Abstract
When we hear the word diversity, usually the first word that comes to mind is difference, and diversity steams from difference, in this paper, board diversity is discussed, in addition to linking it to firm performance, diversity is important, and it’s especially important in the board room of a given firm because it allows for different perspectives and opinions which can impact the decision-making process in the firm, which ultimately can affect the performance of the firm. The purpose of this paper is to give a relational guide on how board diversity can greatly impact the achievements of a firm. This paper is a theory-based study and aims to develop a critical approach of defining board diversity and linking that to the performance of the firm. This paper is a theory-based study because it utilizes the existing literature in order to determine the impact of board diversity on firm performance. This study also uses different theories and existing literature to highlight the relevance of having a diverse board in the firm. To find the relation, various studies and existing literature were analyzed to develop a critical approach to relate board diversity to firm performance. In conclusion, this paper outlines different aspects of board diversity while providing a critical look that allows us to assess the importance of board diversity and its connection to firm performance.
Highlights
While many decry the importance of people from different regions to be in one single room discussing and exchanging ideas, the others appreciate and in what would be a step ahead, retain it
The goal of this paper is to develop a critical approach to look at and assess board diversity and its connection with firm performance, this approach can be developed through the following
S.-H., 2009), scholars have suggested that intervening variables between board diversity and firm performance must be examined to uncover when and how diversity improves performance (Toyah & María, 2009; Yilmaz et al, 2021)
Summary
While many decry the importance of people from different regions to be in one single room discussing and exchanging ideas, the others appreciate and in what would be a step ahead, retain it. As faster as cancer on human flesh; so as diversity impending on discussions about firms. Has it led to criticism, well, according to recurring scenarios and examples supported by existing literature and legal authorities, it can be seen that the need for diversity in boards has become more reliable and relevant. Today women’s’ number is dramatically still low and there is need for firms to increase on women participation (Owen, 2018), In a study by (Dankwano, 2018), it was found that the reason for negative returns on assets by some firms was due to having a lesser number of return on assets was because women were minorities, he suggested for firms to at least have three female representatives on board for firms to be effective. Not all size matters, researchers become divided when it comes to board diversity (Aggarwal, Jindal, & Seth, 2019)
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