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Journal of Business Ethics
Published in: Journal of Business Ethics 3/2022

27-10-2020 | Original Paper

Corporate Social Responsibility and NGO Directors on Boards

Authors: Shili Chen, Niels Hermes, Reggy Hooghiemstra

Published in: Journal of Business Ethics | Issue 3/2022

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Abstract

In the years 2009 to 2016, approximately 35% of Standard & Poor’s (S&P) 500 firms had at least one director with a professional background in private, not-for-profit organizations (NGO director). Yet research provides little guidance on what kind of firms are more likely to have NGO directors on their boards, neither do we know these directors’ effects on firm strategic outcomes. Our study examines the above two questions in the context of corporate social responsibility (CSR), taking the lens of resource dependence theory. Results from an analysis of all firms included in the S&P 500 index between 2010 and 2016 show that the number of NGO directors serving on a firm’s board in a certain year is positively related to the extent to which the firm displays poor CSR performance in the prior year. We also find that NGO directors on boards are not associated with immediate improvements in CSR performance; rather, their positive influence on CSR performance takes hold after 3 years. Our findings suggest that whereas NGO directors may potentially be appointed to a firm’s board for legitimization reasons, these directors are associated with enhanced CSR performance in the long term.
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Appendix
Available only for authorised users
Footnotes
2
We thank our anonymous reviewers for this insightful suggestion.
 
3
For example, industry and business associations (e.g., Gas Processors Association and Chamber of Commerce), professional associations (e.g., American Institute of Aeronautics and Astronautics and Major League Baseball), or college foundations were not coded as NGOs because they do not represent societal interests. Non-profit museums (e.g., Crystal Bridges Museum of American Art and Children’s Discovery Museum in San Jose) and non-profit public policy organizations (e.g., Committee for Economic Development and RAND Corporation) were coded as NGOs because they are not-for-profit and serve a social goal.
 
4
There are a lot of missing values on the item “Company Initial Public Offering Date” in COMPUSTAT Fundamental Annual database. We make up the missing values by reading corporate history and the investor relations section on corporate websites.
 
5
We thank our anonymous reviewers for this insightful suggestion.
 
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Metadata
Title
Corporate Social Responsibility and NGO Directors on Boards
Authors
Shili Chen
Niels Hermes
Reggy Hooghiemstra
Publication date
27-10-2020
Publisher
Springer Netherlands
Published in
Journal of Business Ethics / Issue 3/2022
Print ISSN: 0167-4544
Electronic ISSN: 1573-0697
DOI
https://doi.org/10.1007/s10551-020-04649-4

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