Board diversity and firm innovation: a meta-analysis

Makkonen, Teemu

doi:10.1108/ejim-09-2021-0474

Cited by 16 publications

(16 citation statements)

References 86 publications

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“…Firstly, the results of Model 2 illustrate the impact of the functional background heterogeneity of board members on technological innovation. It can be seen that there is a significant positive correlation between BDf and RD at the 99% confidence interval, which is consistent with the findings of Sternberg (2000) and Makkonen (2022) . The higher the degree of functional heterogeneity of board members is, the more professional and diversified board governance in the enterprise will be, which can provide enterprises with better professional consulting functions, thereby improving the level of enterprise innovation decision-making.…”

Section: Analysis and Discussion Of Resultssupporting

confidence: 88%

Finding the key to the black box of board diversity and firm performance: A mediating effect analysis of technological innovation

Yao

2022

Front. Psychol.

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A growing body of research has focused on the relationship between board diversity and firm performance. A series of empirical literatures have also examined a significant positive correlation between the two. But these results only demonstrate the relationship between the input of ‘diversity’ and the output of ‘firm performance’. Such research is more of a black box because board diversity must act on certain strategies or decisions to affect firm performance. Some scholars try theoretical analysis with the purpose of opening the black box. In order to verify the relevant theoretical analysis results, this study uses the mediating effect analysis model in the field of psychology, through multiple regression, impulse analysis, variance decomposition and other methods, to thus empirically test the mediating effect of technological innovation in the process of board diversification promoting corporate performance. We found that board diversity can improve firm performance by enhancing the level of technological innovation. Among them, technological innovation has played a complete mediating role in the diversity of board members’ functional and occupational background, and played a partial mediating role in the diversification of directors’ part-time jobs. Technological innovation is a key indicator bridging board diversity and firm performance. This study can explore and explain the inner workings of the significant relationship between board diversity and firm performance, and link research findings on similar phenomena. The research results may make the existing board governance theories more systematic, expand the extension of theoretical research, and provide some empirical research references for academics and practitioners.

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Section: Analysis and Discussion Of Resultssupporting

confidence: 88%

Finding the key to the black box of board diversity and firm performance: A mediating effect analysis of technological innovation

Yao

2022

Front. Psychol.

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“…In addition, our findings confirm the enlarged perspective of the agency theory that expands the standard principal-agent paradigm of financial economics to create the stakeholder-agency theory according to which monitoring tools that reduce the information asymmetry between managers and stakeholders ensure that the former act in the interest of the latter (Hill and Jones, 1992). Indeed, we enrich this view by proving that banks supporting Governing FinTech for performance the inclusion of women on the board offer more recognition to shareholders, debtholders and society and create pro-innovation board structures (Ben Rejeb et al, 2020;Makkonen, 2022) that are capable of lowering agency costs and improve performance.…”

Section: Discussionmentioning

confidence: 87%

Governing FinTech for performance: the monitoring role of female independent directors

Arena

Catuogno

Naciti

2023

EJIM

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PurposeThe use of digital technologies in the financial service industry has brought new complexities to the corporate governance in banks. Relying on the agency perspective of the shareholder, debtholder and societal governance in banks, this research examines the impact of financial technology innovation (FinTech) on banks' performance by enlightening the monitoring role of female independent directors.Design/methodology/approachRelying on a sample of Italian banks observed during the period 2016–2020, the authors hand-collected data on the use of FinTech by considering (1) the in-house provisions of FinTech solutions, (2) the collaboration with external FinTech firms and (3) a combination of both measures. The authors run a panel data regression analysis with fixed effects, measuring bank performance through bank competitiveness and bank riskiness.FindingsThe authors find that FinTech increases bank competitiveness in gathering money from depositors and that independent women on board mitigate the negative relationship between FinTech and the riskiness of banks' assets, ameliorating the conflicting interests among shareholders, debtholder and societal governance.Originality/valueThis study emphasizes the complexities of bank governance when dealing with FinTech in the wider perspective of equity governance, debt governance and the societal governance spotlighting the importance of appointing female directors in independent positions to enhance the bright sides of financial innovation. The authors enrich the literature on FinTech with a finer understanding of the drivers and implications of in-house provisions of FinTech solutions versus the collaboration with external FinTech firms.

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“…In line with this stream of thinking, race and gender have often been used in diversity research as proxies for differences in perspectives and human capital (Hillman et al , 2002; Kolev and McNamara, 2020; Roh and Sung, 2022). However, despite their long histories as variables of interest, their effects have been inconsistent within the research (An and Lee, 2022; Hoobler et al , 2018; Makkonen, 2022; Riordan, 2000), even as their salience and importance in business have increased (Ghafoor et al , 2022; Miller and Triana, 2009; Verhulst and DeCenzo, 2021).…”

Section: Literature Reviewmentioning

confidence: 99%

The relationship between women and racial minority employees/managers and financial performance

Smith,

De Leon

2023

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Purpose Diversity, equity and inclusion (DEI) have become prioritized goals of business, such as hiring more women and racial minorities. This study adds to the body of research regarding the value of diversity in organizations by examining the relationship between diversity at the workforce level and the financial performance of the organization. The empirical results of prior research have provided mixed results, finding mainly positive, but also negative, and nonsignificant relationships (Sharma et al., 2020; Vlas et al., 2022). The purpose of this study is to examine the current employment status of women and racial minorities in top US companies, then analyze if a correlation exists between a company’s profit margin and its percentage of women and racial minority employees and managers. Design/methodology/approach This study examined the top 200 companies in the Fortune 500 companies; these are the largest companies by revenue in the USA. Companies were ranked according to each variable (% of women employees, % of racial minority employees, % of women managers and % of racial minority managers) and then divided into equal quartiles. The mean profit margin for the top quartile was compared with the mean profit margin for the bottom quartile. T-tests were used to determine whether significant differences in profit margin exist between companies. This methodology of comparing top and bottom quartiles was developed in prior studies. Findings Fortune 200 companies have an average of 40% women and also 40% racial minorities in their workforce. Both women and racial minorities account for a smaller percentage of managers. Women account for 34% of managers, while racial minorities account for 29%. There is a significant positive relationship between profit margin and two of the variables. Companies with 45% or more women managers have a significantly higher profit margin than companies with the lowest percentages of women managers. Companies with 48% or more racial minority employees have a significantly higher profit margin than companies with the lowest percentages of racial minority employees. These findings are in-line with the existing body of research that has found mixed impacts of diversity on firm performance (cf. Hoobler et al., 2018; Leung et al., 2022) and draws attention to the need to consider the impact of gender and racial diversity on firms at various management levels within the firm to better understand the impact that increasing diversity has on firm performance (cf. Curado et al., 2022). Originality/value This paper adds to the body of knowledge by assessing the current status of women and racial minorities in top US companies and, then, analyzing if a correlation exists between a company’s profit margin and the number of women and racial minority employees and managers. Findings provide companies with further incentive to maintain DEI as a prioritized goal.

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Board diversity and firm innovation: a meta-analysis

Cited by 16 publications

References 86 publications

Finding the key to the black box of board diversity and firm performance: A mediating effect analysis of technological innovation

Finding the key to the black box of board diversity and firm performance: A mediating effect analysis of technological innovation

Governing FinTech for performance: the monitoring role of female independent directors

The relationship between women and racial minority employees/managers and financial performance

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