Do Green Boards Make a Difference? Board Environmental Expertise and Stakeholder Orientation

Abstract

We examine the influence of board environmental expertise on corporate environmental performance. Based on stakeholder theory, we posit that being experienced regarding environmental issues leads directors to push for superior environmental performance at the focal company and the inclusion of stakeholder interests in the firm’s overall environmental strategy. We argue that board environmental expertise increases the ability of directors to manage stakeholder relations which in turn leads to superior environmental performance. In addition, we hypothesize that the positive effect of board environmental expertise depends on a country effect. We theorize that a high country-level stakeholder orientation decreases the need for board environmental expertise since the country’s stakeholder-oriented profile implicitly drives firm environmental performance. To test our hypotheses, we use a multi-country sample covering the time period between 2005 and 2014.