Local environmental organizations and employee directors on the board

Abstract

This research explores the impact of local non-governmental environmental organizations on board structures. Our results indicate that the intensity of such local organizations relates positively to the number of employee directors on the board. This finding suggests that a firm’s long-term orientation, influenced by local stakeholders, contributes to the development of sustainable board structures. We also analyze whether firms’ internal and external factors affect these organizations. The results show that the positive impact is stronger when local societies and corporate governance prioritize long-term goals. Thus, our findings align with social movement theory, suggesting that social initiatives motivate firms to enhance their social and environmental practices, ultimately fostering a long-term-oriented board structure.