Does board diversity influence firms’ corporate social responsibility reputation?

Abstract

Purpose

Board diversity positively impacts corporate social responsibility (CSR); however, there is limited evidence on how board diversity affects the reputation of organizations that are involved in CSR. The purpose of this paper is to examine the effect board diversity has on socially responsible firms’ corporate social responsibility reputation (CSRR). The authors specifically examine this relationship because an organization’s corporate reputation may be very different to its CSRR gained through engagement in socially responsible activities.

Design/methodology/approach

The authors use the CSR reputation scores for the top 100 most socially responsible global companies provided by the RepTrak Database as a measure of CSRR. Board diversity measures are calculated for gender, ethnicity and education to measure their impact on social reputation. The sample for this study consists of 146 observations for the period 2013–2017.

Findings

The authors find a significant and positive relation between having a combination of women and ethnically diverse members on the board and firms’ CSRR. The authors also find a significant positive effect on CSRR when the board is composed of women and educationally diverse members.

Research limitations/implications

Board diversity characteristics continue to impact organizations’ decision-making processes and their involvement in CSR activities as public stakeholders demand greater representation of females and minorities on the board. Because research on board diversity is in its infancy, the authors urge scholars to continue to investigate the impact board diversity has on an organization’s motivation to be socially responsible as well as how it affects their CSRR.

Practical implications

The findings of this study highlight the importance stakeholders place on an organization’s social responsibility reputation and the positive effects of board diversity in managing their CSRR.

Social implications

The findings provide evidence that the composition of the board can influence a company’s engagement in CSR activities and their CSRR as perceived by its stakeholders.

Originality/value

This study contributes to the CSR literature by introducing the concept of CSRR. To the best of the authors’ knowledge, this study also extends research in the diversity literature by examining the relationship between board diversity variables and an organization’s CSRR. The findings highlight the importance of having a diverse board composed of ethnically and educationally varied individuals and provide evidence of a link between organizations’ involvement in socially responsible activities and their CSRR.

Citation

Hartmann, C.C. and Carmenate, J. (2021), "Does board diversity influence firms’ corporate social responsibility reputation?", Social Responsibility Journal, Vol. 17 No. 8, pp. 1299-1319. https://doi.org/10.1108/SRJ-04-2020-0143