How Job-Related Diversity Affects Board Strategic Participation

Abstract

Today, one concern for corporate leaders is to have different skills, knowledge, and experience in the boardroom. Using information-processing theory, our study examines a fairly neglected link between job-related diversity and board strategic involvement and looks into board processes to explain this relationship. Our findings suggest that job-related diversity is positively associated with boards’ strategic involvement, i.e. making proposals on long-term strategies, making decisions on long-term strategies, and putting those decisions into action. This relationship is fully mediated by board members' use of knowledge and skills. Other than hypothesized, no mediation effect could be found for cognitive conflict. We extend and contribute to the literature that uses information-processing theory in board context by explaining whether and how board diversity may influence boards' involvement in strategic decisions. This study offers insights to corporate leaders on how to create boards as active players in ...