studies: current issues and future directions Alessandro Zattoni SDA - - PowerPoint PPT Presentation

Alessandro Zattoni

SDA Bocconi School of Business & Parthenope University

Board diversity in governance studies: current issues and future directions

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

Board variables

• size
• duality
• committees
• outsider ratio
• etc.

Board processes

• effort norms
• cognitive

conflicts

• Use of

knowledge Board tasks

• Strategic
• Control
• Networking

Firm Performance

• Economic
• Financial
• Social

Board diversity

• demographic
• human capital
• social capital

External antecedents

• shareholders
• stakeholders
• regulation

Firm antecedents

• size
• 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

• rder 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!