Corporate responsibility, boardroom representation and philanthropy. Matthew Bond
Corporate Responsibility, BoardroomRepresentation and PhilanthropyDr Matthew BondLondon South Bank University
Corporate Responsibility• Responsible corporate directors have a range ofduties they must tend to.For example,– Duties to their shareholders.– Duties to the wider community.• Corporate philanthropy can be a way of meetingboth sets of duties.– Improve a company’s reputation.– Create positive community benefit.
Meeting the needs of communities• Corporate philanthropy will only achieve its aimsif it meets the needs of the communities it worksin.• The difficulty is that ultimate control over thedecision rests with directors.• They cannot so easily rely on market mechanismsor democratic deliberation to determinecommunity needs.
Representation• The difficulties are compounded by the factthat boards of directors are typicallyunrepresentative of the communities theircompanies serve.• Risk that corporate philanthropy will reflectparticular personal characteristics of directors.– Is corporate philanthropy affected by the socialbackgrounds of directors?
Studying the effects of boards’representativeness• The effects of lack of representation can bestudied by measuring the effects of boards’social backgrounds controlling for economicfactors that are associated with corporatephilanthropy.– If the effects net of economic factors is nil thenrepresentation not an issue.– If the effects net of economic factors differs fromzero then representation becomes a concern.
Empirical Data• 250 largest (market capitalisation) UK firms in2011.• Dependent variables are: 1) Membership ofBusiness in the Community (BITC) and 2) The size(in £) of corporate charitable contributions• Independent variables: 1) Directors’ socialbackgrounds and 2) Economic controls.– Logistic regression models for BITC membership– Generalized linear model with Gamma distributionassumed for dependent variable to deal with outliersand heteroscedasticity.
British boards are male dominated0.8% (2) of companies have female chairs4.4 % (11) of companies have female chief executives10.67% of board places held by women.32.8% (82) boards have all male boards
British Boards are globalised30.4 % (76) foreign chief execs (not from Great Britain or Eire)21.2% (53) foreign chairs (not from Great Britain or Eire)
British boards are posh and sociableMinimum 17.2% (26.9% 43/160 identified in social directory) of chairs attended atraditional public school.Minimum 6% (16.7% 15/90identified in social directory) of chief execs attended atraditional public school.Minimum 16% (25% 40/160 identified in social directory) of chairs member of traditionalelite club.Mimimum 2.4% (3.8% identified in social directory) of chief execs member of traditionalelite club.
Director Background and corporatephilanthropyMember of BITC Size of donationFemale + (sig) + (sig)Foreign -sig - (sig)School/Club Null Null
What to do?• Would increasing levels of female representationand reducing the number of foreigners in theboardroom lead to increased levels of corporatephilanthropy?• Or is there something more fundamental aboutfirms that leads them both to increase thenumber of women on their boards and engage ingreater levels of corporate philanthropy?