Abstract
Addressing the fact that there are few studies exploring the relationship between board characteristics and corporate social responsibility (CSR) in non-Western contexts, this study examines the relationship in South Korean corporate contexts. We concentrate on foreign directors as a board attribute, which is reported as a remarkable change in Korean corporate boards, and propose that foreign directors have different impacts on CSR investment depending on their nationality (Anglo-Americans vs. non-Anglo-Americans) and director types (insiders vs. outsiders). In detail, the presence of directors from Anglo-American countries (e.g., the United States, the United Kingdom) decreases firms’ CSR involvement, whereas the presence of directors from non-Anglo-American countries (e.g., France, Germany) increases firms’ CSR involvement. Moreover, the effects of Anglo-Americans on CSR are strengthened when they are inside (rather than outside) directors. Empirical analyses using a sample of 1828 Korean firms from 2002 to 2015 provide evidence to support the predictions. This study theoretically contributes to CSR and corporate governance literature in that it sheds light on the CSR in non-Western companies and reveals varied effects of foreign directors contingent upon their individual attributes. It also has practical implications for policymakers and corporate managers by providing insights of the changes generated by foreign members in a boardroom.
Highlights
The importance of corporate social responsibility (CSR) has increased in recent years [1,2,3,4]
We explore the effects of board characteristics on CSR in South Korean companies
We address nationality and director type in the question, how does the influence of foreign directors differ depending on their nationality and director types? We employ national institutional difference literature [5,28] to address the distinct effects of directors’ nationality, and board dynamics literature [29] to address the effects of director type
Summary
The importance of corporate social responsibility (CSR) has increased in recent years [1,2,3,4]. Companies have begun to recognize their obligations to society and a wide variety of stakeholders, and have engaged in socially responsible activities such as enacting relevant policies, programs, and practices [5,6]. There are variances in the extent of CSR investment among companies [7]. A corporate board of directors has been suggested as an important determinant of CSR, because the board, as the highest decision-making group, greatly influences the strategic choices of the corporation [13,14,15]. Board characteristics such as board size [16], independent director presence [17,18,19], director ownership [19], director background [20], board diversity [17], and the presence of an audit committee [18] have been examined
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