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Boards, Incentives and Corporate Social Responsibility: the case for a change of emphasis

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  • Craig Mackenzie

Abstract

Boards of large UK companies are devoting more time to the governance of corporate social responsibility (CSR). This is in line with the Combined Code on Corporate Governance's requirement that boards set standards and values for companies and ensure they meet their social obligations. But is board activity in this area as effective as it could be at achieving corporate compliance with CSR standards? This paper draws on the economic literature to offer an analysis of the primary causes of breaches of corporate responsibility standards. Based on a small survey of the board CSR activities of 20 of Britain's largest companies, it assesses whether boards are addressing these causes effectively. The tentative conclusion is that board activity might usefully be reoriented to do more to address the fundamental incentives problems that often cause corporate responsibility failures, namely market failure and misaligned performance management systems. Copyright (c) 2007 The Author; Journal compilation (c) 2007 Blackwell Publishing Ltd.

Suggested Citation

  • Craig Mackenzie, 2007. "Boards, Incentives and Corporate Social Responsibility: the case for a change of emphasis," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(5), pages 935-943, September.
  • Handle: RePEc:bla:corgov:v:15:y:2007:i:5:p:935-943
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    References listed on IDEAS

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    1. Luigi Zingales & Raghuram G. Rajan, 2003. "Banks and Markets: The Changing Character of European Finance," NBER Working Papers 9595, National Bureau of Economic Research, Inc.
    2. Barca, Fabrizio & Becht, Marco (ed.), 2002. "The Control of Corporate Europe," OUP Catalogue, Oxford University Press, number 9780199257539.
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    Cited by:

    1. Orhan Akisik & Graham Gal, 2014. "Financial performance and reviews of corporate social responsibility reports," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 25(3), pages 259-288, December.
    2. Tobias Hahn & Jonatan Pinkse & Lutz Preuss & Frank Figge, 2015. "Tensions in Corporate Sustainability: Towards an Integrative Framework," Journal of Business Ethics, Springer, pages 297-316.
    3. Y. Fassin & D. Gossselin, 2011. "The collapse of a European bank in the financial crisis: an analysis from strategic, stakeholder, ethical and governance perspectives," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 11/726, Ghent University, Faculty of Economics and Business Administration.
    4. Benjamin Mwanzia Mulili & Dr. Peter Wong, 2011. "Corporate Governance Practices in Developing Countries: The Case for Kenya," International Journal of Business Administration, International Journal of Business Administration, Sciedu Press, vol. 2(1), pages 14-27, February.
    5. repec:kap:jbuset:v:143:y:2017:i:4:d:10.1007_s10551-016-3131-9 is not listed on IDEAS
    6. Ntim, Collins G., 2016. "Corporate governance, corporate health accounting, and firm value: The case of HIV/AIDS disclosures in Sub-Saharan Africa," The International Journal of Accounting, Elsevier, vol. 51(2), pages 155-216.
    7. Jeremy Galbreath, 2016. "When do Board and Management Resources Complement Each Other? A Study of Effects on Corporate Social Responsibility," Journal of Business Ethics, Springer, pages 281-292.
    8. Mohammad Jizi & Aly Salama & Robert Dixon & Rebecca Stratling, 2014. "Corporate Governance and Corporate Social Responsibility Disclosure: Evidence from the US Banking Sector," Journal of Business Ethics, Springer, pages 601-615.
    9. repec:spr:rvmgts:v:12:y:2018:i:1:d:10.1007_s11846-016-0220-1 is not listed on IDEAS
    10. Lippert, Inge, 2008. "Perspektivenverschiebungen in der Corporate Governance: Neuere Ansätze und Studien der Corporate-Governance-Forschung," Discussion Papers, Research Unit: Knowledge, Production Systems and Work SP III 2008-302, Social Science Research Center Berlin (WZB).
    11. Lin, Philip T. & Li, Bin & Bu, Danlu, 2015. "The relationship between corporate governance and community engagement: Evidence from the Australian mining companies," Resources Policy, Elsevier, vol. 43(C), pages 28-39.
    12. Amama Shaukat & Yan Qiu & Grzegorz Trojanowski, 2016. "Board Attributes, Corporate Social Responsibility Strategy, and Corporate Environmental and Social Performance," Journal of Business Ethics, Springer, pages 569-585.
    13. Kathyayini Rao & Carol Tilt, 2016. "Board Composition and Corporate Social Responsibility: The Role of Diversity, Gender, Strategy and Decision Making," Journal of Business Ethics, Springer, pages 327-347.
    14. Jose-Manuel Prado-Lorenzo & Isabel-Maria Garcia-Sanchez, 2010. "The Role of the Board of Directors in Disseminating Relevant Information on Greenhouse Gases," Journal of Business Ethics, Springer, pages 391-424.
    15. repec:gam:jsusta:v:9:y:2017:i:10:p:1759-:d:113507 is not listed on IDEAS
    16. Semenescu Andreea & Curmei Cătălin Valeriu, 2015. "Using CSR to mitigate information asymmetry in the banking sector," Management & Marketing, De Gruyter Open, vol. 10(4), pages 316-329, December.

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