Board diversity in governance studies: current issues and future directions Alessandro Zattoni SDA Bocconi School of Business & Parthenope University
Index • Review of previous studies • Relevance of diversity • Meaning of diversity • Practical example • Stylized model • Relationship between diversity and performance • Role of context • Role of methods • Conclusion
Review of previous studies A quick review of previous studies on board diversity (keyword) developed through archival database of academic publications (business source complete) shows that: • 164 articles have been published on the topic; • the time range is between 1978 and 2013 with the following distribution: (i) before ’ 90s: 4 (ii) 1990-99: 8 (iii) 2001-2009: 64 (iv) after 2010: 88 • the main outlets are CGIR (18) and JBE (12). There is an increasing attention to explore board diversity and this conference and special issue are timely!
Relevance of diversity Board diversity is a relevant and hot topic for Corporate Governance scholars: 1. Practitioners’ view - Diffusion of quota law in several countries (e.g. Norway, Spain, Finland, Italy) - Increasing emphasis on diversity in good governance codes Consultants’ encouragement to increase board diversity - 2. Scholars’ view - Well developed construct for governance scholars - Well established theories to predict its consequences (e.g. agency, information processing, social categorization, resource dependence) - Empirical data on diversity easy to access
Meaning of diversity Diversity can be defined as “the distribution of personal attributes among interdependent members of a work unit ” (Jackson et al., 2003). Diversity is a multi dimensional construct that includes (Johnson, Schnatterly, Hiil, forthcoming): - Demographic (e.g. age, gender, race, nationality, religious, political) - Human capital (e.g. skills, experiences) - Social capital (e.g. professional networks, personal networks, interlocking) Key questions: • Can we assume similar antecedents and consequences for different types of diversity (e.g. age, gender, race, nationality, tenure)? • Can we assume similar antecedents and consequences for the different dimensions of diversity (i.e. demographic, human capital and social capital)? • What are the implications of the interactions of different types and dimensions of diversity (in an individual and in a group)?
Practical example Marissa Mayer Indra K. Nooyi Cher Wang Position P/CEO Yahoo C/CEO Pepsi co-founder & C HTC Born 30/05/1975 28/10/1955 14/09/1958 Nationality USA Indian/USA Taiwan BS engineer physics n.a. MS computer sc. MBA + P&P Mgmt economics Functional designer, PM CFO entrepreneur Previous jobs Google J&J, Mettur, BCG, First Int. Comp., VIA Motorola, ABB Private boards Walmart, Jawbone - - Nonprofit Natl Design Mus., World Ec. Forum, - NY City & SF ballet, Intl Rescue comm., SF MoMA World Justice Pjt Religion Lutherhan Hindu Christian
Stylized model External antecedents - shareholders - stakeholders Board - regulation diversity - demographic - human capital Board Firm - social capital processes Board tasks Performance - effort norms - Strategic - Economic - cognitive - Control - Financial Board conflicts - Networking - Social variables - Use of - size knowledge - duality Firm - committees antecedents - outsider ratio - size - etc. - age - listing - industry
Relationship between diversity and performance Previous studies showed mixed findings, governance scholars are encouraged to explore: • the consequences of diversity on board-level variables: (i) board processes; (ii) board tasks; (iii) board decision making. Key questions • Is the relationship linear (positive or negative) or curvilinear (U- shape or inverted U-shape)? • How to disentangle positive and negative effects of diversity (typically characterized as a double-edged sword)? • Which variables can moderate the relationship between diversity and performance? • What is the final effect on firm performance?
Role of context The context can affect diversity and its consequences. Future studies should consider: • Type of diversity (demographic, human capital, social capital) • National context (i.e. informal and formal institutions) • Industry context (i.e. stable and low uncertainty versus unstable and high uncertainty) • Firm context (e.g. profit versus nonprofit) • Team context (e.g. shareholders, board, TMT) Governance scholars cannot replicate previous studies developed in different contexts, but should better contextualize their research!
Role of methods Different methods can allow scholars to explore diversity from multiple and complementary viewpoints: • Quantitative methods • Qualitative methods (see recent special issue on CGIR) • Mixed-methods Governance scholars are invited to use different methods in order provide a richer empirical evidence. Multi-level analyses can be useful to disentangle the effect of diversity at different levels.
Conclusion Board diversity is a relevant and timely topic to explore both from an academic and a practitioner viewpoint. Future studies are encouraged to: - Contextualize board diversity at national, firm, industry and team level - Explore the multifaceted dimensions of board diversity - Investigate the potential interactions among different types of diversity - Apply a wide set of (quantitative and qualitative) methods to provide a rich empirical evidence - Explore its antecedents and consequences at different levels: (i) External antecedents: culture, regulation, stakeholders (ii) Firm antecedents: size, listing, industry (iii) Board consequences: processes, tasks, decision making (iv) Firm consequences: economic, financial and social performance
Thanks for your kind attention!
Recommend
More recommend
