Built
on the organizational theory and the theoretical framework under which
board-level sustainability committees are motivated by shared value creation,
we posit that firms’ business strategies and the stakeholder focus of their
sustainability committees have a joint effect on their CSR performance.
Using hand-collected information on sustainability
committees for a sample of S&P500 firms, we find that firms with a
prospector business strategy are associated with better stakeholder-related CSR
performance. In contrast, firms following a defender strategy are associated
with worse third-party related CSR performance. Firms with a third-party
focused sustainability committee have better CSR performance, while firms with
a stakeholder focused sustainability committee have worse CSR performance. In
addition, the presence of a board-level sustainability committee focused on
third-party interests and issues increases CSR strength for both prospectors
and defenders. It mitigates CSR concerns for defenders and increased their
overall socially responsible performance.
