Board diversity and firm performance: evidence from the U.K. SMEs

Nermeen Shehata, Ahmed Salhin and Moataz El-Helaly

Applied Economics, 2017, vol. 49, issue 48, 4817-4832

Abstract: This study examines the relationship between board diversity and firm performance in small- and medium-sized enterprises (SMEs) in the U.K. In particular, we investigate the role of gender and age as two dimensions of diversity. Using a large sample of SMEs (34,798 firms) located in the U.K. and focusing on the period from 2005 to 2013, our results show a significant negative association between each of gender diversity and age diversity, and firm performance. Our evidence yields important insights on the association between board diversity and firm performance, and calls suggestions for increased board diversity into question. A possible explanation for our findings could be due to the fact that our sampled firms are SMEs, whereas those in previous studies have been large enterprises. This research provides insights to entrepreneurs on how to enhance their performance, and to governments and policymakers on the development of rules that would achieve better performance in the SME sector.

Date: 2017
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Citations: View citations in EconPapers (21)

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DOI: 10.1080/00036846.2017.1293796

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