The influence of firm -and country-level social factors on the Corporate Sustainability Performance. A multilevel approach

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Companies are constantly urged by various stakeholders to enhance their sustainability performance with the aim to minimize the negative footprint on the environment and the society created by business activities. However, improved insight into factors that affect the sustainability performance may help companies to adopt the most optimal practices. Whereas previous research has focused on “hard determinants” to examine the level of CSP in the firms, this study focuses on the social side of the issue by investigating how the board characteristics and the national culture influence the Corporate Sustainability Performance (CSP), but also how they interact with one another. The hypotheses were tested using a dataset of 3,633 firms from 47 countries for the period 2008-2016, which reaches 12,023 observations. The results of the analysis suggest that the more independent directors and the more diversity there is on the board of directors, the superior the firm’s sustainability performance is. In addition, the Hofstede’s cultural dimension masculinity influences negatively the CSP, whereas the long-term orientation has a positive effect. The analysis also showed that the negative effect of the country-level factor masculinity can be offset by employing more strictly independent directors on the board. Overall, the results show that not only financial performance is imperative for the level of CSP, but also “soft factors” are of equal importance and should not be overlooked by researchers and businesses.
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