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Boards, Incentives and Corporate Social Responsibility: the case for a change of emphasis
Author(s) -
Mackenzie Craig
Publication year - 2007
Publication title -
corporate governance: an international review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.866
H-Index - 85
eISSN - 1467-8683
pISSN - 0964-8410
DOI - 10.1111/j.1467-8683.2007.00623.x
Subject(s) - corporate social responsibility , corporate governance , incentive , business , accounting , compliance (psychology) , social responsibility , code of conduct , public relations , finance , political science , economics , psychology , social psychology , law , microeconomics
Boards of large UK companies are devoting more time to the governance of corporate social responsibility (CSR). This is in line with the Combined Code on Corporate Governance's requirement that boards set standards and values for companies and ensure they meet their social obligations. But is board activity in this area as effective as it could be at achieving corporate compliance with CSR standards? This paper draws on the economic literature to offer an analysis of the primary causes of breaches of corporate responsibility standards. Based on a small survey of the board CSR activities of 20 of Britain's largest companies, it assesses whether boards are addressing these causes effectively. The tentative conclusion is that board activity might usefully be reoriented to do more to address the fundamental incentives problems that often cause corporate responsibility failures, namely market failure and misaligned performance management systems.