Factors influencing board of directors’ decision-making process as determinants of CSR engagement

Abstract

This paper focuses on the determinants of Corporate Social Responsibility (CSR) at the organisational level. Specifically, it aims to understand the influence of not previously analysed board of directors’ characteristics on a company’s CSR engagement. A random effect probit model was applied to a panel of Spanish non-financial and non-insurance listed firms over the period 2009–2013. The analyses revealed that the existence of a board sub-committee responsible for social and environmental matters and its size, the establishment of a statutory term limit for independent directors and the possibility for directors of receiving advice from external sources positively affect a firm’s CSR engagement. This paper contributes to the debate about corporate governance and CSR by relating factors determining the decision-making process at boards of directors to CSR. Thus, it extends research on the board as a driver for social and environmental issues and suggests new ways to deal with this issue empirically.

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Notes

  1. 1.

    Companies that are more than 90 %-owned by another listed firm in the sample.

  2. 2.

    Introduced in the empirical analysis as a logarithm.

  3. 3.

    There is no statistic validity for a probit fixed effects model (Greene 1999). When dummy variables are used, the fixed effect model does not identify why the linear regression changes over time and in different firms, with a reduction in the degrees of freedom.

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Acknowledgements

The authors acknowledge the funding received from the Project ECO2015-63880-R from the Ministerio de Economía y Competitividad of Spain and the Project ULE2014-1 from the University of León (Spain). They also acknowledge funding from Project ECO 2015-69058-R.

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Godos-Díez, J., Cabeza-García, L., Alonso-Martínez, D. et al. Factors influencing board of directors’ decision-making process as determinants of CSR engagement. Rev Manag Sci 12, 229–253 (2018). https://doi.org/10.1007/s11846-016-0220-1

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Keywords

  • Board of directors
  • Board sub-committee
  • Independent directors
  • External advice
  • CSR engagement
  • Panel data

Mathematics Subject Classification

  • 90B50 Management decision making, including multiple objectives
  • 91G70 Statistical methods, econometrics