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.
