How Experience and Network Ties Affect the Influence of Demographic Minorities on Corporate Boards

Abstract:     
This study examines how the influence of directors who are demographic minorities on corporate boards is contingent on the prior experience of board members and the larger social structural context in which demographic differences are embedded. We assess the effects of minority status according to functional background, industry background, education, race, and gender for a large sample of corporate outside directors at Fortune/Forbes 500 companies. The results show that (1) the prior experience of minority directors in a minority role on other boards can enhance their ability to exert influence on the focal board, while the prior experience of minority directors in a majority role can reduce their influence; (2) the prior experience of majority directors in a minority role on other boards can enhance the influence of minority directors on the focal board, and (3) minority directors are more influential if they have direct or indirect social network ties to majority directors through common memberships on other boards. Results suggest that demographic minorities can avoid out-group biases that would otherwise minimize their influence when they have prior experience on other boards or social network ties to other directors that enable them to create the perception of similarity with the majority.

Number of Pages in PDF File: 73

Keywords: corporate governance, minorities, boards of directors

JEL Classification: G3, M1

working papers series