmental manager positively moderates this relationship, but is not effective in isolation. Unexpectedly, no support was found for the influences of stakeholder representation.

This is a preview of subscription content, access via your institution.

Access options

Buy single article

Instant access to the full article PDF.

USD 39.95

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Fig. 1

Notes

  1. Outside directors considered affiliates of the firm include significant shareholders (>10 % of voting shares), members of professional firms providing service to the company (e.g., law firm, commercial bank, consulting firms, etc.), officers of firms with significant supplier/customer relationship to the company, directors affiliated with non-profit institutions receiving more than $100,000 from the company that year, members with interlocking directorships, former employees, and directors receiving personal benefit from the company (individual consultant to the company, vice-chair of board) of greater than $100,000 per year.

References

  • Adams, R. B. (2003). What do boards do? Evidence from board committee and director compensation data (March 13). EFA 2005 Moscow Meetings Paper. http://ssrn.com/abstract=397401 (From the Social Sciences Research Network Website).

  • Agle, B. R., Mitchell, R. K., & Sonnenfeld, J. A. (1999). Who matters to CEOs: An investigation of stakeholder attribute and salience, corporate performance, and CEO values. Academy of Management Journal, 42(5), 507–525.

    Article  Google Scholar 

  • Aiken, L. S., & West, S. G. (1991). Multiple regression: Testing and interpreting interactions. Newbury Park, CA: Sage.

    Google Scholar 

  • Anderson, C. A., & Anthony, R. N. (1986). The new corporate directors: Insights for board members and executives. New York: Wiley.

    Google Scholar 

  • Aragón-Correa, J. A. (1998). Strategic proactivity and firm approach to the natural environment. Academy of Management Journal, 41(5), 556–567.

    Article  Google Scholar 

  • Aragón-Correa, J. A., & Sharma, S. (2003). A contingent resource-based view of proactive environmental strategy. Academy of Management Review, 28(1), 71–88.

    Google Scholar 

  • Ayuso, S., & Argandona, A. (2007). Responsible corporate governance: Towards a stakeholder board of directors? Working Paper No. 701. IESE Business School, Barcelona.

  • Backer, L. (2007). Engaging stakeholders in corporate environmental governance. Business and Society Review, 112(1), 29–54.

    Article  Google Scholar 

  • Bansal, P. (1997). Business strategy and the environment. In P. Bansal & E. Howard (Eds.), Business and the natural environment. Oxford: Butterworth-Heinemann.

    Google Scholar 

  • Bansal, P., & Roth, K. (2000). Why companies go green: A model of ecological responsiveness. Academy of Management Journal, 43(4), 717–736.

    Article  Google Scholar 

  • Baysinger, B. D., Kosnik, R. D., & Turk, T. A. (1991). Effects of board ownership structure on corporate R&D strategy. Academy of Management Journal, 34(1), 205–214.

    Article  Google Scholar 

  • Berle, A. A., Means, G. C., & Columbia University. (1932). Modern corporation and private property. Council for Research in the Social Sciences. New York, Chicago: Commerce Clearing House, Loose leaf service division of the Corporation Trust Company.

  • Berman, S. L., Wicks, A. C., Koth, S., & Jones, T. M. (1999). Does stakeholder orientation matter? The relationship between stakeholder management models and firm financial performance. Academy of Management Journal, 42(5), 488–506.

    Article  Google Scholar 

  • Berrone, P., & Gomez-Mejia, L. R. (2009). Environmental performance and executive compensation: An integrated agency-institutional perspective. Academy of Management Journal, 52(1), 103–126.

    Article  Google Scholar 

  • Bilimoria, D., & Pederit, S. K. (1994). Board committee membership—effects of sex-based bias. Academy of Management Journal, 37(6), 1453–1477.

    Article  Google Scholar 

  • Boyd, B. (1990). Corporate linkages and organizational environment: A test of the resource dependence model. Strategic Management Journal, 11, 419–430.

    Article  Google Scholar 

  • Braiotta, L. Jr. & Sommer, A. A. (1987). The essential guide to effective corporate board committees. Englewood Cliffs, NJ: Prentice-Hall.

    Google Scholar 

  • Buzzelli, D. T. (1991). Time to structure an environmental policy strategy. Journal of Business Strategy, 12(2), 17–20.

    Article  Google Scholar 

  • Chen, M., & Hambrick, D. (1995). Speed, stealth and selective attack: How small firms differ from large firms in competitive behavior. Academy of Management Journal, 38(2), 453–482.

    Article  Google Scholar 

  • Christmann, P. (2000). Effects of “best practices” of environmental management on cost advantage: The role of complementary assets. Academy of Management Journal, 43(4), 663–680.

    Article  Google Scholar 

  • Clemons, B. (2006). Economic incentives and small firms: Does it pay to be green? Journal of Business Research, 59, 492–500.

    Article  Google Scholar 

  • Cohen, J. (1977). Statistical power analysis for the behavioral sciences. New York: Academic Press.

    Google Scholar 

  • Coombs, J. E., & Gilley, K. M. (2005). Stakeholder management as a predictor of CEO compensation: Main effects and interactions with financial performance. Strategic Management Journal, 26, 827–840.

    Article  Google Scholar 

  • Cyert, R. M., & March, J. G. (1963). A Behavioral Theory of the Firm. Englewood Cliffs, NJ: Prentice Hall.

  • D’Amboise, G., & Muldowney, M. (1988). Management theory for small business: Attempts and requirements. Academy of Management Review, 13, 226–240.

    Google Scholar 

  • Daily, C. M. (1996). Governance patterns in bankruptcy reorganizations. Strategic Management Journal, 17(5), 355–375.

    Article  Google Scholar 

  • Daily, C., Dalton, D., & Cannella, A. (2003). Corporate governance: Decades of dialogue and data. Academy of Management Review, 28(3), 371–382.

    Google Scholar 

  • Daily, C. M., & Schwenk, C. (1996). Chief executive officers, top management teams, and boards of directors: Congruent or countervailing forces? Journal of Management, 22(2), 185–208.

    Article  Google Scholar 

  • Dalton, D. R., Daily, C. M., Ellstrand, A. E., & Johnson, J. L. (1998). Meta-analytic reviews of board composition, leadership structure, and financial performance. Strategic Management Journal, 19(3), 269–290.

    Article  Google Scholar 

  • Dalton, D. R., Daily, C. M., Johnson, J. L., & Ellstrand, A. E. (1999). Number of directors and financial performance: A meta-analysis. Academy of Management Journal, 42(6), 674–686.

    Article  Google Scholar 

  • Davis, G. F. (1991). Agents without principles: The spread of the poison pill through the intercorporate network. Administrative Science Quarterly, 36(4), 583–613.

    Article  Google Scholar 

  • Davis, J. H., Schoorman, D. F., & Donaldson, L. (1997). Toward a stewardship theory of management. Academy of Management Review, 22(1), 20–47.

    Google Scholar 

  • Dean, T. J., Brown, R. L., & Bamford, C. E. (1998). Differences in large and small firm responses to environmental context: Strategic implications from a comparative analysis of business formation. Strategic Management Journal, 19(8), 709–728.

    Article  Google Scholar 

  • Dixon-Fowler, H., Slater, D., Johnson, J., Ellstrand, A., & Romi, A. (2013). Beyond “Does it pay to be green?” A meta-analysis of moderators of the CEP-CFP relationship. Journal of Business Ethics, 112(2), 353–366.

    Article  Google Scholar 

  • Elkington, J. (1994). Towards the sustainable corporation—win-win-win business strategies for sustainable development. California Management Review, 36(2), 90–100.

    Article  Google Scholar 

  • Etzion, D. (2007). Research on organizations and the natural environment, 1992-present: A review. Journal of Management, 33(4), 637–664.

    Article  Google Scholar 

  • Fama, E. F. (1980). Agency problems and the theory of the firm. Journal of Political Economy, 88(2), 288–307.

    Article  Google Scholar 

  • Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. Journal of Law and Economics, 26(2), 301–325.

    Article  Google Scholar 

  • Forbes, D. P., & Milliken, F. J. (1999). Cognition and corporate governance: Understanding boards of directors as strategic decision-making groups. Academy of Management Review, 24(3), 489–505.

    Google Scholar 

  • Freeman, R., & Evan, W. (1990). Corporate governance: A stakeholder interpretation. Journal of Behavioral Economics, 19(4), 337.

    Article  Google Scholar 

  • Gales, L. M., & Kesner, I. F. (1994). An analysis of board of director size and composition in bankrupt organizations. Journal of Business Research, 30(3), 271–282.

    Article  Google Scholar 

  • Govindarajan, V. (1988). A contingency approach to strategy implementation at the business-unit level—Integrating administrative mechanisms with strategy. Academy of Management Journal, 31(4), 828–853.

    Article  Google Scholar 

  • Gupta, A. K., & Govindarajan, V. (1984). Business unit strategy, managerial characteristics, and business unit effectiveness at strategy implementation. Academy of Management Journal, 27(1), 25–41.

    Article  Google Scholar 

  • Hair, J. F., Black, W. C., Babin, B. J., Anderson, R. E., & Tatham, R. L. (2006). Multivariate data analysis (6th ed.). Upper Saddle River, NJ: Pearson Prentice Hall.

    Google Scholar 

  • Harrison, J. R. (1987). The strategic use of corporate-board committees. California Management Review, 30(1), 109–125.

    Article  Google Scholar 

  • Hart, S. L. (1995). A natural-resource-based view of the firm. Academy of Management Review, 20(4), 986–1014.

    Google Scholar 

  • Hendry, J. R. (2006). Taking aim at business: What factors lead environmental non-governmental organizations to target particular firms? Business and Society, 45(1), 47–86.

    Article  Google Scholar 

  • Henriques, I., & Sadorsky, P. (1999). The relationship between environmental commitment and managerial perceptions of stakeholder importance. Academy of Management Journal, 42(1), 87–99.

    Article  Google Scholar 

  • Hill, C. W. L., & Snell, S. A. (1988). External control, corporate-strategy, and firm performance in research-intensive industries. Strategic Management Journal, 9(6), 577–590.

    Article  Google Scholar 

  • Hillman, A. J. (2005). Politicians on the board of directors: Do connections affect the bottom line? Journal of Management, 31, 464–481.

    Article  Google Scholar 

  • Hillman, A. J., Cannella, A. A. J., & Paetzold, R. L. (2000). The resource dependence role of corporate directors: Strategic adaptation of board composition in response to environmental change. Journal of Management Studies, 37(2), 235–255.

    Article  Google Scholar 

  • Hillman, A. J., & Dalziel, T. (2003). Boards of directors and firm performance: Integrating agency and resource dependence perspectives. Academy of Management Review, 28(3), 383–396.

    Google Scholar 

  • Hillman, A. J., & Keim, G. D. (2001). Shareholder value, stakeholder management, and social issues: What’s the bottom line? Strategic Management Journal, 22(2), 125–139.

    Article  Google Scholar 

  • Hillman, A. J., Keim, G. D., & Luce, R. A. (2001). Board composition and stakeholder performance: Do stakeholder directors make a difference? Business and Society, 40, 295–313.

    Article  Google Scholar 

  • Hutchinson, C. (1996). Integrating environment policy with business strategy. Long Range Planning, 29(1), 11–23.

    Article  Google Scholar 

  • James, P., Ghobadian, A., Viney, H., & Liu, J. (1999). Addressing the divergence between environmental strategy formulation and implementation. Management Decision, 37(4), 333–347.

    Article  Google Scholar 

  • Jensen, M. C., & Meckling, W. H. (1976). Theory of firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360.

    Article  Google Scholar 

  • Johnson, J. L., Daily, C. M., & Ellstrand, A. E. (1996). Boards of directors: A review and research agenda. Journal of Management, 22(3), 409–438.

    Article  Google Scholar 

  • 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(5), 564–576.

    Article  Google Scholar 

  • Jones, T. M., & Goldberg, L. D. (1982). Governing the large corporation: More arguments for public directors. Academy of Management Review, 7(4), 603–611.

    Google Scholar 

  • Judge, W. Q., & Zeithaml, C. P. (1992). Institutional and strategic choice perspectives on board involvement in the strategic decision-process. Academy of Management Journal, 35(4), 766–794.

    Article  Google Scholar 

  • Kassinis, G., & Vafeas, N. (2002). Corporate boards and outside stakeholders as determinants of environmental litigation. Strategic Management Journal, 23(5), 399–415.

    Article  Google Scholar 

  • Kesner, I. F. (1988). Directors characteristics and committee membership—an investigation of type, occupation, tenure, and gender. Academy of Management Journal, 31(1), 66–84.

    Article  Google Scholar 

  • Klassen, R. D., & McLaughlin, C. P. (1996). The impact of environmental management on firm performance. Management Science, 42(8), 1199–1214.

    Article  Google Scholar 

  • Klein, A. (1998). Firm performance and board committee structure. Journal of Law and Economics, 41(1), 275–303.

    Article  Google Scholar 

  • Lam, K., & Li, Y. (2008). Does corporate governance matter?: The case of environmental and social responsibility committees in the board. Working paper. Toronto, ON: University of Toronto.

  • Lane, P. J., Cannella, A. A., & Lubatkin, M. H. (1998). Agency problems as antecedents to unrelated mergers and diversification: Amihud and Lev reconsidered. Strategic Management Journal, 19(6), 555–578.

    Article  Google Scholar 

  • Lang, J. R., & Lockhart, D. E. (1990). Increased environmental uncertainty and changes in board linkage patterns. Academy of Management Journal, 33(1), 106–128.

    Article  Google Scholar 

  • Lenox, M., & King, A. (2004). Prospects for developing absorptive capacity through internal information provisions. Strategic Management Journal, 25(4), 331–345.

    Article  Google Scholar 

  • Lester, R. H. (2003). A road less traveled: Investigating the outside directors of America’s corporate boards. Dissertation, Texas A&M University, p. 212; AAT3104010.

  • Lorsch, J. W., & MacIver, E. (1989). Pawns or potentates : The reality of America’s corporate boards. Boston, MA.: Harvard Business School Press.

    Google Scholar 

  • Lublin, J. S. (2008). Environmentalism sprouts up on corporate boards. Wall Street Journal, 11, B6.

    Google Scholar 

  • Luoma, P., & Goodstein, J. (1999). Stakeholders and corporate boards: Institutional influences on board composition and structure. Academy of Management Journal, 42(5), 553–563.

    Article  Google Scholar 

  • Mahoney, L. S., & Thorn, L. (2006). An examination of the structure of executive compensation and corporate social responsibility: A Canadian investigation. Journal of Business Ethics, 69(2), 149–162.

    Article  Google Scholar 

  • Main, B., O’Reilly, C., & Wade, J. (1995). The CEO, the board of directors and executive compensation: Economic and psychological perspectives. Industrial and Corporate Change, 4, 1–34.

    Article  Google Scholar 

  • Marcus, A., & Geffen, D. (1998). The dialectics of competency acquisition: Pollution prevention in electric generation. Strategic Management Journal, 19(12), 1145–1168.

    Article  Google Scholar 

  • McGuire, J., Dow, S., & Argheyd, K. (2003). CEO incentives and corporate social performance. Journal of Business Ethics, 45(4), 341–359.

    Article  Google Scholar 

  • McWilliams, A., & Siegel, D. (2000). Corporate social responsibility and financial performance: Correlation or misspecification? Strategic Management Journal, 21, 603–609.

    Article  Google Scholar 

  • Mitchell, R. K., Agle, B. R., & Wood, D. J. (1997). Toward a theory of stakeholder identification and salience: Defining the principle of who and what really counts. Academy of Management Review, 22(4), 853–886.

    Google Scholar 

  • Mizruchi, M. S., & Stearns, L. B. (1988). A longitudinal-study of the formation of interlocking directorates. Administrative Science Quarterly, 33(2), 194–210.

    Article  Google Scholar 

  • O’Reilly, C. A., Main, B. G., & Crystal, G. S. (1988). CEO compensation as tournament and social-comparison—a tale of two theories. Administrative Science Quarterly, 33(2), 257–274.

    Article  Google Scholar 

  • Odell, A. M. (2008). Getting on board with corporate social responsibility. Social Funds: Sustainability Investment News. SRI World Group. Aug. 25. http://dev.socialfunds.com/news/article.cgi/article2545.html. Accessed Feb. 2014.

  • Peterson, C. A., Philpot, J., & O’Shaughnessy, K. C. (2007). African-American diversity in the boardrooms of the US Fortune 500: Director presence, expertise and committee membership. Corporate Governance-an International Review, 15(4), 558–575.

    Article  Google Scholar 

  • Pettigrew, A. M. (1992). On studying managerial elites. Strategic Management Journal, 13, 163–182.

    Article  Google Scholar 

  • Pfeffer, J., & Salancik, G. R. (1978). The external control of organizations. New York: Harper and Row.

    Google Scholar 

  • Platts & Capgemini. (2008). Platts/Capgemini utilities executive study. http://www.capgemini-consulting.com/north-american-plattscapgemini-utilities-executive-study. Accessed Sept. 2011.

  • Porter, M. E., & van der Linde, C. (1995). Toward a new conception of the environment-competitiveness relationship. Journal of Economic Perspectives, 9(4), 970118.

    Article  Google Scholar 

  • Post, J. E. (1991). Managing as if the earth mattered. Business Horizons, 34(1), 32–38.

    Article  Google Scholar 

  • Post, J. E., & Altman, B. W. (1994). Managing the environmental change process: Barriers and opportunities. Journal of Organizational Change Management, 7(4), 64–82.

    Article  Google Scholar 

  • Russo, M. V., & Fouts, P. A. (1997). A resource-based perspective on corporate environmental performance and profitability. Academy of Management Journal, 40(3), 534–559.

    Article  Google Scholar 

  • Saeverud, I. A., & Skjaerseth, J. B. (2007). Oil companies and climate change: Inconsistencies between strategy formulation and implementation? Global Environmental Politics, 7(3), 42–61.

    Article  Google Scholar 

  • Sharma, S., Pablo, A. L., & Vredenburg, H. (1999). Corporate environmental responsiveness strategies: The importance of issue interpretation and organizational context. Journal of Applied Behavioral Science, 35(1), 87–108.

    Article  Google Scholar 

  • Sharma, S., & Vredenburg, H. (1998). Proactive corporate environmental strategy and the development of competitively valuable organizational capabilities. Strategic Management Journal, 19(8), 729–753.

    Article  Google Scholar 

  • Shivdasani, A., & Yermack, D. (1999). CEO involvement in the selection of new board members: An empirical analysis. Journal of Finance, 54(5), 1829–1853.

    Article  Google Scholar 

  • Singh, H., & Harianto, F. (1989). Management-board relationships, takeover risk and the adoption of golden parachutes. Academy of Management Journal, 32(1), 7–24.

    Article  Google Scholar 

  • Slater, D., & Dixon-Fowler, H. (2009). CEO international assignment experience and corporate social performance. Journal of Business Ethics, 89(3), 473–489.

    Article  Google Scholar 

  • Spencer Stewart (2013). 2013 Spencer Stuart Board Index, available at https://www.spencerstuart.com/~/media/PDF%20Files/Research%20and%20Insight%20PDFs/SSBI-2013_01Nov2013.pdf.

  • Spira, L. F., & Bender, R. (2004). Compare and contrast: Perspectives on board committees. Corporate Governance: An International Review, 12(4), 489–499.

    Article  Google Scholar 

  • Stead, J. G., & Stead, E. (2000). Eco-enterprise strategy: Standing for sustainability. Journal of Business Ethics, 24(4), 313–329.

    Article  Google Scholar 

  • Storey, D. (1994). Understanding the small business sector. London: Routledge.

    Google Scholar 

  • Strike, V. M., Gao, J., & Bansal, P. (2006). Being good while being bad: Social responsibility and the international diversification of US firms. Journal of International Business Studies, 37(6), 850–862.

    Article  Google Scholar 

  • Turban, D. B., & Greening, D. W. (1997). Corporate social performance and organizational attractiveness to prospective employees. Academy of Management Journal, 40(3), 658–672.

    Article  Google Scholar 

  • U.S. Securities and Exchange Commission. (2014). http://www.sec.gov/.

  • Vance, S. C. (1983). Corporate leadership: Boards, directors, and strategy. New York: McGraw-Hill.

    Google Scholar 

  • Waddock, S., & Graves, S. (1997). The corporate social performance—financial performance link. Strategic Management Journal, 18, 303–319.

    Article  Google Scholar 

  • Waldman, D. A., Siegel, D. S., & Javidan, M. (2006). Components of CEO transformation leadership and corporate social responsibility. Journal of Management Studies, 43(8), 1703–1725.

    Article  Google Scholar 

  • Waldo, C. N. (1985). Boards of directors: Their changing roles, structure, and information needs. Westport, CT: Quorum Books.

    Google Scholar 

  • Walls, J. L., Berrone, P., & Phan, P. H. (2012). Corporate governance and environmental performance: Is there really a link? Strategic Management Journal, 33(8), 885–913.

    Article  Google Scholar 

  • Westphal, J., & Zajac, E. (1997). Defections from the inner circle: Social exchange, reciprocity, and the diffusion of board independence in US corporations. Administrative Science Quarterly, 42(1), 161–183.

    Article  Google Scholar 

  • Woo, C. Y. Y., & Cooper, A. C. (1981). Strategies of effective low share businesses. Strategic Management Journal, 2, 301–318.

    Article  Google Scholar 

  • Wood, D. J. (1991). Corporate social performance revisited. Academy of Management Review, 16(4), 691–718.

    Google Scholar 

  • Yu, T. (2001). Toward a capabilities perspective of the small firm. International Journal of Management Reviews, 3(3), 185–197.

    Article  Google Scholar 

  • Zahra, S., & Pearce, J. A. (1989). Boards of directors and corporate financial performance: A review and integrative model. Journal of Management, 15(2), 291–334.

    Article  Google Scholar 

  • Zahra, S., & Stanton, W. (1988). The implications of boards of directors composition for corporate strategy and performance. International Journal of Management, 5(2), 229–236.

    Google Scholar 

  • Zajac, E. J. (1988). Interlocking directorates as an interorganizational strategy: A test of critical assumptions. Academy of Management Journal, 31(2), 428–438.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Management, Walker College of Business, Appalachian State University, 4087 Peacock Hall, Boone, NC, 28608, USA

    Heather R. Dixon-Fowler

  2. Department of Management, Sam M. Walton College of Business, University of Arkansas, WCOB 402A, Fayetteville, AR, 72701, USA

    Alan E. Ellstrand

  3. Department of Management, Sam M. Walton College of Business, University of Arkansas, WJWH 522, Fayetteville, AR, 72701, USA

    Jonathan L. Johnson

Authors
  1. Heather R. Dixon-Fowler
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Alan E. Ellstrand
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Jonathan L. Johnson
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Heather R. Dixon-Fowler.

Rights and permissions

Reprints and Permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Dixon-Fowler, H.R., Ellstrand, A.E. & Johnson, J.L. The Role of Board Environmental Committees in Corporate Environmental Performance. J Bus Ethics 140, 423–438 (2017). https://doi.org/10.1007/s10551-015-2664-7

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-015-2664-7

Keywords

search

Navigation