Board Structure and Corporate Social Responsibility: Contingency versus Agency Theory

Studies in the field of corporate governance have tried to formulate a model that is compatible with all companies with different goals by using of agency theory. On the other hand, some researchers emphasize on presenting a contingency perspective. The purpose of this research is to examine the relationship between the board structure and corporate social responsibility by considering the role of contingency factors.

The research data includes 128 companies admitted to the Tehran Stock Exchange in the period of 2016 to 2021. Structural equation modeling and SmartPLS3 software were used to test the hypotheses. The three factors of firm size, business strategy and business competition have considered as contingency factors that affect the board structure.

Contingency factors including firm size, business strategy and business competition have a positive and significant effect on the board structure, and the board structure has a significant mediating effect on the relationship between the contingency factors and corporate social responsibility.

Companies with a strong strategy, large size and high business competitiveness have a more efficient board structure. Contingency factors are among the factors affecting the board structure, and the fitting of the board structure with contingency factors lead to improve corporate social responsibility.

Contribution: 

Studies based on agency theory are unable to explain the effectiveness of the board of directors in the field of corporate social responsibility due to having a narrow theoretical lens. By providing a contingency framework, this study contribute to the existing literature, and helps the legislators to formulate new guidelines and laws.