 Board cultural diversity and firm performance under competitive pressuresOlga Dodd, Bart Frijns, Robin Kaiji Gong and Shushu Liao The Financial Review, 2024, vol. 59, issue 1, 89-111 Abstract: We examine the impact of board cultural diversity, based on directors' ancestry, on firm performance conditional on product market competition. We argue that culturally diverse boards foster critical thinking and offer creative solutions that help firms thrive in competitive environments. We document that culturally diverse boards are associated with superior performance for firms operating in highly competitive industries. To address potential endogeneity issues, we use a quasi‐natural experiment of the U.S. import tariff cuts. The positive impact of board cultural diversity on firm performance in competitive markets manifests itself in firms that innovate more, require creative inputs, and face heightened predation risk due to their high interdependence with industry rivals, in line with culturally diverse boards effectively performing their advisory role. Lastly, we find no evidence that board cultural diversity is associated with enhanced monitoring as its benefits fade in the presence of powerful CEOs. Date: 2024 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:finrev:v:59:y:2024:i:1:p:89-111 Ordering information: This journal article can be ordered from Access Statistics for this article The Financial Review is currently edited by Cynthia J. Campbell and Arnold R. Cowan More articles in The Financial Review from Eastern Finance Association Contact information at EDIRC. |
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