2. Corporate Responsibility
• Responsible corporate directors have a range of
duties they must tend to.
For example,
– Duties to their shareholders.
– Duties to the wider community.
• Corporate philanthropy can be a way of meeting
both sets of duties.
– Improve a company’s reputation.
– Create positive community benefit.
3. Meeting the needs of communities
• Corporate philanthropy will only achieve its aims
if it meets the needs of the communities it works
in.
• The difficulty is that ultimate control over the
decision rests with directors.
• They cannot so easily rely on market mechanisms
or democratic deliberation to determine
community needs.
4. Representation
• The difficulties are compounded by the fact
that boards of directors are typically
unrepresentative of the communities their
companies serve.
• Risk that corporate philanthropy will reflect
particular personal characteristics of directors.
– Is corporate philanthropy affected by the social
backgrounds of directors?
5. Studying the effects of boards’
representativeness
• The effects of lack of representation can be
studied by measuring the effects of boards’
social backgrounds controlling for economic
factors that are associated with corporate
philanthropy.
– If the effects net of economic factors is nil then
representation not an issue.
– If the effects net of economic factors differs from
zero then representation becomes a concern.
6. Empirical Data
• 250 largest (market capitalisation) UK firms in
2011.
• Dependent variables are: 1) Membership of
Business in the Community (BITC) and 2) The size
(in £) of corporate charitable contributions
• Independent variables: 1) Directors’ social
backgrounds and 2) Economic controls.
– Logistic regression models for BITC membership
– Generalized linear model with Gamma distribution
assumed for dependent variable to deal with outliers
and heteroscedasticity.
7. British boards are male dominated
0.8% (2) of companies have female chairs
4.4 % (11) of companies have female chief executives
10.67% of board places held by women.
32.8% (82) boards have all male boards
8. British Boards are globalised
30.4 % (76) foreign chief execs (not from Great Britain or Eire)
21.2% (53) foreign chairs (not from Great Britain or Eire)
9. British boards are posh and sociable
Minimum 17.2% (26.9% 43/160 identified in social directory) of chairs attended a
traditional public school.
Minimum 6% (16.7% 15/90identified in social directory) of chief execs attended a
traditional public school.
Minimum 16% (25% 40/160 identified in social directory) of chairs member of traditional
elite club.
Mimimum 2.4% (3.8% identified in social directory) of chief execs member of traditional
elite club.
10. Director Background and corporate
philanthropy
Member of BITC Size of donation
Female + (sig) + (sig)
Foreign -sig - (sig)
School/Club Null Null
11. What to do?
• Would increasing levels of female representation
and reducing the number of foreigners in the
boardroom lead to increased levels of corporate
philanthropy?
• Or is there something more fundamental about
firms that leads them both to increase the
number of women on their boards and engage in
greater levels of corporate philanthropy?