Adopting a social purpose in for-profit firms: the role of the board of directors

The debate on the purpose of corporations has intensified over the past decade, compelling businesses to reassess their societal roles. To effectively integrate sustainability into corporate strategies, for-profit firms are increasingly encouraged to adopt a pro-social purpose (SP). However, adopting and integrating an SP is a substantial shift that necessitates an internal push from corporate actors. In particular, due to its function of strategic decision-making, the board of directors represents a pivotal player in promoting the adoption of an SP. This research delves into the impact of board characteristics on the likelihood of adopting an SP in for-profit firms. We examined 580 European firms employing propensity score matching and logistic regression methodologies. Our findings offer initial insights on the effect of the board composition on adopting an SP. In particular, we found that cultivating the directors’ network with employees, fostering gender and age diversity, and welcoming highly qualified directors on board are key factors in facilitating the adoption and implementation of an SP in EU for-profit firms. Our study represents the first attempt to quantitatively examine the relationship between the board and SP. By doing so, we contribute to the theoretical advancement of the complementarity of corporate governance and corporate purpose. Moreover, we encourage practitioners to accrue awareness of the board characteristics that facilitate the adoption of an SP within their firms.