Ethnicity and Corporate Boards: Evidence from a Developing Economy

Abstract

The literature on corporate governance and institutional theory suggests that corporate governance responds to a broad array of institutional influences. In extending this literature, we adopt the Nigerian multi-ethnic institutional setting to understand how ethnicity influences boards and corporate governance. Employing an interpretivist qualitative methodology that includes 21 semi-structured interviews with two key stakeholder groups, i.e., board directors and regulators, we find the prevalence of a board ethnicity logic in the Nigerian corporate governance system. We uncover the drivers of this logic to include ethnocentric inclinations, government policy, colonialism, and the informal business environment. Furthermore, we show why and how this ethnicity logic conflicts with the legal system/regulatory framework. This research also allows us to examine the effects of the ethnicity logic on boards and corporate governance mechanisms such as whistleblowing.