CSR and Female Directors: A Review and Future Research Agenda

Abstract

Society’s expectations for business are higher than ever. Younger generations believe that organizations that are environmentally and socially conscious are better places to work and the vast majority believe that they will be more loyal to companies that share their values. The responsibilities placed on leaders grow in tandem with the need for social accountability. Gender diversity on corporate boards has been identified as one of the most important drivers of sustainability as well as corporate social responsibility (CSR). Nevertheless, there are the mixed empirical evidences to back up this claim. To fill this void, the purpose of this chapter is to provide readers with a brief overview of theories and empirical evidence supporting the relationship between female directors and CSR. Besides, the chapter attempts to gather the main conceptual contributions on the situation and evolution of the relationship, providing insights regarding future studies.

1. Introduction

Now more than ever, society’s expectations for business are rising. According to McKinsey [1], nine out of ten Generation Z customers agree that businesses have a duty to solve environmental and social challenges. Younger people believe that organizations that are ecologically and socially conscious are better places to work, and the great majority believe that they would be more loyal to companies that share their values. As the need for social accountability grows, so do the responsibilities placed on leaders.

What is interesting, although not surprising, is that certain characteristics of leaders strengthen the company’s corporate social responsibility (CSR). Board gender diversity has been recognized as one of the most important drivers for environmental sustainability and it has attracted the attention of both researchers and policymakers. For instance, in 2004, Norway was the first nation to adopt a quota for female director, while other nations, such as Germany, France, Belgium, Iceland, and Italy followed suit and adopted mandatory female quota. Further, the United Nations (UN)‘s fifth Goal of Sustainability Development states that “Achieve gender equality and empower all women and girls”.

Prior researchers claim that female directors are not the same as male executives when it comes to leadership [2]. Females are more collaborative and promote participatory decision making [3]. They were often regarded as using the approach to persuade followers to shift from self-interest to collective interest via shared concern for major objectives. Furthermore, female executives value universalism and kindness more than male executives, and less self-enhancement ideals like accomplishment and power [4]. Thus, gender diversity board is more likely to seek long-term strategy and is stakeholder-focused, which are critical to sustainability and successful CSR practices, and this probably is a reason why shareholders, legislators, and regulators possess a common interest in increasing gender diversity in the boardroom.

Despite the fact that both researchers and the general public have paid close attention to CSR and gender, the evidence in favor of female leaders leading to higher CSR remains mixed (for review paper see [5]). Several studies have indicated that female directors have a good impact on company sustainability and social responsibility, play an important role in ethically managing the firm’s sustainable operations, and support the adoption of ethical standards (for e.g. see [6, 7, 8]). While some scholars argue that female directors have no influence on sustainability [9, 10] or lowers involvement in sustainable development projects [11]. Hence, there is a need to understand this relationship and probe the likely factors and theory behind these inconsistent results. In this chapter, we focus on the role of female leaders, particularly female directors, on CSR and sustainability of the company. We argue that CSR is essential to today’s business and there are several theories to explain the reason behind this relationship. Nevertheless, theories are related and there are no sole to explain the relationship. Most of the theories based on the notion that women have greater moral and community attitudes than men. Furthermore, some determinants were not taken into account in previous research, resulting in inconsistency findings. In order to fill this void, we reviewed literature in both financial theories and social psychology theories, mapping their relevance to the relationship between CSR and female leaders. We noted, based on major theoretical perspectives that female directors lead to higher CSR performance and CSD. Future study in this topic is required to provide a greater understanding of the relationship especially under various economic conditions and multi-country studies to supplement the existing literatures.

We provide a brief review of the literature on CSR and gender diversity boards in the sections that follow, as well as why these two topics are important. The review will then move on to the theoretical perspectives that could be used to explain the relationship. Section 5 discusses the missing determinant that could explain the inconsistency in the impact of female directors on CSR. Following this, the chapter discusses the direction for future research. Lastly, we end with the conclusion remarks.

2. Corporate social responsibility

A heated debate has erupted among academics, consultants, and corporate executives, yielding numerous definitions of a more humane, ethical, and transparent way of doing business. In addition, customers and workers are increasingly demanding that the organizations they support make a major good influence on the world around them. Unsurprisingly, CSR quickly becomes a key component of a company’s standard operating procedure, with nearly 90% of S&P 500 companies publishing an annual sustainability report as a part of their CSR strategies.

The United Nations Industrial Development Organization defines CSR as a business management concept whereby companies integrate social and environmental concerns in their operations and interactions with their stakeholders. CSR is commonly seen as a technique for a corporation to achieve a balance between economic, social, and environmental factors while meeting the expectations of various stakeholders. It is a form of self-regulation that reflects companies’ accountability and commitment in contributing to the well-being of communities and society through various social, environmental, and corporate governance measures. Local governments and some non-governmental organizations (NGOs) believe that public-private partnerships can revitalize neighborhoods. Various management disciplines, such as quality management, marketing, communication, finance, HRM, and reporting, have also recognized the value of CSR. Examples of CSR initiatives can range from donation efforts and involvement in the local community to diversity, inclusion, and transparency. While, CSD is aimed for both internal and external stakeholders who are informed about the company’s economic, environmental, and social actions [8].

Though CSR activities could incur as company’s expense, it could be a route for improving companies’ reputation, risk management, cost savings, access to financing, valuable resource, human resource management, and innovation capability (for review paper see [12, 13, 14]). Firms may also gain the long-term trust of employees, consumers, and society by recognizing social responsibility, which is the foundation for sustainable business strategies. Furthermore, in developed countries, CSR activities are regarded as a duty that companies are compelled to carry out in order to gain the confidence of capital markets and be included in a sustainable market index, such as the Dow Jones Sustainability (DJS) Index, the FTSE4 Good Index, or the Morgan Stanley Capital International ESG indices. At the same time, some companies choose to go beyond the legal requirements and proactively addressing CSR in their business models.

CSR practices and CSD not only contribute toward sustainability development but also help firms gain trust of stakeholders, including investors and community. More importantly, it increases stakeholder awareness of the company’s CSR operations and demonstrates their commitment to CSR. Previous research has demonstrated that firms may earn legitimacy by sharing verifiable social and environmental information [15], which they can then utilize as a strategy to adapt to social expectations [16]. Furthermore, CSD may provide positive signals to stakeholders that the activities of firms are appropriate and desirable [17].

From above, it is clear that benefits of CSR may not only satisfy their social and environmental commitments, but also get advantages for themselves. Furthermore, organizations may recognize their social and environmental influence on society by making decisions and initiating activities that embrace such a larger responsibility. Nevertheless, the advantages of CSR are not immediately quantified in dollars and are not always seen in the short term. As a result, it is doubtful that CSR concerns will be given a significant priority at the management level.

3. Gender diversity

Nowadays, many firms try to nominate more women to their boards of directors in the pursuit of gender diversity, but there’s more to the story, and investors should be aware that although more women on boards signifies progress, it is also crucial to see more women in managerial roles.

Previous studies have shown that the presence of female director improves decision-making process, since it requires keeping multiple points of view and perspectives in mind, as well as assessing potential outcomes [18]. The diversity of the board can also enhance the board independence, consequently increased board diversity could lead to a better board monitoring function [19]. Furthermore, the recent finding suggests that firm with female directors could reduce male CEO overconfidence, especially in industries with high overconfidence prevalence [20].

Female directors tend to take into account the needs of a wide range of stakeholders [21]. This allows companies to attract a wider range of prospective customers and better penetrate various markets [22]. At the same time, female leaders are more likely to be participative, democratic, and communal in their leadership style, as well as more environmentally conscious. As a result, female directors are also often associated with improved corporate sustainability disclosure (CSD) [8] and CSR performance of companies (for e.g. see [6, 7]). Likewise, researchers found that greater gender diversity on a board of directors can lead to more transparent information disclosure [23], and higher reported earnings [24]. The presence of female director on board also gives a positive signal to stakeholders that the company cares about the societal diversity in their governance (for e.g. see [18, 25, 26]).

The literature also recognizes there are gender psychological differences in this professional setting. Female leaders are more likely to be risk-averse, have complicated moral reasoning abilities, empathy, compassion, kindness, and interpersonal sensitivity. Males are more ambitious, aggressive, autonomous, self-confident, adventurous, and competitive than females [27, 28, 29]. When it comes to leadership, female directors are also not the same as male leaders [2]. The presence of more female directors could stimulate more collaborative and participative communication among its members [4], which in turn promote participatory decision making [3].

The presence of women has an impact on financial performance as well. New ideas and views can evolve into new strategies, products, and services that increase the firm’s revenue and profit. For all of these reasons, several studies demonstrated a positive effect of gender diversity on business financial success (for a meta-analysis, see [2]).

Adams and Ferreira [19], on the other hand, argue that this relationship occurs exclusively in organizations with inferior corporate governance (as proxied by stronger takeover defenses). Besides, there is also evidence of a non-linear relationship between the number of female directors and financial performance; the presence of one or two “token” women on a board is associated with poorer firm performance, whereas the presence of three or more women (reaching a critical mass) is associated with improved firm outcome (for e.g. see [7, 21, 30]).

On the other side, gender diverse boards may result in greater decision-making costs in boards, as well as an increase in the possibility of disputes and board functions [19]. The diverse boards could suffer more conflicts of interests and slower decision making. Furthermore, some researchers have suggested that diversity might have a detrimental impact if employees do not value/believe in their varied work groups [31].

Overall, there seems to be some evidence to indicate that the presence of female directors could enhance firm corporate governance and participatory decision making, which turn into favorable firm outcomes such as financial performance. This could also imply that, in order to boost economic development and growth, equal participation of men and women in the labor force is supposed to ensure full utilization of available national resources. Nonetheless, in reality, males continue to dominate the majority of leadership positions across the world, and change is required.

4. How women can drive meaningful CSR

Going back to the women’s liberation movement in the late 1960s and early 1970s, some CSR had already strayed into gender issues. Companies are increasingly addressing the issue of gender equality and incorporating it into their CSR programs. Gender inclusion in CSR can play a dynamic role in achieving gender equality in the workplace through activities, initiatives, strategies, and policies that provide female employees with equal access to job opportunities and equal treatment in the workplace. Likewise, gender equality is playing an increasingly important role at the firm level as a key factor in strengthening CSR strategies. Simultaneously, the involvement of women in leadership positions enhances CSR activity [4, 7]. From these evidences, it would seem that there is a link between the gender equality and CSR. As CSR performance are seen to be the consequence of board choices, a board’s characteristics and attributes can be crucial in achieving better CSR results. Thus, it is vital to comprehend the theories and empirical evidences behind the impact of female directors and CSR.

Literatures have offered various reasons to support the notion that board gender diversity enhances the CSR. One of the most frequently used theories to explain the relationship between diversity boards and CSR is agency theory. It is predicated on the notion that there is a separation of ownership and control, which results in expenses associated with resolving conflicts of interest between a principal (i.e. shareholders) and an agent (i.e. a manager). To migrate agency costs, the firm incorporates a range of corporate governance mechanisms, including law, incentives, shareholder rights, and monitoring [32]. And the board of directors is recognized as one of the most important aspects for monitoring managerial behavior and mitigating the firm’s agency problems. They are usually elected or appointed by shareholders and represent the company’s shareholders. The board is responsible for making important strategic decisions, providing leadership, monitoring and supervising top management on behalf of shareholders.

In agency theory literatures, researchers often try to emphasize on the link between board composition and firm value, investment and firm’s decisions. In recent years, researchers have increasingly focused their research on gender diversity. Based on social psychology theory, people often seek out people who have similar backgrounds, perspectives, and values, which are then reinforced in intragroup communication. The more we identify with our in-group, the more distant we feel from members of the out-group. Furthermore, when we strongly identify as an in-group member, we tend to elevate other members of the group. This phenomenon is commonly referred to as in-group favoritism or in-group bias, and it can be described as a privilege issue in which members are favored, while people in out-groups are discriminated against due to characteristics that they cannot change [33]. Sexual orientation, gender, ethnicity, race, religion, physical abilities, and age are examples of these characteristics. According to this viewpoint, researchers who believe in agency theory frequently assume male directors regard female directors as out-group members and may have a negative social bias regarding their appointment to board committee [34]. To put it another way, female directors are breaking away from the “old boys club” and presenting a more independent point of view [2, 19]. This could also imply that firms with a high proportion of female directors have less conflict of interest between shareholders and managers, and the board is more likely to make decisions that benefit the firm in the long run.

Other researchers employ stereotypes concept to explain why different genders of directors behave and make decision differently. Stereotyping is a cognitive process in which a characteristic is associated with a group [35]. It is not an abnormality in human social behaviors and values because it is simply human nature to form opinions about other people and their actions based on our understanding and expectations of ourselves. For instance, the literature on gender stereotype often associated female with complex moral reasoning ability, risk-averse, empathy, caring, kindness, and interpersonal sensitivity. Men, on the other hand, are said to have attribute with agentic qualities such as assertive, ambitious, aggressive, independent, self-confidence, daring and competitive [27, 28, 29, 36]. In this regard, men and women differ both psychologically and cognitively. Thus, female directors may result in a greater level of compassion and sensitivity to CSR and stakeholder concerns.

In short, if CSR generates long-term value for stakeholders without endangering people, the environment or the economy, and female directors have the potential to reduce agency costs, firms with a high level of gender diversity may be more likely to improve CSD and CSR performance for the long-term benefit of all stakeholders [37].

Even though several researchers have used agency theory to explain the relationship between the gender diversity board and CSR, the theory appears to fall short of covering all aspects of this relationship. As previously stated, the agency cost theory employs social psychology concepts such as in-group bias and stereotype concept to support the logic underlying the possible positive relationship between female director and CSR. Likewise, Spitzeck [38] contends that the fact that companies are increasingly using CSR committees does not explain why they do so or how CSR governance structures might evolve, implying that the agency theory cannot fully explain the link between CSR and female directors. Similarly, Hussain [39] argued that no single theory fully accounts for all the hypothesized relationships.

Another important theory related to the arguments in favor of board gender diversity is the stakeholder theory. Though both agency and stakeholder theories advocate for the alignment of shareholder, stakeholder, and management interests, it is important to recognize that there are significant differences between the two theories. Unlike agency theory, stakeholder theory describes the composition of organizations as a group of different individual groups with diverse interests. These interests, when taken together, are a representation of the will of the firm. Business choices should take into account the interests of these collective groupings and also balance a multiplicity of stakeholders’ interests that can affect or are affected by the achievement of an organization’s objectives. Any disagreement between these groups reflects the loss of these interests. Therefore, the stakeholder engagement is crucially important for firms to justify the legitimacy of their operations [40]. Organizational legitimacy does not only ensure the inflow of capital, labor, and customers necessary for the company’s viability but also could reduce the likelihood of other disruptive actions [41].

Companies usually attempt to gain legitimacy by disclosing social and environmental verifiable data and information [15] and CSD is a strategy that businesses can use to respond to societal expectations [16] and gain legitimacy of the company’s activities in the eyes of stakeholders, who have a diverse expectation. It also signals to stakeholders that companies’ actions are appropriate and desirable [17]. In other words, CSD is part of the dialog between the company and its stakeholders as it provides information to stakeholders on the social and environmental impacts of corporate activities.

In recent year, CSR has become one of the major concerns for many companies and their managers. Gender equality and human rights are also two of the EU’s founding values and the United Nations’ guiding principles. Also, the corporate world’s efforts to re-premiumize have compelled many European countries to implement gender quotas on corporate boards. Consequently, CSR has become the center of interest for both internal and external stakeholders. Unsurprisingly, many firms would choose to reveal social and environmental verified facts and information in order to balance the interests of a variety of stakeholders.

According to stakeholder theory, female directors are more likely to assist the business in developing an orientation toward the interests of diverse stakeholders [42]. Female directors are more likely to oriented toward philanthropic causes and typically have experience in nonprofit industries, firm with greater gender diversity have been shown to give more to community service organizations and programs [43]. In a similar vein, female directors are more likely to enhance stakeholder management by providing firms with relevant knowledge to enhance their ability manage these interests [44]. For instance, examining a sample of FTSE 350 firms, Jizi [8] shows that female board representation has a positive impact on CSR engagement and reporting as well as on the development of ethical policies. Rather than fulfilling the traditional monitoring function to resolving conflicts of interest between management and shareholders, female directors are more likely to exercise their power in ways that benefit a broader variety of stakeholder interests.

Another strand of research has used upper echelon theory-UET [45, 46] to explain the relation between female directors and CSR. According to the upper echelon theory-UET [45, 46], each decision maker brings a cognitive base and values to a decision, creating a screen between the situation and his/her eventual perception of it [46]. Thus, the more these values are shared by top management, the more likely that the directors to have effective and efficient information-sharing, joint decision making, and collaboration in order to formulate and implement good strategies and other decisions, including those for developing effective firms’ environmental policy [47]. As mentioned earlier, female directors are said to possess a different set of psychological values and perceptions compared to their male counterparts. Female leaders are more likely to have a participative, democratic, and communal leadership style and more concerned about the environment. Accordingly, female directors may help boosting the firm’s value in terms of environmental protection.

Likewise, a gender difference perspective can be deeply embedded in gender socialization theory, which states that socialization encourages and rewards different behaviors in men and women: individualistic and competitive behaviors in men versus cooperative and altruistic behaviors in women (for e.g. see [48, 49]). These diverse public roles and expectations give rise to career paths and leadership styles that differ depending on the gender of the leaders. As a result, women in leadership roles tend to take more participative and relationship development approaches, and they are more likely to pursue long-term strategies and stakeholder focused outcomes, which are critical to successful CSR practices [50, 51].

Given the theoretical justifications provided above, it is evident that female directors play an essential role in implementing CSR into a company’s strategic objective. Nevertheless, no single theory fully explains for all the relationships. Indeed, the majority of ideas in favor of female directors are predicated on the premise of psychology idea that female directors have higher moral and communal attitudes than male directors. As a result, female directors are more concerned with CSR and are more likely to launch CSR initiatives. However, facts might not always imply truth. The board decision is much more about individual traits. For instance, in recent qualitative study has revealed that, while female directors are highly impacted by their psychological perceptions that are aligned with CSR, a number of hurdles have been discovered for female directors to properly participate [52]. It is also argued that female executives must act like men in order to succeed. Female directors, in contrast to the female stereotype for the population, are more risk-taking than their male counterparts [4]. Furthermore, the preceding theories do not include the environmental context, which could be the important determinant of the relationship. For instance, in some countries, a female director’s ability to influence on corporate strategy may be limited due to stereotyping challenges and culture. In short, the benefit of female director is prevalence in some extend, nonetheless the future investigations still needed.

In this stance, as part of corporate strategy, the board of directors play preliminary role in determining the socially responsible behavior of an organization [5, 53, 54], being relevant to this role of the fulfillment of social and environmental conscientiousness [55, 56].

5. Not all female directors are the same

A large and growing body of literature has investigated on the relationship between female director and CSR. However, the results are mixed (for review paper see [5]). Some studies argue that higher representation of female directors is associated with stronger CSR (for e.g. see [6, 7]), while others do not support such a relationship [10]. A possible reason for the mixed findings is that female directors may differ in personal experiences and backgrounds (e.g. political connection), and consequently exert differential impacts on CSR. Aside from that, companies’ attitudes toward social and environmental concerns are multidimensional and impacted by a variety of other company and country-specific factors. Thus, in the following section, we shall analyze the link between a female director and CSR in several contexts.

5.1 Masculine V.S. feminist countries

In Saudi Arabia and Vatican City, women cannot vote, while in Yemen a woman is considered only half a witness and cannot leave her house without her husband’s permission. Women encounter different types of prejudice depending on where they live. According to the World Economic Forum in 2018, there are no laws against sexual harassment in school in 123 nations, and there are no laws prohibiting it in the workplace in 59 countries. Husbands have the legal power to forbid their wives from working in 18 nations, while women are barred from starting a firm in four nations. Thus, certain cultures have stronger gender roles than others, which affects general and organizational behavior in that community [57]. Furthermore, countries that prioritize feminine traits prioritize gender equality, encourage sympathy for the weak, and elect women to multiple leadership positions. Culture can create stereotypes of roles associated with gender that can affect female’s access to board [58]. To that end, if a woman currently leads a country that embodies feminine cultural norms, then by definition there is society wide support for policies that would benefit the public good. In turn, the woman leader should have more flexibility in the policies she can enact. So, one may believe that regional effect could be a possible explanation for the heterogeneity relationship between female participation on boards and CSR. Consistence with this notion, Seckin-Halac et al. [59] suggested that the impact of the board gender diversity on CSR is more prevalent in high gender-egalitarian societies where women are more involved in decision making. Likewise, in a study of 463 firms from 23 countries, Ringov and Zollo [60] suggested that companies based in more masculine countries, exhibit lower levels of social and environmental performance. Similarly, the recent research by Tapver [61] argues that a country’s masculinity-femininity is a variable that determines the association between CSD and female representation, which has previously been overlooked in CSR reporting literature. Shoham et al. [57], on the other hand, empirically examined data from 71 nations and observed that the presence of even one female director on the board positively encourage firms to become much more proactive in environmental sustainability, regardless of the local culture. This result highlights how individual women in powerful positions can make an organization-wide difference.

5.2 Female V.S. male-dominated industries

When women started to work in factories during WWII, they dispelled the idea that they could not perform the same labor as men. Despite a trend toward more equality, several nations continue to exclude women from specific industries. Manufacturing, agriculture, transportation, mining, construction, energy, and water are all examples of this. Some restrictions on when women are permitted to work are based on general safety concerns, while others are based on outdated legislation. Nevertheless, women are less likely to take positions of leadership in industries where their ability to act autonomously is limited. In another word, industry could be another important determinant in explaining the heterogeneity relationship between female boards and CSR. Indeed, there have been studies that showed support for the effects of contextual factors, such as industries, and relationship between gender diversity and CSR. For instance, Ciocirlan and Pettersson [62] show that companies employing more women and having a stronger European presence are more concerned about the climate change. This result suggested a possible moderating effect of contextual factor, such as certain industry characters under which firms are operating, on the relationship between gender diversity and climate change. In the same vein, Li et al. [47], using a sample of nonfinancial firms listed in the United States, found that the pollution creation likelihood (PCL) can have a significant effect on the relationship between gender diversity and firms’ environmental policy. Specially, the positive impact of gender diversity on environmental concerns seems to be stronger when environmental pollution is greater. Even so, Kyaw et al. [37] discovered that while the effect of gender diversity boards on CSR scores is not heterogeneous across industries, it is highly heterogeneous across countries.

5.3 Family V.S. non-family business

Family businesses are those where the founders or family descendants are not only majority shareholders but also manage or sit on the board [63]. This gives them a great power over the company’s management and its decisions, and close involvement in day-to-day activities, together with unlimited access to information, which allows them much closer control over management processes and employees than in the case of non-family businesses [63]. Thus, the family’s intention regarding certain corporate, social, or family issues will shape business behavior and, as a result, affect business outcome. Some scholars have argued that family businesses are more likely to engage in social activities proactively because doing so preserves and enhances their nonfinancial preferences and socioemotional wealth (SEW) [64]. In another word, family managers and board members are usually more averse to the loss of SEW than to financial loss, an outlook that can significantly affect the strategic decisions taken by the firm (for meta-analysis see [65]). Consequently, directors from family businesses may be more committed to CSR and/or long-term sustainable projects, as these mechanisms are believed to facilitate the company’s subsequent transfer to future generations. Furthermore, these policy decisions improve the company’s image and reputation, which is an important aspect given the company is viewed as an extension and a mirror image of the family, and therefore as reflecting the fundamental values of the family members [66].

For female directors to have a real impact on a company’s decision making, they need to be perceived as equal, legitimate board members [67]. For example, in a family firm, women are believed to have immaterial qualities that facilitate family relationships and thus a more informal management style. So, in family business setting, it is reasonable to assume that these qualities will enhance role played by female directors. This notion is support by García-Sánchez et al. [68], who showed that the presence of women on the boards of family businesses encourages the adoption of CSR practices in the Latin American environment. Similarly, Cruz et al. [69] argued that positive relation between firm’s corporate social performance and the presence of women on family firm boards is primarily due to the presence of outsider nonfamily and insider family women directors.

While, some may argue that CSD and the strength of internal corporate governance, particularly the gender diversity board, are substitutes. Family businesses are less prone to information asymmetry [63], which leads to less opportunistic behavior [70]. As a result, control mechanisms such as voluntary information disclosure, such as CSR information, may not be necessary. Furthermore, female directors in family businesses are more likely to be affiliated to the management through family ties rather than their professional experience and knowledge, and therefore their independence is constrained [71]. Additionally, it has been reported that female directors who work in family businesses receive less consideration than their male relatives and that their work is usually underestimated [72]. Consistent with this logic, Rodríguez-Ariza et al. [73] argue that the role of female directors in promoting CSR practices could vary according to the nature of company ownership. Specifically, they suggest that female directors tend to act in accordance with family interests, putting aside their own skills, opinions, and ideas and strengthening or weakening their social responsibility orientation in accordance with the wishes of the family.

Similarly, prior research suggests that the impact of female directors on CSR may differ depending on ownership structure. Because concentrated ownership is an effective monitoring mechanism in and of itself, the need for transparency through high-quality auditing and assurance engagement is less of an issue in such firms. Buertey’s [74] empirical evidence backs up this claim. They discovered that concentrated ownership has a significant moderating effect on the relationship between board gender diversity and CSR assurance. Likewise, firms with a high level of state ownership constitutes a strong pressure on corporate executives to implement CSR, which weakens the power of female directors’ personal ideologies and preferences over CSR [75].

5.4 Qualification of female directors

Prior literature often assume that female directors are more socially oriented than their male counterparts, thereby turning the boardroom to be more socially oriented [44]. Wang et al. [75] argued that female directors may differ in social orientation due to their past experience and that political connection is an important personal factor that shapes an individual’s social orientation. Government exists to promote social welfare and stability. This ideology is likely to permeate an individual’s values, making a politically connected person highly socially oriented. Therefore, they argued that the impact of politically connected female directors on CSR should further differ across situations. Specifically, they found the politically connected female directors are more socially oriented than politically disconnected female directors and consequently have a stronger positive effect on CSR.

Similarly, some researchers focus on characteristics of directors. For instance, del Mar Alonso-Almeida et al. [76] examined the differences in attitudes toward the various dimensions of CSR, with a focus on the perspectives of women in top management positions in Spain. Although they were unable to find a link between professional background and CSR, they did discover a link between women’s educational level and CSR awareness. Whereas some may argue that personalities, abilities, network, and business expertise can influence women’s views about CSR. Ramon-Llorens [77] classified female directors into three main categories namely, industry experts, advisors, and community leaders, and found that companies characterized by female directors with technical expertise are effective at pursuing CSD strategies. Whereas, female directors with political and social connections reduce CSR transparency. These findings underline the fact that gender diversity could have a two-sided character, with diverse behavior among female directors based on their expertise and backgrounds.

5.5 Critical mass

When women attained 20% of the Senate vote, they went after the Pentagon to modify the military’s sexual-assault procedure. When they reached 25% of Hollywood producers, they were able to bring down Harvey Weinstein and his casting-couch culture. When they reached one-third of the White House press corps, Fox News’ Roger Ailes, NPR’s Michael Oreskes, and other chronic harassers in the media were called out. Things start to alter somewhere around that range, when women make up 20–30% of a given institution. According to critical mass theory based on Kanter [78]‘s work, only when a company’s board of directors reaches a critical mass or threshold, women will be able to provide unique perspectives, ability, and skills and hence positively influence group culture and performance. Some of empirical results also show that an absolute number of at least three female directors participate on board is necessary before significant power can be exercised over board activities and significantly affect the dynamics and processes inside the board [21, 30]. Besides, unless a critical mass of at least three women is present on a board, female presence on boards appears to have little impact on governance performance [30]. Along the same line, Post et al., [7] demonstrated that boards with three or more female directors demonstrate more firm environmental corporate social responsibility (ECSR), as measured by Kinder, Lydenberg, Domini (KLD) ratings in the environmental strength’s areas, because individuals in the associated groups have more information about and favorable attitudes toward environmental issues than male directors. Likewise, Liu [79] discovered that female CEOs are related with lower environmental lawsuits only in enterprises with low female board participation; in firms run by male CEOs, a larger association between the number of female directors and lower litigation frequency is detected. Using both qualitative and quantitative data on multination dataset, Shoham et al. [57] observed that when the board has at least three women directors, the probability that the organization reports its attitudes and behavior regarding environmental sustainability is about two times higher than an organization with fewer than three women on the board. In addition, there is evidence that the presence of a critical mass of female directors resulted in enhanced CSD by corporations in a sample of nonfinancial organizations listed in Spain [80].

Nonetheless, some say that variety is not only about the numbers but also about the relative power and prestige of social groupings that extends to their members [81]. For instance, Board A, with four female and six male directors, and Board B, with four male and six female directors, are regarded identical, as indicated by an index of dissimilarity. However, because female and male directors have differing access to firm information, as a result, Boards A and B are most likely extremely distinct and will make very different judgments. Hence, though the critical mass may be important for female directors to have influence on the board, the relative and prestige of female directors’ influence on the board is also important.

6. Future research

There is clearly a pressing need for research that could help to explain the inconsistent findings observed across previous studies of the relationship between female directors and CSR, especially under various economic conditions and multi-country studies to supplement the existing literatures.

People seek to find any positive narrative to latch onto during times of crisis in order to offer some feeling of normalcy to their odd reality. As COVID-19 has grown internationally, we have been able to compare how various leaders have handled the problem—and their actions appear to be a solid link in how things have turned out for those nations run by women at the moment. Various media, such as the New York Times, Forbes, Vox, the Harvard Business Review, Stanford Medicine, and NBC News, published articles supporting this narrative, suggesting that countries led by women have fared better than those led by men in pandemic management. For instance, San Francisco’s mayor London Breed, the first black women to ever hold that office, took action days before governor of California and the mayor of Los Angles (both men). Similarly, New Zealand’s Prime Minister Jacinda Ardern has been praised for prompt in implementing restrictive measures early on, resulting in limited contagion and a much shorter lockdown than neighboring countries. A recent release article also suggest female-led governments were more effective and rapid at flattening the epidemic’s curve, with peaks in daily deaths roughly six times lower than in countries ruled by men. However, one may argue this narrative is based on sample section bias. Therefore, this could be a good opportunity for researchers to investigate the impact of COVID on the relationship between gender equality and sustainability, particularly CSR. For instance, how do gender equality friendly policy affect firm’s CSR during COVID? In addition, the researcher may explore the association between female directors’ qualities, such as education, social network, and political connections, and CSR before and after the pandemic.

Gender, on the other hand, is much more than biological differences between men and women. It refers to men’s and women’s socially created features, such as standards, attitudes, and roles that society believes appropriate for men and women. It varies from society to society and may be change overtime. Thus, it would be interesting to invest more on how gender rather than sex (i.e. male or female) impact the CSR decision.

Despite the fact that the majority of prior literatures employed quantitative methods, more rigorous qualitative investigations might be an alternate technique to acquire a deeper understanding of the relationship. Furthermore, the qualitative method may validate the female-CSR literature’s fundamental assumption that female directors have greater moral and communal attitudes than male directors.

Lastly, a previous research has theorized about the impact of female director on CSR, mostly based on a literature on gender variations in moral and community attitudes. Yet, it is also possible that other variation such as reputation and network could play a moderate role in the effects of female directors on CSR.

7. Conclusion

The recent crisis highlighted not just the inherent issues with quick-return investments, but also underscored the importance of a long-term investment perspective. Growing business pressure, along with corporations’ desire to do better in terms of ethical and CSR, has propelled the topic to the top of board agendas.

Prior research suggests the presence of gender-inclusive leadership is associated with higher levels of charitable giving and increased CSR, as well as growth in other aspects of CSR, such as environmental CSR. Female leaders are more likely to be participatory, democratic, and communal in their leadership style, as well as more concerned about the environment. As a result, female directors may contribute to the firm’s value in terms of environmental protection. Simultaneously, board gender diversity sends a favorable signal to stakeholders that the firm values social diversity in its governance (for e.g. see [18, 25, 26]). In addition, board diversity is likely to improve stakeholder management by influencing organizational goals, emphasizing the interests of a diverse range of stakeholders and providing organizations with appropriate expertise to help them manage these interests [44]. In short, the presence of female director enhances CSR.

Nevertheless, some researchers do not support such a relationship [10]. A potential explanation for this inconsistent viewpoint is that not all female directors produce a homogeneous effect among the CSR dimensions. Female directors’ influence on CSR may also be affected by culture [59, 60], industries [47, 62], ownership structure [68, 69, 73] and director’s specific characters [75, 76]. Lastly, some researchers also suggest that at least three female directors must participate on board is necessary before sufficient authority may be exerted over board activities and significantly alter board dynamics and procedures [21, 30].

In short, the chapter emphasizes the importance of gender equality, particularly in positions of female leadership. Active participation and decision making by women in the business world is critical for firms’ long-term success and CSR, which is the primary driver of sustainability. The hurdles to women’s participation in leadership roles and board membership remain. The benefits of female directors are more prevalence when abilities, skills, and viewpoints of women are welcomed and valued in the boardroom. Nonetheless, while it is critical for corporations to increase gender equality by nominating more female directors, policymakers, and organizations must also consider the quality of potential female board members as well as the environmental context in which businesses operate.