IntroductionThe article we have in hand takes a look at the relationship between board diversity and a firm's performance. Different than other studies, it explores "mediators that explain how board diversity is related to the firm's performance". The core idea is twofold: first, the authors explore how much board diversity, whether racial, gender or both, is related to the firm's performance. They start by disclosing statistics reflecting the current situation of boards in major companies in the United States. Then they apply research studies to try to conclude solid facts on this issue. Diversity's different aspects are related to cultural backgrounds and various indications appear; t ...view middle of the document...
The unique dependent variable put under study is the firm performance. Control variables are then defined as "firm age, liquidity, firm size, product diversification, etc…" One major limitation noted on the sampling level is the use of Fortune 500. Being the annual listing of the top 500 companies based in the United States - only, with the use of Fortune 500 the study disregards actual demographic data from other important places, such as Europe, Asia and Africa.Results of the studyResults of the study can be summarized as follows: Gender diversity is more common than racial diversity. A positive correlation is noted between gender and racial diversity and firm size. Reputation is significantly and positively correlated with both board diversity measures, but neither board gender diversity measures. Innovation is positively and significantly correlated with Blau's board racial diversity measure and marginally significantly correlated with both gender diversity measures. Both racial diversity measures are positively and significantly correlated to firm performance.The authors' contribution helps us see the benefits of board diversity in general. Yet, and because it is limited to cases in the United States of America, it presents a double-edged effect: from one side we learn that board diversity may be a positive factor and we can work on implementing it in other regions; from another side we have the cultural factor that comes in question to explore if such diversity can be applied in other regions of the world. Naturally, some questions arise from these contributions: can we apply racial diversity in every business community in the world as much as it's applied in the States? Can we also apply gender diversity? In some countries of the Middle East where the business community presents its weight on the international market, we find it difficult to discuss the introduction of gender diversity in the board. Yet and as time goes by, change is coming to some countries. For example, the election of two women to the Jeddah Chamber of Commerce & Industry (JCCI) last year provided another example of the growing prominence of women in Saudi Arabia's business sector (Meyer, 2006).Another contribution presented a clear relationship between diversity, governance and the signalling theory. If, as stated in the article, signals may come less effective when they do not come from powerful individuals who chair committees, then this may hinder the presence of elements on the board viewed as minorities, and sometimes viewed weaker than others. On the other hand, the authors validate the fact that diversity on the board is not a sufficient condition to ensure a better performance.AnalysisThe world, and especially the business community, has always struggled with the issue of diversity. Tolerance of the other, multiculturalism, social groups, has always been hot topics to discuss and study. In some societies, the cultural factor plays a major role;...
