Board of Directors’ Surface Level Diversity and Innovation Performance

Independent directors and firm innovation: the moderating role of gender and nationality diversity

“…As far as the US context is concerned, Balsmeier et al (2017), using a sample of 713 companies, find that the firms with the most independent boards, patent and claim more and receive more total future citations on their patents. Also, in the American context, similar results are found by Atallah et al (2021), Belkacemi et al (2021), Lu andWang (2018), andTai et al (2018). Jiraporn et al (2017) also find positive effects of independent directors on innovation in a study that includes 15,750 firm-year observations in Pakistan.…”

“…Atallah et al (2021), in their study of US and Canadian firms, also report that the presence of Independent directors and firm innovation women on boards is beneficial for both R&D investments and patents. In their study of firms listed in Forbes in year 2017, Belkacemi et al (2021) also point out that female directors are more creative, bring more input to new ideas and have the ability to help boards make better decisions related to innovation. In the same line, Griffin et al (2021) carried out an extensive study with a sample of 12,244 companies from 45 countries around the world.…”

“…However, bringing foreign directors onto the board may have drawbacks for the company. Adapting to the local culture and to the new domicile, and language and communication barriers involve psychological factors that might require the foreigner to spend time adapting to the company and might lead to conflicts (Belkacemi et al, 2021;Makkonen et al, 2018). In addition, their presence in the firm as insiders would be partly determined by the CEO's decisions so, unlike local directors, foreign directors might further EJIM 27,2 limit their criteria to be in line with the CEO's proposals.…”

“…Additionally, board gender and nationality diversity has also recently become a key global political and social issue for both companies and countries (Gyapong et al, 2016;Khan and Abdul Subhan, 2019;Mahadeo et al, 2012;Sarhan et al, 2019;Zaid et al, 2020). Therefore, some countries have established legislation to increase the inclusion of minorities on boards of directors based on ethical motivations (equality and equity), but also because of their economic benefits (Belkacemi et al, 2021;Terjesen et al, 2016).…”

“…The board of directors plays a key corporate governance role in strategic decisions, with the independent directors also being in charge of protecting minority interests (Fern andez-Temprano and Tejerina-Gaite, 2020) and they may also be a guarantee of firm decisions like firm innovation that may be perceived as highly risk by managers and large shareholders (Hern andez et al, 2010). Most previous studies on the relationship between independent directors and firm innovation have been carried out in countries with an Anglo-Saxon financial system, such as Australia (Valencia, 2018), US (Balsmeier et al, 2017;Belkacemi et al, 2021;Iyengar and Sundararajan, 2020;Jiraporn et al, 2017;Li and Rainville, 2021;Lu and Wang, 2018;Tai et al, 2018), UK (Garcia Osma, 2008;Rodrigues et al, 2020;Sena et al, 2018), and Asia (Ashwin et al, 2016;Berezinets et al, 2019;Chen et al, 2016;Chen and Hsu, 2009;Dong and Gou, 2010;Fu, 2019;Iren and Tee, 2018;Liao et al, 2019;Shapiro et al, 2015;Sharma et al, 2018;Suman and Singh, 2020;Takahiro, 2015;Wang, 2021;Zhang, 2022). The empirical evidence for Europe is more limited (Attia et al, 2021;Rossi and Cebula, 2015;Wincent et al, 2012) and, as far as Spain is concerned, to our knowledge, there are only two studies: Gonzales-Bustos and Hern andez-Lara (2014) and Gonzales-Bustos et al (2020) [3].…”