Is the effect of board diversity on CSR diverse? New insights from one-tier vs two-tier corporate board models

Abstract

Purpose

The purpose of this study is to investigate the impact of board diversity on corporate social responsibility (CSR). The aim is twofold; does board diversity has any effect on CSR, do structural and demographic differences between one-tier and two-tier board models may impact this effect?

Design/methodology/approach

This paper applies a panel generalized method of moments estimator to a sample of 2,544 non-financial listed firms from 42 countries over the period of 2013–2017.

Findings

The findings reveal that board diversity leads to effective CSR. By distinguishing between diversity among boards from diversity within boards, the results display the effects of the specific variables that make up the manner and latter’s constructs within unitary and two-tier board structures. Specifically, this paper reveals that tenure, ideology and educational level (gender and nationality) predominantly appear to drive a firm’s CSR within one (two)-tier boards settings. These results remain consistent when robustness tests are ruled.

Practical implications

The study provides managers, investors and policymakers with knowledge about how among and within board diversity attributes favor the decision-making process around CSR. The evidence is useful for companies in setting the criteria to identify directors who can support their strategic decisions. It benefits, moreover, academics in better understanding firms’ CSR determinants and practices under different corporate board models.

Social implications

Examining how different sets of board diversity affect firms’ CSR given divergences between one-tier and two-tier board structure is a useful and informative endeavor for all community actors.

Originality/value

Unlike prior studies that identify the limited scope of diversity, the study is the first to examine the effect of broader dimensions of board diversity on CSR under both one-tier and two-tier board settings. This paper provides a contribution to a greater understanding of the impacts underlying board models and different attributes of board diversity on CSR. This new understanding will help to improve predictions of different features of board diversity impacts on decision-making processes around organizational outcomes.

Citation

Jouber, H. (2021), "Is the effect of board diversity on CSR diverse? New insights from one-tier vs two-tier corporate board models", Corporate Governance, Vol. 21 No. 1, pp. 23-61. https://doi.org/10.1108/CG-07-2020-0277