A growing body of work suggests that the presence of women and of independent directors on boards of directors is associated with higher corporate environmental performance. However, the mechanisms linking board composition to corporate environmental performance are not well understood. This study proposes and empirically tests the mediating role of sustainability-themed alliances in the relationship between board composition and corporate environmental performance. Using the population of public oil and gas firms in the United States (U.S.) as the sample, the study relies on renewable energy alliances to measure sustainability-themed alliances and longitudinally analyzes lagged data for independent and control variables. The study found that 1) the higher the representation of women on a firm’s board, the more likely the firm is to form sustainability-themed alliances, and 2) the higher the representation of independent directors on a firm’s board, the more likely the firm is to form sustainability-themed alliances. Such alliances, in turn, positively contribute to corporate environmental performance. This paper discusses the study’s contributions to the board composition-social performance literature. As the literature increasingly suggests, the composition of a board of directors is a meaningful predictor of a firm’s environmental performance (e.g., Kassinis and Vafeas, 2002; Ortiz-de-Mandojana and Aragon-Correa, forthcoming; Rao et al., 2012; Walls and Hoffman, 2013). For example, corporations with a higher proportion of women on their boards exhibit heightened strategic capabilities for environmental performance (Post et al., 2011; Walls et al., 2012), provide more and higher quality environmental reporting (Fodio and Oba, 2012; Rao et al., 2012), and enjoy a superior reputation for environmental performance (Kimball et al., 2012). However, the relationship between board composition and corporate environmental performance is not always statistically significant (e.g., Galbreath, 2011; Stanwick and Stanwick, 1998), underscoring the need to better understand how these two distal concepts are connected. One of the challenges with the literature is that the theoretical framework that supports empirical evaluations of the board composition-corporate environmental performance relationship is overly parsimonious. In particular, the dominant framework fails to model how board involvement in strategy might mediate the ‘board composition-environmental performance’ relationship (Pye and Pettigrew, 2005; van Ees et al., 2009). Therefore, this study proposes the formation of sustainability-themed alliances as one mechanism linking board composition to corporate environmental performance. It conceives of sustainability-themed alliances as strategic alliances that for-profit corporations form with pro-environment organizations (Stafford et al., 1998) to mitigate internal resource needs (e.g., if sustainability is already an industry norm) or to facilitate external growth opportunities (e.g., if sustainability is not yet an industry norm) (Rahman and Korn, 2009), by scaling or linking operations (Dussauge et al., 2000). Informed by the broader construct of corporate social performance (Orlitzky et al., 2003; Wood, 1991), corporate environmental performance in this study encompasses environmentally responsible business practices and outcomes (e.g., pollution prevention activities; use of alternative fuels; environmental communications) (Walls et al., 2012). As depicted in Figure 1, this paper suggests that the makeup of a board influences the strategic formation of sustainability-themed alliances and that, in turn, such alliances help explain why board composition is associated with corporate environmental performance. This paper focuses on two dimensions of board composition that are particularly relevant to corporate environmental performance: the representation of women and of independent directors on boards. This study offers two distinct contributions to the research on board composition and corporate environmental performance. First, it advances the field by conceptually and empirically delineating how board composition might affect a firm’s environmental strategies (e.g., sustainability-themed alliances). To date, studies have primarily sought to explain the direct board composition-corporate environmental performance relationship (e.g., Ortiz-de-Mandojana and Aragon-Correa, forthcoming; Post et al., 2011). This study on the effect that board composition has on environmental strategies contributes to the literature because environmental strategies are a more proximal outcome of board composition than is corporate environmental performance. Second, this study contributes to the ‘board composition-firm outcome’ literature by theoretically establishing and empirically testing the mediating role of sustainability-themed alliances in the ‘board composition-corporate environmental performance’ relationship. Despite considerable evidence of the relationship between board composition (specifically, representation of women and/or independent directors on boards) and corporate environmental performance (e.g., Fodio and Oba, 2012; Kimball et al., 2012; Rao et al., 2012; Walls et al., 2012), not much is known about the mechanisms linking these distal constructs (Finkelstein and Mooney, 2003; Roberts et al., 2005; Tuggle et al., 2010). This paper specifically evaluates how the representation of women and of independent directors on the board affects corporate environmental performance through the formation of sustainability-themed alliances. Additionally, this paper advances the literature on female directors by examining the link between female board representation and firm strategy. While several studies have found that there is a relationship between female board representation and firm social performance (Bear et al., 2010; Boulouta, 2013; Mallin and Michelon, 2011; Marquis and Lee, 2013; Webb, 2004; Zhang et al., 2013; Zhang, 2012), the effect of female board representation on strategic decision-making pertaining to environmental sustainability has not been explored to date. Addressing sustainability issues is considered an increasingly critical challenge for organizational success (Accenture and UNGC, 2010). In particular, stakeholders’ intensified scrutiny of corporations’ sustainability efforts have increased the pressure on boards to promote environmental initiatives to improve corporate environmental performance (Darnall et al., 2010; Sharma and Henriques, 2005). Responses to stakeholder concerns of environmental sustainability are instrumental in helping a firm achieve and maintain organizational legitimacy in the marketplace. The context for this study is the oil and gas industry because, as one of the most controversial industries in the domain of environmental responsibility, it is subject to heightened stakeholder concerns (Du and Vieira Jr, 2012; Lindgreen et al., 2012; Roeck and Delobbe, 2012). In addition, in the oil and gas industry, the development of renewable energy is an accepted pathway for promoting sustainability (Bagliani et al., 2010; Luchsinger, 2009). Among traditional oil and gas firms, alliances constitute a legitimate avenue for pursuing the development of renewable energy (Dacin et al., 2007; Olk and Ring, 1997). Therefore, this paper specifically focuses on renewable energy alliances, which are defined as sustainability-themed alliances linking for-profit firms with renewable energy organizations to mitigate internal resource needs or to facilitate external growth opportunities in areas such as tidal and wave energy, hydropower, geothermal electricity, biomass, solar energy, and onshore and offshore wind energy. Finally, restricting the sample to a single industry helped reduce the noisy distraction of industry variation in alliance formation and environmental considerations
