Director independence and its influence on corporate social responsibility decisions and performance

Abstract

Purpose This study aims to provide an understanding of how directors perceive the relationship between board independence and corporate social responsibility (CSR) performance which has remained under-researched. Design/methodology/approach The qualitative data were collected through semi-structured interviews of 19 directors from 14 organisations operating in Australia. Data were analysed following the six-phase process of thematic analysis. Findings The findings indicate that independent directors contribute to board CSR decisions in two major ways: they bring an outsider view to the board, and they monitor managers in taking decisions that consider the interests of the broader stakeholder groups. Research limitations/implications The in-depth analysis of director independence and CSR highlights the structural and behavioural aspects of director independence and CSR playing out in board rooms. Propositions are offered which can be tested to advance the research in this arena. Practical implications The findings suggest that efforts are required at organisational policy level to ensure the effectiveness of director independence for CSR. Originality/value This study provides insights into the “black box” of boardroom dynamics highlighting important contextual factors influencing director independence and CSR decisions previously under-explored.