How Do Board Size and Occupational Background of Directors Influence Social Performance in For-profit and Non-profit Organizations? Evidence from California Hospitals

Journal of Business Ethics · 2013 · Volume 118 · Issue 1

Abstract

This study investigates how board size and occupational background of directors differentially influence social performance in for-profit and non-profit organizations. Using data from California hospitals, we develop a quantitative measure of social performance and provide the following empirical evidence. First, board size is negatively (positively) associated with social performance in for-profit (non-profit) hospitals. Second, the presence of government officials on the board is negatively (positively) related to social performance in for-profit (non-profit) hospitals. Third, representation of physicians on the board is positively associated with social performance in for-profit hospitals, whereas their presence is not significantly related to social performance in non-profit hospitals. Our findings highlight the different effects of governance mechanisms on social performance in for-profit and non-profit organizations.

Keywords

Board size, Governance, Occupational background, Ownership, Social performance

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