The heterogeneous relationship between board social ties and corporate environmental responsibility in an emerging economy

Abstract

Firms in emerging economies are faced with multiple, incompatible institutional forces in their environmental activities. Which of these forces will be dominant and instantiated within an organization is partly determined by the social relationships that a firm maintains with external actors. This paper investigates the relationship between board social ties and the level of environmental responsibility undertaken by firms in China, an emerging economy, by categorizing board social ties into three types in terms of the three isomorphic forces in the institutional field (coercive, normative and mimetic). Drawing on institutional and agency theories, using a sample of listed firms in environmentally sensitive industries, and a generalized least squares regression method, the results provide empirical evidence that ties that are linked to coercive and normative forces (i.e., political organizations and universities) are related to a higher level of environmental responsibility; however, those that are linked to mimetic forces (i.e., industrial peers) have a negative association with environmental responsibility, which is mitigated by CEO power. These findings suggest that the heterogeneous effects of board social ties on environmental responsibilities experienced by firms in a context of environmentalism are at an early stage.

Interactive effects of various institutional pressures on corporate environmental responsibility: Institutional theory and multilevel analysis

“…Surprisingly, the results do not support the positive effects of normative pressure on the relationship between perceived environmental benefit and CER. One possible explanation is that normative systems related to CER in China are fragmented and lack shared social expectations (Zou et al, ). This phenomenon causes firms' difficulty in evaluating whether their environmental benefit perception is consistent with the expectation of their stakeholders.…”

“…As an emerging economy, firms within a cluster will be embodied into market pressure, and stakeholders in some clusters will promote CER mainly on the basis of economic rather ethical motives (Liu et al, ). In other words, the clusters in China have not developed the mature norms for social environmental value and collective environmental awareness (Yang, Uysal, & Taylor, ; Zou et al, ). Indeed, stakeholders within the clusters have different expectations, which may compete or even conflict with the focal firm's environmental consciousness (DiMaggio & Powell, ; Godfrey, ).…”

“…Indeed, the laws, codes, rules, regulations, and formal structures for CER remains underdeveloped in China, and the central and local governments and powerful institutions still attempt to develop stable and consistent rules and regulations for CER (Marano, Tashman, & Kostova, ; Yin & Zhang, ). Meanwhile, normative systems in China related to CER are fragmented and lack conformity and sufficient social acceptance (Zou, Xie, Qi, & Yang, ); hence, understanding and following the norms in the institutional environment are difficult for firms. For example, stakeholders may pay excessive attention on economic development and material pursuit, thereby neglecting ethical and social responsibilities (He, Lu, Mol, & Beckers, ; Yin & Zhang, ).…”

Board gender diversity and environmental performance: An industries perspective

“…Two topics that are front of mind of many large firms today are gender diversity in the boardroom (Amran, Lee, & Devi, ; Bravo & Reguera‐Alvarado, ; Galbreath, ; Glass, Cook, & Ingersoll, ; Horbach & Jacob, ; Jizi, ; Pucheta‐Martínez & Bel‐Oms, ) and environmental performance (Boiral, Heras‐Saizarbitoria, & Brotherton, ; Danso, Adomako, Amankwah‐Amoah, Owusu‐Agyei, & Konadu, ; Elmagrhi, Ntim, Elamer, & Zhang, ; Henry, Buyl, & Jansen, ; Pucheta‐Martínez, Gallego‐Álvarez, & Bel‐Oms, ; Shahab, Ntim, Chengang, Ullah, & Fosu, ; Zou, Xie, Qi, & Yang, ). Through our research, we show how these two themes are related and that firms could improve their environmental performance with a gender diversified board, especially in more environmentally impacting (resource extractive) industries.…”

Monitoring effect of transparency: How does government environmental disclosure facilitate corporate environmentalism?

“…This will greatly reduce the company's resistance, and in order to make this environmental governance process smoother, it is necessary for the local government to strengthen the skills and capabilities of the environmental departments. For business managers, environmental management can be seen an important part of political strategy (Zou, Xie, Qi, & Yang, ). Our findings show that government environmental information disclosure can serve as a significant political signal about the attitude of those in power to environmental governance.…”