Board gender diversity and corporate social responsibility: Is there a case for critical mass?

Abstract

The role of business sector in addressing Sustainable Development Goals (SDGs) is increasingly recognised around the world. The SDG 5 Gender Equality has given impetus to actions in many countries in the form of gender equality and gender diversity in businesses. Rapid progress has been made recently in achieving gender representation on corporate boards with voluntary initiatives such as the 30% Club in Australia and other countries. This study differs from previous studies in that it considers the ethical and social dimensions rather an economic angle by examining the association between gender diversity and corporate social responsibility (CSR). The limited prior research with this approach has focused on the US and UK context with emphasis on analysing how female directors with their unique views, perspectives and specific experiences contribute to strategic decision making and for addressing issues that are of concern to society and stakeholders. Continuing in this vein, this study examines the association between gender diversity and positive and negative dimensions of CSR separately. For a sample of constituents of the ASX 300 Index and employing systems Generalized Method of Moments (GMM) methods, this study finds evidence supporting both the token theory and the critical mass theory. Both positive and negative dimensions of CSR are unrelated to gender diversity when there is a token female representation on the boards of directors. However, companies that have improved gender balance undertake more positive CSR activities and reduce negative or controversial activities that hinder CSR.