Impact of internal corporate social responsibility, women board members, directors’ experience, and firm size on firm efficiency

Public awareness of corporate social responsibility initiatives is increasing, compelling companies to take greater responsibility towards their stakeholders, including the employees as the company’s internal stakeholders. This initiative is very important because good corporate responsibility towards employees fosters motivation and loyalty to the company, which in turn may enhance the firm efficiency. Meanwhile, corporate governance, influenced by the board of directors’ characteristics, such as directors’ experiences and women board members, may influence companies in maximizing corporate responsibility practices towards workers to increase company efficiency. In addition, company size, which reflects media coverage, may also influence the relationship between corporate responsibility practices for workers and its efficiency performance. Previous studies have predominantly focused on the influence of corporate responsibility on corporate financial performance, such as ROA, ROE, or Tobins-Q, yielding mixed results across different countries and industries. Therefore, this thesis aims to address the gaps through four objectives. First, this study investigates the direct relationship between corporate responsibility toward employees (internal CSR) and firm efficiency. Second, this study examines the moderating impact of women board members on internal CSR and firm efficiency link. Third, the thesis examines the moderating role of directors’ experience on the relationship between internal CSR and firm efficiency. Fourth, this study analyses the moderating role of firm size in the internal CSR and firm efficiency relationship. Data is sourced from the LSEG Refinitiv database and the International Monetary Fund (IMF). The data consists of unbalanced panel data of 32,748 firm-year observations from 4,526 unique firms, 36 countries, and nine industries from 2013 to 2022. This study employs two-step data analysis procedures. Initially, data envelope analysis (DEA) is utilized to determine the efficiency level of firms. Afterward, regression analysis is used to examine the impact of the independent variables (internal CSR) as well as the moderating variables (women board members, directors' experience, and firm size) on firm efficiency. Several conclusions can be drawn from these findings: First, the findings show that the relationship between internal CSR and firm efficiency is significantly positive. These findings support stakeholder theory and RBV (Resource-Based View), explaining that corporate responsibility actions toward employees contribute positive feedback to the corporate efficiency. Second, the result finds evidence that the interaction between women board members and internal CSR significantly enhances company efficiency. Supporting gender socialization theory, women board members assist the company in determining the right internal CSR practices to enhance firm efficiency. Third, the thesis finds that directors' experience strengthens the relationship between internal CSR and firm efficiency. In other words, the more experience the board of directors has, the more effective corporate responsibility practices toward employees become. These findings support the upper-echelon theory. Finally, the result finds that firm size also affects the relationship between internal CSR and firm efficiency. Large companies tend to strengthen the positive relationship between internal CSR investment and firm efficiency. These findings align with the legitimacy theory.

Text 125386 - Full Text.pdf Download (2MB) Text SPE 2024 3 - Declaration Form.pdf Restricted to Repository staff only Download (406kB) Text SPE 2024 3 - Full Text.pdf Restricted to Repository staff only Download (2MB) Official URL or Download Paper: http://ethesis.upm.edu.my/id/eprint/18867

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