Abstract
Stakeholder norms influence firms’ board composition including board diversity. However, less is known on how firms in emerging economies, specifically India—a heterogeneous institutional context where selection of directors exhibits distinct social embeddedness in firm-related network relations as well extra-network affiliations (e.g., religion/caste). Bridging the stakeholder perspective with the institutional perspective, we study Indian firms’ board diversity as a strategic adaptation to stakeholder norms from developed economies. Using panel regression analyses on 842 firm-year observations between 2013 and 2018, we find that in the Indian institutional environment, such an adaptation is subject to social embeddedness in ongoing relationships between firms and governments/public agencies, as well as firms’ positions in the interlocking network. The findings have important implications for corporate governance in emerging economies.
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