AAA Spark Meeting of Regions

Board-Level Commitment to Sustainability, Business Strategy, and CSR Performance

• In Event: Sustainability

Abstract

Built on the organizational theory (Miles and Snow's 1978 and 2003) and the theoretical framework under which board-level sustainability committees are motivated by shared value creation (Burke et al., 2019), we posit that the type of business strategy firms follow and the stakeholder focus of their sustainability committee could have an important effect on their CSR performance.
Using hand-collected information on sustainability committees for a sample of S&P500 firms in 2002-2012, we find that firms with a prospector business strategy are associated with more CSR performance that is driven by their direct and internal stakeholders’ related CSR activities, whereas firms following a defender strategy are negatively associated with CSR performance because of their worse direct and internal stakeholders’ related CSR activities. However, firms with a third-party focused sustainability committee have better CSR performance, while firms with an internal stakeholder focused sustainability committee have worse CSR performance. In addition, as a group, defenders are associated with more CSR concerns, but the presence of board-level sustainability committee focused on third-party stakeholders mitigates these concerns and increased their overall socially responsible performance.

Authors

• Xiaolu Xu, University of Massachusetts-Boston

• Fadimbe Olivier Baro, University of Massachusetts