J Bus Ethics
DOI 10.1007/s10551-015-2651-z
Exploring the Relationship Between Board Characteristics
and CSR: Empirical Evidence from Korea
Young Kyun Chang1 • Won-Yong Oh2 • Jee Hyun Park1 • Myoung Gyun Jang1
Received: 11 February 2014 / Accepted: 2 April 2015
Ó Springer Science+Business Media Dordrecht 2015
Abstract Previous studies in Western contexts have ex-
amined the relationships between various board character-
istics and CSR, yet the relationships need to be re-examined
in non-Western contexts given differential theoretical
premises across contexts. We specifically propose that the
effects of board characteristics on CSR in Korea should be
patterned distinctively from Western-based existing lit-
erature, focusing on three important board characteristics,
such as a board’s independence, social ties, and diversity.
Using a panel dataset from large Korean firms, we found that
various relationships between board characteristics and
CSR were non-linear, whereas most of the previous research
on Western contexts found that the same relationships were
linear. Specifically, curvilinear relationships were found
between CSR and board independence (i.e., exponentially
growing shape), CEO-outside director social ties (i.e., in-
verted U-shape), and educational diversity (i.e., U-shape).
Our findings suggest that there is no universal feature of
& Young Kyun Chang
youngkyunchang@gmail.com
Won-Yong Oh
won.oh@haskayne.ucalgary.ca
Jee Hyun Park
jhpark80@sogang.ac.kr
Myoung Gyun Jang
zzanga1108@sogang.ac.kr
1
Sogang Business School, Sogang University, 35 Baekbeom-
ro, Mapo-gu, Seoul 121-742, South Korea
2
Haskayne School of Business, University of Calgary, 2500
University Drive NW, Calgary, AB T2N 1N4, Canada
CSR-supportive board characteristics due to the unique
characteristics of various institutional contexts.
Keywords Board characteristics  Corporate social
responsibility  Curvilinear relationship  Korea
Introduction
Although most previous studies of corporate social re-
sponsibility (CSR) have been conducted in and have fo-
cused on Western contexts (Matten and Moon 2008),
recent research has begun to pay attention to CSR in non-
Western contexts, particularly in Asian countries (e.g.,
Chapple and Moon 2005, 2007; Cheung et al. 2010). One
reason for the increased attention is the growing inter-
dependence between Asian and Western economies, as
well as unique CSR norms and practices in Asia. Chapple
and Moon (2007, p. 183) pointed out that ‘‘the study of
CSR in Asia is an important but relatively under-re-
searched area.’’
Among the various corporate governance mechanisms, a
corporate board has played a pivotal role in a firm’s CSR
(Walls et al. 2012). Because a board of directors generally
affects critical strategic decisions, it also influences CSR in
many ways. A corporate board establishes stakeholder-
friendly corporate policies, monitors top managers’ self-
serving behaviors, approves annual budgets for CSR-re-
lated spending, and creates separate standing committees
dealing with CSR-related matters (Walls et al. 2012).
Nonetheless, due to institutional differences, the role that
the board of directors has played in Asian countries has
been distinctive from the role they have played in Western
countries (e.g., Jia and Zhang 2013; Khan et al. 2013; Oh
et al. 2011). Therefore, it is useful to explore different
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theoretical frameworks to better understand how board of
directors in Asian countries impact CSR decisions.
As a first step, we conducted an extensive review of the
literature on board characteristics and CSR (see Table 1),
which validated our assumption that there is a lack of re-
search on the linkage between board characteristics and
CSR in Asian contexts. Only six out of 32 studies presented
in Table 1 focused on the Asian contexts between 1990 and
2014. Furthermore, Chapple and Moon (2005) argued that
CSR in Asia is not necessarily homogeneous, and varies
within Asian countries. Therefore, an in-depth single-
country study may begin to enhance our understanding of
the board-CSR linkage in Asian countries.
Specifically, our study examines the relationship be-
tween board characteristics and CSR in Korean firms
(here, Korea denotes South Korea). Korea offers an in-
teresting research setting for examining the board-CSR
linkage for the following reasons. First, since the Asian
Financial Crisis in the late 1990s, the Korean government
has been pushing firms to reengineer their corporate
governance structures in ways that promote transparency
and accountability in their business operations (Cho and
Kim 2007). Broadly speaking, attention to corporate so-
cial contributions was one of the courses of action that
Korean firms were encouraged to take. Consequently,
Korean firms have begun to actively engage in CSR, and
many have been included in the Dow Jones Sustainability
Indices, the global indices that track the financial per-
formance of the world’s top sustainability-driven compa-
nies. Second, Korea has a unique corporate governance
system, the Chaebol, which can be characterized as
having a strong affiliation between owners and top man-
agers and family-controlled corporate structures (Chang
2003). Such a unique corporate governance structure is
presumed to have a distinctive impact on important cor-
porate decisions, including CSR. As such, it is meaningful
to explore how the Korean governance system affects
CSR decisions by identifying the unique roles of a board
of directors.
Given Korea’s unique institutional environment, we
propose that the relationship between board characteristics
and CSR in Korea should be patterned distinctively, espe-
cially in comparison to many of the previous studies of the
board-CSR relationship in Western contexts. Our proposi-
tion is based on the claim that the theoretical premises that
are used in Western contexts may not be equally applicable
to non-Western contexts (Tsui 2007). For instance, agency
theory used to predict board-CSR relationships is par-
ticularly applicable to Anglo-American capitalist countries
where principals and agents are ‘‘meaningfully indepen-
dent.’’ In Korea, however, in most cases top managers are
less independent from, and may even be strongly affiliated
with, founding owners or major shareholders. Therefore, a
123
Y. K. Chang et al.
conventional agency theory would need a more nuanced
application in Korea. In this regard, previous Western
studies found that board independence has a positive and
linear relationship with CSR (e.g., Harjoto and Jo 2011;
Johnson and Greening 1999), but this relationship may not
be observed in Korea in the way it has been in Western
studies. Likewise, in previous Western studies, resource
dependence theory has been used to predict a positive and
linear association between board diversity and CSR (e.g.,
Siciliano 1996; Webb 2004), since diversity is generally
conceptualized as a ‘‘useful’’ resource for stakeholder
management. However, for Koreans, because of their
strong collectivist orientation, diversity often violates
norms of conformity, which hurts harmony and unification,
and thus may not be always useful to collective decision
makers such as boards of directors.
To address this theoretical gap, we analyzed three im-
portant board characteristics in the Korean context: board
independence, board diversity, and CEO-outside director
social ties. Because board independence and diversity have
been studied in the existing literature, which is primarily
Western-focused (see our review in Table 1), they could
provide a good benchmark for comparison. The relation-
ship between CEO-outside director social ties and CSR has
not been examined to date but is worth exploring here,
since social ties in the boardroom generally have been seen
as a critical element in corporate decisions in Korea (Kim
2005, 2007).
Analyzing panel data from 780 firm-year observations,
we found different patterns of ‘‘curvilinear’’ relationships
between the three board characteristics noted above, and
CSR in Korean firms. Specifically, in relation to CSR, (1)
board independence had a curvilinear relationship with an
exponentially growing shape; (2) CEO-outside director’s
social ties had an inverted U-shaped relationship; and (3) a
board’s educational diversity had a U-shaped relationship.
With those unique findings, this study offers theoretical and
empirical contributions to the literature. From a theoretical
viewpoint, this study provides a more precise and context-
nuanced understanding of the relationship between boards
and CSR. More importantly, this study found that there is
no ‘‘universal’’ feature of CSR-supportive board charac-
teristics, which suggests that different institutional contexts
must be considered when designing ideal corporate gov-
ernance structures to promote CSR. Empirically, this study
not only introduces an underexplored sample of CSR in
Korea, but also contributes a curvilinear board-CSR rela-
tionship to the literature in which a simple linear rela-
tionship has been dominant. Taken together, given the
theoretical and methodological contributions, our study
could serve as a catalyst for future research on the board-
CSR linkage in non-Western contexts, especially other
Asian countries.
 Table 1 Existing literature on board characteristics and CSR
Study Sample Country Theorya Board characteristics CSR measures Major findings

Arora and N = 518 US Agency Proportion of outside directors KLD strength Linear, (-)
Dharwadkar S&P 500 KLD concerns Linear, (-)
(2011)
Bai (2013) N = 363 US Agency Board size Corporate philanthropy Linear, (-)
Hospitals (for- profit and Resource Occupational background (=gov’t Linear, (-)
non-profits) dependence officials)
Bartukus et al. N = 66 US Agency Board size Corporate giving for charity Linear, (?)
(2002) Foundation Center in Proportion of outside directors (Over $1 million giving) Non-sig.
Washington DC Directors’ affiliation with charities Non-sig.
Bear et al. (2010) N = 51 US Resource Board diversity based on business KLD (institutional strength vs. technical Non-sig.
Fortune’s 2009 most dependence experience, experts, support strength) Linear, (?)
admired list Agency specialty, and community
influence
Proportion of female directors
Boulouta (2013) N = 126 US Resource Gender diversity (women KLD composite Linear, (?)
S&P 500 dependence board = 1 only) KLD strength Non-sig.
Gender KLD concerns Linear, (-)
characteristics
Chang et al. N = 180 Korea Resource Proportion of outside directors Korea Economic Justice Institute (KEJI) Linear, (?)
(2012) Korean stock exchange dependence Index
Coffey and Wang N = 98 US Resource Proportion of outside directors Corporate philanthropy from council on Linear, (?)
(1998) Fortune 500 dependence Proportion of female directors economic priorities (CEP) Non-sig.
Agency Insider ownership Linear, (?)
Ratio of stock owned by outside to Non-sig.
inside board members
Ghazali (2007) N = 87 Malaysia Country-specific Insider ownership CSR disclosure with 22 checklist items Linear, (-)
Bursa Malaysia composite institution from annual reports
Exploring the Relationship Between Board Characteristics and CSR: Empirical Evidence from Korea

index
Hillman et al. N = 250 US Stakeholder Board size KLD five domains Linear, mixed
(2001) S&P 500 management Stakeholder representativeness
(e.g., employee directors,
community directors, etc.)
Hafsi and Turgut N = 95 US Agency Diversity of Boards (structural) KLD strength Non-sig.
(2013) S&P 500 Upper echelon Diversity in Boards (demographic) Linear, (?)
Harjoto and Jo N = 12,527 (2952 firms) US Agency Proportion of outside directors KLD composite Linear, (?)
(2011) Director ownership Non-sig.

123
 Table 1 continued
Study Sample Country Theorya Board characteristics CSR measures Major findings

123
Hung (2011) N = 120 (directors) Hong Kong Stakeholder Board perception of CSR Survey-based concerns for Linear, (?)
management importance stakeholders
Ibrahim and N = 429 US N/A Insiders versus outsiders (dummy) Corporate social responsibility Mixed (economic CSR for
Angelidis S&P’s register of orientation (CSRO) with 20 items outsiders; philanthropic
(1995) corporations, directors, CSR for insiders)
and executives
Ibrahim et al. N = 307 US Agency Insiders versus outsiders (dummy) Corporate social responsibility Mixed (economic CSR for
(2003) S&P’s register of orientation (CSRO) with 20 items insiders, but philanthropic
corporations, directors, CSR for outsiders)
and executives
Jia and Zhang N = 492 China Critical mass Number of female directors Corporate donation (dummy) Linear, (?)
(2013) China Securities Regulatory Gender (critical mass = 3) Corporate giving (amount) Linear, (?) for moderation
Commission (CSRC) characteristics Age diversity (among female
directors) 9 critical mass
Jizi et al. (2014) N = 492 US Agency Proportion of outside directors CSR disclosure (content analysis) Linear, (?)
National banks Board size Linear, (?)
Jo and Harjoto N = 12,527 (2952 firms) US Agency Proportion of outside directors KLD composite Linear, (?)
(2012) Conflict- Managerial entrenchment Linear, (?)
resolution
Johnson and N = 252 US Resource Proportion of outside directors Industry-adjusted KLD with two sub- Linear, (?)
Greening (1999) Fortune 1000 dependence dimensions
Kabongo et al. N = 4438 US Resource Board diversity (women, minority, Corporate giving (dummy) Linear, (?)
(2013) Fortune 1000 dependence and disabled members)
Kacperczyk N = 878 US Managerial Insider ownership KLD (six domains separately) Linear, mixed by CSR
(2009) entrenchment domains
Khan et al. (2013) N = 116 Bangladesh Country-specific Proportion of independent CSR disclosure (content analysis) Linear, (?)
Dhaka stock exchange institution directors Linear, (?)
(DSE) Agency Presence of audit committee
Ntim and N = 600 South Neo-institution Board diversity (gender, race) CSR index (content analysis) Linear, (?)
Soobaroyen Johannesburg stock Africa Board size Linear, (?)
(2013) exchange Independent directors Linear, (?)
Oh et al. (2011) N = 118 Korea Country-specific Insider ownership Korea Economic Justice Institute Linear, (-)
Korean stock exchange institution Outsider ownership (KEJI) index Non-sig.
Agency
Y. K. Chang et al.
 Table 1 continued
Study Sample Country Theorya Board characteristics CSR measures Major findings
b
Post et al. (2011) N = 78 US Agency Proportion of outside directors Environmental corporate social Linear, (?)
Fortune 1000 Gender Proportion of female and minority responsibility (ESCR) Linear, (?)
characteristics directors Inverse U
Moral Director average age Linear, (?)
development Directors with Western European Non-sig.
Education education
attainment Directors with advanced degree
education
Siciliano (1996) N = 240 US Resource Occupational diversity The degree of effectiveness of social Linear, (?)
YMCA dependence Gender diversity mission of YMCA Linear (?) for female
Agency Age diversity Linear, (?)
Board size Linear, (?)
Surroca and Tribo N = 358 (22 countries) Multiple Managerial Managerial entrenchment SiRi PRO ratings Linear, (?)
(2008) countries entrenchment Board independence Linear, (-)
Control committee in boardroom Linear, (-)
Wang and Coffey N = 78 US Resource Proportion of outside directors The percentage of pretax earnings Linear, (?)
(1992) Fortune 500 dependence Proportion of female and minority given to charities Non-sig.
Agency directors Linear, (?)
Insider ownership Non-sig.
Ownership concentration
Wang and N = 545 US Resource CEO versus non-CEO directors Board of directors’ attitudes toward Linear, (?) for non-CEO
Dewhirst (1992) Corporations in the dependence (dummy) stakeholders directors & outsiders
Southeast States Agency Insiders versus outsiders (dummy)
Williams (2003) N = 185 US Resource Proportion of outside directors Total charitable contributions Non-sig.
Fortune 500 dependence Proportion of female directors Linear, (?)
Gender
Exploring the Relationship Between Board Characteristics and CSR: Empirical Evidence from Korea

characteristics

123
 Table 1 continued
Study Sample Country Theorya Board characteristics CSR measures Major findings

123
Webb (2004) N = 394 US Resource Number of board meetings DSI index from KLD Non-sig.
Domini 400 index dependence Family-tied board (dummy) Linear, (-)
Agency Directors from non-profit (dummy) Linear, (-)
Proportion of inside and outside Linear, (?)
directors Linear, (-)
Proportion of ‘gray’ directors Non-sig.
The proportion of senior (C65) Non-sig.
directors
Non-sig.
The proportion of directors with
Linear, (?)
multiple directorships
The proportion of active CEO-
outside directors
Proportion of female directors
Zhang et al. N = 611 US Stakeholder Proportion of outside directors Reputation-based CSR (ranked in top or Linear, (?)
(2013) FAMA (from Fortune management Proportion of female directors bottom half) Linear, (?)
Magazine) Gender
characteristics
a
Theory does not necessarily indicate the overarching framework of each study, but rather a working theory that directly applies to the specific relationship between board characteristics and
CSR
b
Although Post et al. (2011) focused on ‘‘environmental’’ responsibility, we included this study due to its non-linear finding. Other studies dealing with ‘‘environmental’’ responsibility were
excluded for our focused literature review
Y. K. Chang et al.
Exploring the Relationship Between Board Characteristics and CSR: Empirical Evidence from Korea
Theoretical Background
Existing Theoretical Frameworks
The existing literature on the relationship between board
characteristics and CSR generally relies on two theoretical
views (see Walls et al. 2012, pp. 887–890 for review):
agency theory (Jensen and Meckling 1976) and resource
dependence theory (Pfeffer and Salancik 1978). This is in
line with a general theoretical foundation of the existing
strategic management literature on the roles of a board of
directors (Hillman and Dalziel 2003). First, agency theory
posits that an effective board promotes CSR because it can
align managers’ interests with long-term goals for both
shareholders and non-shareholding stakeholders. Often,
this can be done by assigning outside directors who can
monitor a manager’s self-serving behaviors and by using
incentives to reinforce their monitoring roles. As a result,
firms are expected to engage more in CSR when they are
being monitored by outside directors and when they have
incentives to do so. Most empirical studies found that
higher levels of outsider representation (board indepen-
dence) and director ownership (board incentives) are
positively associated with CSR (Chang et al. 2012; Johnson
and Greening 1999).
Second, while agency theory focuses on a board’s
monitoring role, resource dependence theory (Pfeffer and
Salancik 1978) focuses on a board’s resource provision
role. Directors can be a critical channel to valuable re-
sources and information, as well as to advice and counsel
for organizational success. In the context of CSR, the role
of directors as resource providers is still pivotal, since
CSR is the result of effective stakeholder management
(Clarkson 1995). In other words, since a successful im-
plementation of CSR requires a comprehensive under-
standing of multiple stakeholders’ interests and demands,
diversified qualities and backgrounds of directors can help
a firm better engage in CSR (Siciliano 1996; Webb 2004;
Williams 2003).
Application of Existing Theories to the Korean
Context
The existing theories do a reasonably good job of ex-
plaining the relationship between board characteristics and
CSR. However, we propose that these theories, which are
based mostly on North American and European contexts,
have limited application to Korean companies due to in-
stitutional differences between these contexts. First, one of
the main assumptions of agency theory is that managers
and principals are separate (Fama and Jensen 1983), and
that managers have a strong motive to seek self-interest.
Overall, this assumption is valid for any modern public
corporation, yet seems particularly applicable to Anglo-
American capitalist countries where principals and agents
are ‘‘meaningfully independent.’’ In particular, stock
ownership for managers has been considered to be an ef-
fective means through which opportunistic managers are
directed to take a long-term view (e.g., CSR) of organi-
zational success. For example, Johnson and Greening
(1999) found that stock ownership by top managers is
positively associated with CSR among large US firms.
Some studies from Asian countries, however, found a
very distinctive pattern of the relationship between man-
agerial ownership and CSR. This group of researchers
suggests that because top managers are not independent
from, and may even be strongly affiliated with, founding
owners or large shareholders, a conventional agency theory
would need to be reinterpreted for Asian contexts. For
example, Oh et al. (2011) found that managerial ownership
has a negative effect on CSR. They argued that because
many top managers in Korea have strong connections to
their firm’s founding families, they tend to expropriate
value from other shareholders to increase the wealth of the
controlling owners, which often includes founding-family
members (Chang 2003). As a result, managers in Korea
might seek opportunities that immediately benefit them-
selves, as well as founding families, by disengaging from
longer-term, outcome-uncertain social investments. Fol-
lowing a similar logic, Khan et al. (2013) also found a
negative relationship between managerial ownership and
CSR in Bangladesh. In short, an instrumental motivation
(i.e., profit generation from CSR) is a key driver of CSR for
executives with equity ownership in the US, whereas a
relational concern (i.e., building an exclusive relationship
with controlling owners) is a key inhibitor of CSR in some
Asian countries.
In addition, most previous studies (e.g., Siciliano 1996;
Webb 2004; Williams 2003) that employ resource depen-
dence theory tend to assume a positive effect of board di-
versity on CSR. From the Western viewpoint, diversity is
generally conceptualized as a useful resource for CSR. As
such, the more diversified the board of directors is, the more
likely that it will introduce ideas for how to effectively
manage a variety of stakeholders. However, in Asian
countries such as China, Japan, and Korea, an increase in
board diversity does not simply mean introducing more
comprehensive and diverse resources. Rather, due to a
strong collectivist orientation in these countries, diversity
often increases the likelihood that the cultural norm of
conformity in a group-based setting will be violated (Kim
and Markus 1999). Thus, resource dependency theory
should be applied carefully when studying Asian firms, and
should take into account the issue of institutional specificity.
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Hypotheses Development
Based on the distinctive application of existing theories, we
developed context-nuanced hypotheses for the relationship
between board characteristics and CSR. Three important
board characteristics are analyzed: board independence,
CEO-outside director social ties, and board educational
diversity. We focus on these three board characteristics for
the following reasons: (1) examining these characteristics
enables us to compare our findings with those of previous
studies and (2) these characteristics reflect institutional and
cultural contexts that are specific to Korea.
First, board independence is one of the most closely
examined board characteristics in the existing literature
(see Table 1). Therefore, examining the effects of board
independence on CSR in Korea is a good benchmark for
comparison. In particular, after the Asian financial crisis of
the late 1990s, the Korean government began pushing firms
to enhance board independence as a governance reform
policy (Kim 2007). Some previous studies (e.g., Cho and
Kim 2007) examined the effects of board independence on
financial performance, yet little is known about the effects
on CSR in Korea.
Second, interpersonal relationships, such as guanxi in
China, are an important resource in business operations in
Asia (Luo et al. 2012). As such, we examined the effect of
CEO-outside director social ties on CSR. Notably, inter-
personal ties are a double-edged sword in Korea. While
close social ties help facilitate collaboration and commu-
nication among CEOs and outside directors, excessive so-
cial ties diminish the monitoring roles of outside directors.
Surprisingly, the relationship between CEO-outside direc-
tor social ties and CSR in Korea has not been examined to
date in spite of the importance of social ties in Korean
boardrooms.
Finally, board diversity—especially gender or racial
diversity—is also one of the most commonly examined
characteristics in previous studies (e.g., Boulouta 2013;
Coffey and Wang 1998; Jia and Zhang 2013; Kabongo
et al. 2013), thus creating opportunities for comparison.
However, since most Korean boardrooms are excessively
male-dominated and ethnically homogeneous, we alterna-
tively examined the effects of a board’s educational di-
versity rather than its gender or racial diversity.
Board Independence and CSR
Agency theory (Jensen and Meckling 1976) suggests that
the separation of ownership and control causes a potential
problem of the shareholders’ long-term interests not
aligning with those of management. Because it is difficult
to recoup social investment in the short term (Burke and
123
Y. K. Chang et al.
Logsdon 1996), CSR initiatives might be less appealing to
opportunistic managers.
Agency theory posits that managers’ self-serving be-
haviors could be regulated by independent monitoring.
One of the most effective ways to monitor managers’
agency behavior is to assign outsiders to the board (Walsh
and Seward 1990). Independent outside directors are more
likely to check managers’ self-seeking activities that may
lead to socially irresponsible decisions. Thus, board in-
dependence seems to promote CSR, given outside direc-
tors’ independent positions, pursuit of the long-term
success of the firm, and strong stakeholder orientation
(Wang and Dewhirst 1992). Empirically, previous studies
have found that board independence is positively related
to CSR-favorable decisions (Harjoto and Jo 2011), people
and product dimension of CSR (Johnson and Greening
1999), and discretionary dimensions of CSR (Ibrahim
et al. 2003).
However, we argue that the relationship between board
independence and CSR may be patterned differently in
Korea. Korean business groups, Chaebols, have been cri-
ticized for the lack of transparency in their governance
systems and for their irresponsible behavior toward other
stakeholders. Some researchers attribute the country-wide
economic collapse during the Asian Financial Crisis in late
1990s to such practices of Chaebols (e.g., Kreuger and Yoo
2002). In the wake of the financial crisis, the International
Monetary Fund (IMF) and the Korean government re-
quested that Korean firms reform their governance struc-
tures in various ways. In particular, the government
believed that improving board independence could enhance
firms’ financial and social performance. As a result, Korean
firms have been asked to assign outside professionals as
board members (Cho and Kim 2007). Importantly, the way
in which Korean firms assigned outside directors is quite
unique. The Korean government has pushed firms to in-
crease the number of outside directors to a certain level
mandated by corporate law (Kim 2007). For instance, the
government had compelled the Korean stock exchange
(KSE) to make it mandatory for outside directors to make
up at least 25 % of board members in listed firms.
Given Korea’s unique context, we propose that the re-
lationship between board independence (i.e., a greater
proportion of outside directors) and CSR would be non-
linear. Institutional scholars suggest that when a strong
coercive pressure like corporate laws exists, appointing
outside directors can ‘‘occur as the result of the process that
makes organizations more similar without necessarily
making them more efficient’’ (DiMaggio and Powell 1983,
p. 147). Thus, outside directors in Korea, who were as-
signed during government-led institutional transitions, may
be a result of coercive isomorphism stemming from
Exploring the Relationship Between Board Characteristics and CSR: Empirical Evidence from Korea
institutional pressures (Kim 2007). As such, appointing a
minimal level of outside directors (i.e., 25 %, the legal
requirement by Securities and Exchange Laws) may rep-
resent a firm’s passive conformity rather than its proactive
responsiveness. In this case, it is less likely that outside
directors who were assigned to meet the minimum re-
quirement exert an ‘‘authentic’’ impact on a board’s deci-
sion-making for social investment. However, as Korean
firms ‘‘voluntarily’’ appoint more outsiders beyond the
obligatory requirement (e.g., 25 %), those outside directors
might truly be able to exercise authentic roles to align a
firm’s goals with long-term shareholders’ wealth and to
make CSR-supportive decisions. Therefore, we predict that
the positive effect of board independence on CSR will be
more salient as the proportion of outside directors exceeds
the minimum level legally required (i.e., an exponentially
growing shape or a pattern of increase at an increasing
rate).
Hypothesis 1 The relationship between board indepen-
dence and CSR will be curvilinear with an exponentially
growing shape among Korean firms.
CEO-Outside Director Social Ties and CSR
Outside directors play both resource provision roles and
monitoring roles (Hillman and Dalziel 2003). Not surpris-
ingly, these directors’ dual roles are often influenced by the
closeness of their relationship with the CEOs. On one hand, a
close relationship between the CEO and directors can en-
hance the board’s resource provision role by promoting re-
lational capital, mutual trust, and ease of communication
(Luo et al. 2012; Rahman 2008). On the other hand, with
respect to the monitoring role, an excessive closeness be-
tween the CEO and directors may impair a board’s ability to
oversee an executive’s self-serving decisions (Fredrickson
et al. 1988).
If CEOs are tied closely to outside directors beyond a
formal relationship (i.e., through social ties), the CEOs might
be more open to outside directors’ perspectives on social
issues, and the directors might more effectively provide
advice related to CSR, especially given that relational capital
(e.g., guanxi) is critical to the effectiveness of business op-
erations in Asian countries (Luo et al. 2012; Rahman 2008).
In this case, due to the enhanced resource provision by the
board, CEOs are well advised to promote CSR. However, if
CEOs are not tied to outside directors, their advice and
counsel will be of little use, and as a result, CEOs might care
less about CSR. Thus, it is predicted that the density
(strength) of the social ties between outside directors and the
CEO should be positively associated with CSR.
However, previous studies suggest that outside directors
exert less control over strategic decisions when they have
‘‘excessive’’ social ties with top managers (e.g., Fredrick-
son et al. 1988). When it comes to CSR, if outside directors
are too closely connected with CEOs in a social sense (i.e.,
they could be co-opted by incumbent CEOs), they may feel
obligated to support a manager’s decisions without ques-
tioning them, thus becoming a sort of ‘rubber stamp.’ Such
an excessively intimate relationship may impair a board’s
monitoring function in enhancing shareholders’ long-term
interests, and eventually social investment will be less
likely to occur. Thus, it is also predicted that the density
(strength) of the social ties between outside directors and
CEOs should be negatively associated with CSR when their
ties are excessively strong.
Previous studies reported a similar pattern of findings
regarding the CEO-outside director relationship. For in-
stance, Kim (2005) found that social ties between CEOs
and outside directors are positively associated with a firm’s
financial performance until a certain point of density, since
such ties can help enhance trust and collaboration. How-
ever, the association turned into a negative when the den-
sity exceeded an inflection point, since CEOs can gain so
much power that outside directors may find it difficult to
direct their strategic actions.
Social ties in Korea are generally formed through the
shared backgrounds of regional origin and school. Such a
strong in-group membership by regional origin influences
the ways Korean people think and behave (Shin and Chin
1989). The same is true for school ties. The shared back-
ground of school (e.g., being alumni of the same high
school or college) has been viewed as a critical source of
in-group membership in Korea. For instance, Daewoo, one
of Korea’s largest Chaebols until the late 1990s, used to
have a significant proportion of directors (nine), all of
whom graduated from the same prestigious high school
(Field 1995). Kim (2005, 2007) also identified the presence
of the ‘elite school network’ effect in the boardrooms of
large Korean firms.
Taken together, outside directors who are socially
connected to top managers in Korea are effective in
guiding top managers to make CSR-supportive decisions
(i.e., enhanced resource provision roles), but as the kin-
ship through social ties become excessive, they are less
likely to make bona fide efforts to monitor top manage-
ment (i.e., impaired monitoring roles); consequently, this
will have a detrimental effect on CSR. Therefore, we
predict that the relationship between CEO-outside direc-
tors’ social ties and CSR will be positive to a certain
point, but then turn negative after that point (i.e., a con-
cave relationship).
Hypothesis 2 There will be an inverted U-shaped rela-
tionship between CEO-outside directors’ social ties and
CSR among Korean firms.
123

Board Educational Diversity and CSR
Most research proposes a positive relationship between
board diversity and CSR. Board diversity enhances the
breadth of perspective, cognitive resources, and overall
problem-solving capacity (Hoffman and Maier 1961). This
might also be the case for CSR. Since CSR requires a
comprehensive understanding of multiple stakeholders’
interests and demands (e.g., Hung 2011), a diverse board of
directors with accesses to various stakeholders can help a
firm better engage in CSR. Empirical evidence supports the
positive relationship between board diversity and CSR
(e.g., Post et al. 2011; Siciliano 1996; Webb 2004; Wil-
liams 2003). However, other studies (e.g., Goodstein et al.
1994) report that there are detrimental effects of diversity,
including emotional and relational conflicts. A high level
of diversity may ‘‘cause process deficiencies by plaguing
efficient operation of 4Cs (i.e., communication, collabora-
tion, coordination and cohesiveness)’’ (Auh and Menguc
2005, p. 252). Hence, as the level of board diversity in-
creases, the risks associated with hampered information-
sharing, difficulty of consensus building, and slower deci-
sion-making also increase. In this study, we specifically
focus on the diversity of the type of education (e.g., busi-
ness, science, law, and engineering) because it implies
different views, skills, and ways of understanding and
evaluating a firm’s social roles.
Given that diversity can function as a double-edged
sword, the effect of educational diversity on CSR seems to
be much more complex than it appears. In fact, previous
studies, mostly based on a sample of US firms, found a
simple positive relationship between board diversity and
CSR (e.g., Siciliano 1996; Webb 2004; Williams 2003).
The US is the leading country in terms of individualism
orientation. Within an individualistic culture, firms tend to
value diversity and individual uniqueness. As such, diverse
resources from boards of directors might be fully recog-
nized and utilized for the corporate endeavor of pursuing
CSR.
In contrast, Korean society has been embedded in a
strong collectivistic orientation. Within collectivistic cul-
tures, harmony and unity are considered to be socially
desirable (Hofstede 1991). In addition to collectivism,
Confucian traditions in Korea emphasize communal shar-
ing, collective goals, and conformity in the decision-mak-
ing process (Yamaguchi 1994). Under such cultural
traditions, Korean firms tend to make an effort to integrate
different voices into a united voice, and often suppress
different opinions even though they may be viewed
positively (Kim and Markus 1999). Suggesting divergent
opinions, and thus making oneself overly visible compared
to the majority, is regarded as a violation of the cultural
norm of conformity. Specifically, directors with views that
123
Y. K. Chang et al.
differ from the majority have the mentality of ‘the nail that
sticks up gets hammered down’,’ and they feel pressured to
follow decisions made by the majority. As such, a board’s
educational diversity is likely to have a detrimental effect
on CSR among Korean firms as board diversity increases to
a certain level.
However, as the diversity level increases further, the
dominance of the majority weakens and group pressure
toward conformity also decreases. After reaching a cri-
tical mass, the positive effects of educational diversity
become more salient, a finding that has been reported in
previous studies on board diversity and CSR in US firms
(e.g., Post et al. 2011; Siciliano 1996; Webb 2004; Wil-
liams 2003). In this situation, directors may feel freer to
express their own opinions; in turn, board diversity can be
translated into a CSR-supportive resource. Taken togeth-
er, we predict that the relationship between a board’s
educational diversity and CSR will be negative to a cer-
tain point, but turn positive after that point (i.e., a convex
relationship).
Hypothesis 3 There will be a U-shaped relationship be-
tween a board’s educational diversity and CSR among
Korean firms.
Method
Sample and Data
Large publicly traded Korean firms were selected for this
study. We believe that Korea offers an interesting research
setting to examine the board-CSR linkage. As described
above, the Korean government has led corporate gover-
nance reform in a way that aims to promote transparency
and accountability. As a result, a number of Korean firms
have actively engaged in CSR and have been included in
the Dow Jones Sustainability Indices, the global indices
that track the financial performance of the world’s top
sustainability-driven companies.
The Korea Economic Justice Institute (KEJI), a leading
CSR assessment institute in Korea, has published an annual
list of the top-200 corporate citizens in its KEJI Index. The
reliability of the KEJI Index has been reinforced by its
20-year publication record and its extensive use in research
and practice (e.g., Chang et al. 2012; Choi et al. 2010; Oh
et al. 2011). The KEJI Index relies on comprehensive data
sources. KEJI collected CSR information from a wide va-
riety of sources, including company interviews, govern-
ment, NGOs, and mass media coverage. Similar to Kinder,
Lydenberg, Domini Research and Analytics (KLD) ratings
in the US, Korean firms are rated with standardized values
based on original interval scales, ranging from A to E, in
Exploring the Relationship Between Board Characteristics and CSR: Empirical Evidence from Korea
seven major subdomains1, including Environment, Com-
munity, Corporate Governance, Corporate Integrity, Cus-
tomer Satisfaction with Product Quality and Safety,
Employee Relations, and Long-term Orientation. Seven-
teen analysts—six KEJI senior analysts and 11 independent
university faculty members in economics and business—
were involved in developing the KEJI Index. For quality
assurance, the KEJI auditing committee, composed of
multiple public accountants, performed a quality review of
every company profile.
Due to concerns about the representativeness of the
sample, we contacted the KEJI and asked them to provide
the entire pool evaluated. The KEJI provided information
on approximately 350 firms for each year. In order to
match CSR ratings with board characteristics and other
relevant company information, we collected relevant data
through a directory of corporate boards in the Korea Listed
Companies Association (see Kim 2005, 2007) and KIS-
VALUE, an electronic database for the information of
Korean firms, similar to Standard Poor’s COMPUSTAT in
the US. Due to the lack of full data availability, our final
sample size was reduced to 780 firm-year observations
from 293 firms over the years 2003–2005. In total, over
4500 director-year profiles were analyzed.
Variables
Dependent Variable
The KEJI Index was used to measure CSR. The highest
possible score of KEJI Index is 75. In our sample, the mean
value of KEJI index is 45.01 with the standard deviation of
3.54.
Independent Variables
Most of our board characteristic variables were drawn from
the directory of corporate boards in the Korea Listed
Companies Association, which is similar to Who’s Who in
Finance and Business in the US. Korean corporate gover-
nance researchers have frequently made use of this data
source (e.g., Kim 2005, 2007). All board characteristics
variables were lagged by 1 year, which enhances the
causality inferences for the relationships. We examined
three important characteristics of the board of directors: (1)
board independence, (2) CEO-outside director social ties,
and (3) board educational diversity.
Board independence was measured by the Proportion of
Outside Directors, which was calculated by dividing the
1 Average Age in our analysis as a proxy for their time
Because there is a ‘corporate governance’ domain in KEJI, we also
used adjusted CSR ratings by excluding scores directly related to
boards of directors. The results are similar to the reported ones.
number of independent outside directors by the total
number of board members. CEO-Outside Director Social
Ties were coded in terms of density of the social rela-
tionship between CEOs and outside directors. The number
of regional origin ties (i.e., being born and raised in same
hometown) or school ties (graduating from the same
school) shared by both the CEO and outside directors was
counted as the strength of social ties (Kim 2005). A re-
gional origin tie was coded 1 if the CEO and an outside
director shared the same regional background according to
Korean territory classification (ten major provinces), and a
school tie was also coded 1 if they attended the same high
school or college. Then, a count of regional and school ties
was divided by all possible dyadic relationships between
the CEO and all outside directors. For example, if there
were four outside directors and only one of them shared a
regional background with the CEO, their social tie was
computed as 0.25 (1/1 ? 1 ? 1 ? 1). For board diversity,
we focused on the educational diversity of the board of
directors. Board Educational Diversity was calculated
based on Blau’s (1977) index for heterogeneity (1 -
P 2
Pi ). Each educational background classification was
based on their terminal degree (business and eco-
nomic = 1, social science = 2, natural science = 3,
engineering and applied science = 4).
Control Variables
We controlled for company age, firm size, return on assets
(ROA), CEO change, average age of board members, board
size, outside director ownership, managerial ownership,
and industry dummy variables. First, we included Company
Age, calculated by years of operation since its foundation,
as previous studies (e.g., Moore 2001) found that company
age is associated with CSR. Some of the literature (Chang
et al. 2012) has also argued that firm size has a potential
impact on CSR. Firm Size was controlled with a mea-
surement of total sales, and was transformed logarithmi-
cally due to the positively skewed distribution. According
to slack resources theory (Waddock and Graves 1997),
higher levels of CSR might be driven by better financial
conditions such as high profitability. As measurement for
profitability, ROA was calculated by net income divided by
total assets.
We also controlled for Change of CEO since firms often
change CEOs when they seek to reposition their strategic
stances (Pitcher et al. 2000). We created a dummy variable,
which we coded as 1 if there was a change of CEO during a
given year, or 0 if otherwise. Following the previous lit-
erature (e.g., Kim 2005), we also included Directors’
horizon (McClelland et al. 2012). Older directors may be
less favorable to CSR-supportive decisions due to their
123
 Y. K. Chang et al.

Table 2 Descriptive statistics and correlations

Mean SD 1 2 3 4 5 6 7 8 9 10 11

1. CSR ratings 45.01 3.54

2. Company age 35.12 13.63 0.10
3. Firm size 26.18 1.45 0.44 0.07
4. Return on assets (%) 5.03 7.07 0.20 -0.02 0.05
5. Change of CEO 0.11 0.32 0.08 -0.05 0.08 0.00
6. Directors’ average age 55.71 4.69 0.13 0.19 0.21 0.03 -0.10
7. Board size 5.93 2.34 0.35 0.16 0.53 0.07 -0.05 0.12
8. Outside director ownership (%) 0.03 0.23 -0.04 -0.01 -0.05 0.01 0.02 0.07 0.07
9. Managerial ownership (%) 3.40 8.36 -0.15 0.01 -0.11 -0.04 -0.05 0.07 0.02 0.03
10. Proportion of outside directors 0.34 0.11 0.32 -0.11 0.46 -0.03 0.15 0.06 0.28 -0.01 -0.17
11. CEO-outside director social ties 0.29 0.35 0.05 -0.07 -0.04 0.07 0.01 -0.05 0.02 -0.07 0.00 0.03
12. Board educational diversity 0.48 0.17 0.00 0.01 0.13 -0.04 -0.02 0.04 0.24 -0.04 -0.02 0.03 0.00

Two-tailed coefficient test (N = 780). Correlations greater than j0:07j are significant at p \ 0.05, those greater than j0:10j are significant at
p \ 0.01

shortened time horizon (Burke and Logsdon 1996; Oh et al.
2014). Board Size, measured by the total number of di-
rectors on the board, was also controlled. Since larger
boards may bring more expertise and knowledge (Dalton
et al. 1999), board size should be related to effective
stakeholder management. Previous studies (e.g., Oh et al.
(2011)] found that ownership characteristics also affect
CSR. With respect to ownership characteristics, Outside
Director Ownership and Managerial Ownership are mea-
sured by the percentage of shares held by independent
outside directors and top executives, respectively.
Finally, we considered industry dummy variables to
control for industry-specific effects. KEJI provides the
following industry classifications: electronics/IT industry,
metal/steel/chemistry industry, food/textile/papers indus-
try, and service/non-manufacturing industry. All control
variables, except industry dummy variables, were lagged
by 1 year.
Analysis
Our final dataset consists of panel data of 780 firm-year
observations, thus our data include both cross-sectional and
time-series components. Such data structures violate the
assumption of independence across observations necessary
for ordinary least squares (OLS) regressions. We therefore
used generalized estimating equations (GEE) to estimate
the parameters for all our analyses for several reasons.
Because different board characteristics influence a firm’s
CSR, either GEE or random-effects (RE) GLS2 models can
2
For the sake of robustness, we also conducted a GLS random-
effects model, and the results are similar to the reported ones: squared
terms of board independence (b = 0.86, p B 0.05), CEO-outside
director social ties (b = -2.73, p B 0.05), and educational diversity
(b = 2.91, p B 0.05).
be used instead of the fixed-effects model. GEE regression
estimates more robust and consistent parameters when
autocorrelation exists due to non-independence, compared
to fixed- or random-effects models (Liang and Zeger 1986).
Because the GEE model is based on fewer assumptions
than RE models, it is more robust to erroneous assumptions
about the RE in the model. In addition, the GEE model is
less subject to instability and convergence problems be-
cause it is less computationally intensive than either fixed-
or random-effects models (Quintana-Garcı́a and Bena-
vides-Velasco 2008, p. 499).
Furthermore, a modified Wald test for group-wise
heteroskedasticity revealed the presence of heteroskedas-
ticity in our sample (p \ 0.001). In order to address
heteroskedasticity in our data, we used robust standard
error (e.g., Baltagi 2005). Also, we evaluated the multi-
collinearity by using VIFs, which ranged from 1.06 to 2.92,
where tolerance ranged from 0.34 to 0.94. The range of
VIFs falls outside the conventional threshold of 10 (Neter
et al. 1985), thus our data does not have multicollinearity
issues.
Results
The means, standard deviations, and correlations for all the
variables, except industry dummy variables, are reported in
Table 2. The average CSR rating is 45.01 out of 75.
We perform GEE regression analyses in five steps, as
reported in Table 3. In the first step, all control variables
are included in Model 1. Firm Size is positively associated
with CSR (p \ 0.001) and Board Size is also positively
related to CSR (p \ 0.05).
Hypothesis 1 proposes that the effect of representation
of outside directors on CSR should be curvilinear with an

123
Exploring the Relationship Between Board Characteristics and CSR: Empirical Evidence from Korea

Table 3 Results of GEE regression analysis

Model 1 Model 2 Model 3 Model 4 Model 5
b SE b SE b SE b SE b SE

Constant 44.96*** (0.31) 44.83*** (0.31) 45.23*** (0.32) 44.90*** (0.31) 45.06*** (0.32)
Control variables
Company age 0.01 (0.01) 0.02  (0.01) 0.01 (0.01) 0.01 (0.01) 0.02  (0.01)
Firm size 0.95*** (0.20) 0.79*** (0.20) 0.94*** (0.20) 0.94*** (0.20) 0.78*** (0.19)
Return on assets (%) 0.03 (0.02) 0.03 (0.02) 0.03 (0.02) 0.03 (0.02) 0.03 (0.02)
Change of CEO 0.48  (0.26) 0.40 (0.26) 0.51  (0.26) 0.48  (0.26) 0.43  (0.26)
Directors’ average age 0.04 (0.03) 0.04 (0.03) 0.04 (0.03) 0.04 (0.03) 0.04 (0.03)
Board size 0.18* (0.08) 0.15  (0.08) 0.18* (0.08) 0.20* (0.08) 0.17* (0.08)
Outside director ownership 0.04 (0.42) 0.04 (0.47) 0.08 (0.40) 0.04 (0.42) 0.09 (0.44)
(%)
Managerial ownership (%) -0.02  (0.01) -0.02  (0.01) -0.02  (0.01) -0.02  (0.01) -0.02  (0.01)
Testing variables
Proportion of outside 2.89* (1.19) 2.71* (1.20)
directors
Proportion of outside 0.82* (0.37) 0.82* (0.38)
directors-squared
CEO-outside director 1.12* (0.49) 1.03* (0.48)
social ties
CEO-outside director -2.75* (1.28) -2.80* (1.28)
social ties-squared
Board educational diversity -0.17 (0.87) -0.14 (0.86)
Board educational 2.79* (1.43) 2.90* (1.39)
diversity-squared
Wald chi-square (d.f.) 123.98 167.47 138.10 128.69 189.17
(11)*** (13)*** (13)*** (13)*** (17)***
Number of observations 780 780 780 780 780
Robust standard errors are in parentheses and individual industry dummies are not reported for the sake of brevity
* p B 0.05; ** p B 0.01; *** p B 0.001;   B 0.10, Two-tailed coefficient tests

exponential growth curve. As shown in Model 2, both
the proportion of outside directors (positive) and its
square-term (positive) are significant (p \ 0.05). This
result indicates that CSR increases at an increasing rate
as board independence increases. Thus, Hypothesis 1 is
supported.
Hypothesis 2 proposes that the effects of CEO-outside
director social ties on CSR should be an inverted U-shape
(or concave relationship). As shown in Model 3, both CEO-
outside director social ties (positive) and its square-term
(negative) are statistically significant (p \ 0.05). This re-
sult indicates that the relationship between CEO-outside
directors’ social ties and CSR is positive to a certain point,
but turns negative after that point. Thus, Hypothesis 2 is
supported.
Hypothesis 3 proposes that the relationship between
directors’ educational diversity and CSR should be a
U-shape (or convex relationship). As shown in Model 4,
the squared term of educational diversity (positive) is sig-
nificant (p \ 0.05). This result indicates that the
relationship between board educational diversity and CSR
is negative to a certain point, but turns positive after that
point. Thus, Hypothesis 3 is supported.
In Model 5, all hypotheses are tested simultaneously in
one equation. We observe similar results with Models 2, 3,
and 4, which indicates the robustness of our findings. In
order to demonstrate the non-linear patterns, we plot the
relationships in Figs. 1, 2, and 3, respectively.
Discussion
Most of the previous CSR literature has focused heavily on
Western contexts. In response to a lack of understanding of
CSR in other institutional environments, researchers have
begun to pay close attention to CSR in Asian countries.
Despite the growing attention to CSR in Asia, the rela-
tionships between board characteristics and CSR have been
relatively under-investigated. In our study, we examined
the effects of board characteristics on CSR among Korean

123
 Y. K. Chang et al.

48.5 firms, beginning with the following research question: ‘‘Do

48 existing theories from the Western literature have a similar
47.5
application in the Asian context?’’ Existing theories re-
garding the relationships between board characteristics and
47
CSR include agency theory and resource dependence the-
46.5 ory (Hillman and Dalziel 2003). We found idiosyncratic
46 curvilinear patterns between CSR and the following board
45.5 characteristics: board independence (i.e., exponentially
growing shape), CEO-outside director social ties (i.e., in-
45
verted U-shape), and educational diversity (i.e., U-shape).
44.5
Thus, our findings imply that the fundamental assumptions
44 of existing theories (e.g., a separation of ownership and
Low High
Proportion of outside directors control) should be carefully applied depending on the in-
stitutional contexts where the firms are embedded. Our
Fig. 1 Curvilinear relationship between board independence and study advances the current stream of research, suggesting
CSR that any examination of the board-CSR linkage should
consider the institutional context.
Therefore, our study sheds additional light on the rela-
45.5 tionship between corporate governance and CSR. First,
45.3 while most previous studies found the board independence-
45.1 CSR linkage to be linear and positive (e.g., Johnson and
44.9 Greening 1999), we found a curvilinear relationship with
44.7 an exponential growth curve. Since outside directors in
44.5 Korea have often been viewed as an indication of ‘coercive
isomorphism’ caused by government pressures (Kim
44.3
2007), outside directors may not function properly in
44.1
shaping CSR-supportive decisions unless the proportion of
43.9
outside directors exceeds the regulatory requirement (i.e.,
43.7 more than 25 %). However, as firms voluntarily nominate
43.5 more outsiders beyond the regulatory requirement, outside
Low High
directors should be able to exercise a bona fide effort to
CEO-outside director social ties make CSR-committed decisions. This finding implies that
Fig. 2 Inverted U-shaped relationship between CEO-outside director
outside directors do not always play a meaningful role in
social ties and CSR promoting CSR, in contrast to what the Western-focused
literature has found. Rather, it is more important to create a
decision-making environment in which outside directors
45.7 are empowered to become fully involved in corporate de-
45.6 cisions. Indeed, since 1998, all publically traded firms in
Korea have been requested to assign at least 25 % outside
45.5
directors to corporate boards. Therefore, the proportion of
45.4 outside directors beyond this required level could reflect
45.3 the fact that ‘‘firms recruit, invite, and nominate outside
directors proactively rather than passively’’ (Chang et al.
45.2
2012, p. 496), where outside directors should be able to
45.1 play a significant role in pursuing social goals.
45 Second, this study has been the first to explore the re-
44.9
lationship between CEO-outside director social ties and
CSR. What it found was an inverted U-shape pattern to this
44.8
Low High relationship. This finding suggests that social ties between
CEOs and outside directors can be a double-edged sword.
Board educational diversity
Social ties between CEOs and outside directors can pro-
Fig. 3 U-shaped relationship between board educational diversity mote CSR until the strength of the ties reaches a certain
and CSR point, mainly due to the improved resource provision of

123
Exploring the Relationship Between Board Characteristics and CSR: Empirical Evidence from Korea
directors. However, CEO-outside director social ties can
also have a detrimental effect on CSR as the ties become
too tight. This is because excessive social ties (e.g., ‘‘good
old boys clubs’’ in Kim 2005), as agency theory implies,
prevent outside directors from being socially independent
when they monitor executives. Therefore, our findings
suggest that in order to promote CSR, firms need to be
careful when they are recruiting, inviting, and nominating
outside directors, to avoid situations in which social ties
between the CEO and outside directors are too strong.
Third, we also found a non-linear pattern (i.e., U-shape)
in the relationship between board educational diversity and
CSR. This distinct pattern can be explained by cultural
differences across countries. Contrary to individualistic
culture, collectivistic culture often stifles diversity and in-
dividuality by emphasizing shared social norms and a
shared identity, and seeks harmony as a social virtue. As
such, if some directors have ‘minority’ views, they may
feel pressure to obey the group decision; consequently,
board diversity will not have a positive influence on CSR.
However, as diversity increases, directors may feel freer to
bring in their own opinions, and the corporate board, in
turn, is likely to be more committed to CSR. This finding
implies that Korean firms can benefit from board educa-
tional diversity in terms of promoting CSR when there is
little diversity (highly homogeneous) or when there is a
high level of diversity (highly heterogeneous). Thus, the
findings of this study expand upon the Western-focused
literature (e.g., Siciliano 1996; Webb 2004; Williams 2003)
that has viewed board diversity CSR-supportive resource.
Therefore, Korean firms that are devoted to CSR need to be
careful in pursuing board diversity in order not to get stuck
in the middle.
Based on its unique findings, this study makes several
theoretical contributions. First, it offers more context-rich
theoretical solutions to predicting the relationship between
board characteristics and CSR in Korea. The idiosyncratic
findings of this study suggest that existing theories may
have limited application in other institutional contexts;
therefore, the board-CSR linkage should be carefully ex-
amined, and should consider the institutional context and
how it affects various corporate decisions. Specifically, our
study suggests that agency theory could be more applicable
to Anglo-American capitalist countries, where principals
and agents are ‘‘meaningfully independent,’’ compared to
Asian countries, where agents are not independent from,
and may even be strongly affiliated with, principals such as
founding owners or large shareholders. Similarly, our study
also suggests that a conventional resource dependence
theory should be reinterpreted for Asian contexts. While
previous studies that rely on resource dependence theory
generally assume that board diversity plays a positive role
in terms of CSR, our study suggests that diversity
stemming from different educational backgrounds can play
either a positive or a negative role, and that understanding
these dual roles requires taking country-specific culture and
norms into account.
Furthermore, given the increasing attention to Asian
contexts in CSR research, our in-depth investigation of
CSR in the Korea context might serve as a catalyst for
future CSR research in other countries. Specifically,
Chaebol in Korea often have been juxtaposed against
Keiretsu in Japan in terms of their respective corporate
governance systems, while collectivism in Korea shares the
same roots with Confucian-based cultural traditions in
China. Therefore, this study can also inform CSR research
that focuses on East Asian countries such as China and
Japan, even though institutional differences still exist
among these countries to some extent.
In addition to its theoretical contributions, this study
offers insightful practical implications. First, a growing
number of companies have been developing various CSR
initiatives and practices as an important part of their
strategic agendas, which necessitates significant manage-
rial attention. As CSR becomes a more central part of
firms’ strategic agendas, managers should pay more at-
tention to the nature of the relationship between board
characteristics and CSR. Second, this study suggests that
there is no ‘‘universal’’ feature of CSR-supportive board
characteristics. For example, board diversity has been
recognized as positively affecting CSR in the US, but a
negative affect was also partially detected in this study.
Therefore, managers need to be fully aware of the influence
of cultural and institutional environments when consider-
ing board composition to promote CSR. Finally, our con-
text-rich approach might be most insightful for
multinational enterprises (MNEs) that should strive for
local adaptation with respect to CSR, as well as for inter-
national investors and fund managers who seek the best
portfolio in terms of social investment. For MNEs, it is
important to understand that CSR-supportive board struc-
tures in home countries may not be equivalent to those of
the host countries. For international investors and fund
managers, in order to figure out the best portfolio in terms
of social investment, they need to investigate the board
characteristics by country-specific criteria.
Although the study makes clear contributions, it also has
several limitations. First, we used regional and school in-
formation as a proxy for social ties between CEOs and
outside directors. While demographic similarities have
been widely used as proxies for social capital (Belliveau
et al. 1996), regional ties are not a common measure for
social networks in most research of this type. However, for
culturally and ethnically homogeneous countries like
Korea, being born and growing up in the same hometown
indicates very important social capital. Nonetheless, the
123

generalizability of our findings needs to be re-evaluated in
other countries (e.g., Japan) where cultural and ethnic di-
versity are comparable to Korea. In addition, we only used
educational background as a way to measure board diver-
sity. Although this is justified by unique Korean traditions
that emphasize social engagement through educational
achievements (Whitley 1999), other aspects of diversity
(e.g., diversity in terms of age and occupational back-
ground) also need to be investigated in the future. Fur-
thermore, since our findings are based on an in-depth
single-country study, what we provided was a deeper un-
derstanding of board-CSR linkages in specific institutional
environment. Therefore, future studies may benefit from
testing whether the idiosyncratic curvilinear relationships
can be found in other institutional contexts, including
North America, Europe, and other Asian countries. Finally,
our sample is limited to a relatively short time period, thus
future studies need to determine whether our hypotheses
are confirmed with samples of a longer time span.
In conclusion, our study explored the relationship be-
tween board characteristics and CSR, departing from
Western-based theoretical underpinnings. Previous studies
based on Western contexts have suggested that corporate
boards with better monitoring and incentive alignment, as
well as those with more resource provision roles, are likely
to engage in CSR. However, this study offers more con-
text-nuanced evidence, and thus advances the existing
knowledge of the board-CSR linkages.
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