The board of directors and CSR: How does ideological diversity on the board impact CSR?

Abstract

Abstract Given that ideological differences are likely to become an increasing source of conflict within organizations, we introduce ideological diversity as a new board-level diversity construct and hypothesize its effects on CSR performance. We hypothesize that ideological diversity can have a negative effect on CSR performance through social categorization mechanisms. Alternatively, we introduce a competing hypothesis that suggests a positive effect of ideological diversity on CSR performance through information processing mechanisms. We test our hypotheses on a panel of 372 Dutch municipality boards from 2014 to 2017 using a fixed effects OLS regression. These methods allow us to control for unobserved heterogeneity and is supported by the Hausman test we perform. Results support a negative relationship between board ideological diversity and CSR performance, indicating that a high level of ideological diversity leads to a lower performance in CSR. We discuss the implications of these findings for the board diversity and CSR literatures.