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Board characteristics and corporate social responsibility: Does family involvement in management matter?

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  • Oh, Won-Yong
  • Chang, Young Kyun
  • Jung, Rami

Abstract

Prior research on corporate governance has mixed views on board effectiveness. We argue that boards can be functional or dysfunctional depending on a family's involvement in management in the context of corporate social responsibility (CSR). We hypothesize that, when boards have independence and diversity, firms with weak family involvement will engage in CSR, since boards monitor executives and provide relevant resources to promote CSR as intended (functional view), whereas firms with strong family involvement will disengage from CSR, since boards reinforce the family's interests, merely serving as a means to signal positive corporate image to external stakeholders (dysfunctional view). Using a dataset of Korean firms, we find, when a board is composed of outside directors with equity ownership and directors with diverse education backgrounds, CSR engagement increases among professionally managed firms, but decreases among family-managed firms. Overall, board characteristics have different implications depending upon the extent of a family's involvement in management.

Suggested Citation

  • Oh, Won-Yong & Chang, Young Kyun & Jung, Rami, 2019. "Board characteristics and corporate social responsibility: Does family involvement in management matter?," Journal of Business Research, Elsevier, vol. 103(C), pages 23-33.
    • Handle: RePEc:eee:jbrese:v:103:y:2019:i:c:p:23-33
    DOI: 10.1016/j.jbusres.2019.05.028
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