Integrating Corporate Social Responsibility (CSR) into Corporate Governance Structure: The Effect of Board Diversity and Roles-A Case Study of Saudi Arabia

Abstract

Research Purpose: the purpose of this paper is to determine the board diversity characteristics that affects on board roles in order to improve the integration of Corporate Social Responsibility (CSR) into Corporate Governance (CG) structure. This objective has been achieved by reviewing (CG) and (CSR) literature, and surveying various deliberations on offer at the first; second, by examining how the board diversity characteristics effect on their roles towards the adoption of CSR within case study context of two companies operating in Saudi Arabia. A qualitative case study was adopted by conducting in-depth interviews with participants at various levels of board and management in the two Saudi companies. The findings suggested that board diversity characteristics are an essential to improve the effectiveness of board roles (monitoring, services and strategic) towards the integration of CSR in to governance structure. Based on the findings, three theoretical propositions have been developed to assist and direct further research on the topic. These findings are important and motivating; indicating that recent concern of reforming CG Codes in emerging countries is starting to be balanced by some notice/attention to CSR, with growing of board of directors’ role in protecting stakeholders. This paper makes two important contributions. First, it contributes to our understanding of board diversity characteristics and roles that improve CG codes in the context of engaging with stakeholders. Second, the paper develop a number of theoretical propositions that can assist as the foundation for future research on this issue, particularly in emerging countries, given that the data and propositions are derived from emerging country settings. This study highlights the need for enhancing election criteria when it comes to appointing BODs, especially in the case of an organisational shift towards a socially responsible business. The implications for policy makers can be found in the need for regulatory and judicial systems’ capacity improvements to enhance institutional pressures to increase CSR adoption rate via coercive and normative methods.

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