Abstract
This study aims to discover non-executive directors’ competencies that important to improve their roles towards the adoption of Corporate Social Responsibility (CSR). To begin with, the review of the existing body of literature on the topic of Corporate Governance (CG) codes and the survey of numerous postulations offered is conducted. A qualitative interpretive approach is adopted, based on in-depth interviews conducted with board and management levels of the two companies operate in Saudi Arabia. The key outcomes of the study suggest that (i) NEDs’ independence represents a typical practice in CG and; (ii) NEDs’ competencies and roles represent a governance issue which needs to be addressed via CG code to protect the stakeholder groups. The findings imply a shift in the recent focus on developing and reforming CG Codes towards CSR orientation and the growing role of NEDs in stakeholder’s protection. The key contribution of the study can be found in the enhancement of the current level of understanding of non-executive directors’ competencies and role and the improvement of CG codes to address the issue of stakeholder engagement. The multiple-theoretical framework including aspects of resources dependence, stakeholder and resource-based view of the firm theories allows for the interpretation of the link between NEDs competencies and roles in the CSR context. Board members and managers can find this study useful in improving the election criteria of NEDs’ appointing mechanisms. Additional implications relate to policy makers as the need for increasing the regulatory capacity and legal systems in the area of CG reform is highlighted. Stakeholder’s pressures and forced and normative variety in particular have the potential to enhance the level of CSR adoption.
Highlights
Nowadays, corporate social responsibility (CSR) represents one of the most prominent issues for contemporary organisations
The findings uncovered in this study reveal that (i) independence of non-executive directors represents a common governance practice and that (ii) non-executives director (NED)’ competencies and roles represent a governance issue that should be addressed in CGcode to protect various stakeholder groups
Nine NEDs are at the top of Corporate Social Responsibility (CSR) governance structure supervisory and strategy-related duties
Summary
Corporate social responsibility (CSR) represents one of the most prominent issues for contemporary organisations. In line with the growing importance of this issue, the involvement of corporate board of directors in the assessment and shaping of corporate policies and practices in the area of social and environmental aspects can be observed. Independent and proactive forms of management are required from corporate directors by shareholder activists and other stakeholder groups to reflect a wider range of constituents. The economic success is no longer the only criteria on which corporations are being judged (Ayuso & Argandoña, 2009; Carroll, 2000; Hazlett, McAdam, Sohal, Shahin, & Zairi, 2007; Jamali, 2008; Willard, 2012) pointed out, organisations are “no longer expected to be mere contributors to the global economy, but rather to reconcile and skill-fully balance multiple bottom lines and manage the interests of multiple stakeholders”. In line with the underlying CSR movement, major decision makers and boards of directors in particular are accountable to a wider a range of stakeholders. The exploration of non-executive directors’ competency and role in CSR is of a critical importance
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