Cultural Diversity in the Boardroom and Corporate Social Performance

44 Pages Posted: 5 Jun 2019

See all articles by Olga Dodd

Olga Dodd

Auckland University of Technology

Bart Frijns

Auckland University of Technology - Faculty of Business & Law

Alexandre Garel

Audencia Business School; Labex ReFi

Date Written: May 17, 2019

Abstract

We examine the impact of cultural diversity in corporate boards on a firm’s corporate social performance. Using a novel approach to identify a director’s cultural roots based on ancestry, we estimate the degree of cultural diversity at the board level. We find that board cultural diversity is positively associated with corporate social performance, consistent with the view that board cultural diversity enhances a firm’s ability to satisfy the needs of broader groups of stakeholders. The results are robust to addressing endogeneity concerns and the use of different culture frameworks. The positive relation between board cultural diversity and corporate social performance is particularly strong for firms that have higher needs for stakeholder management (i.e. firms that operate in industries with high visibility to consumers and in highly competitive industries) and for firms that have boards with strong positive diversity beliefs (captured using the board’s gender diversity, age diversity and independence).

Keywords: cultural diversity, corporate social responsibility, board of directors, board diversity, corporate social performance

JEL Classification: M14, G3, G34, G39

Suggested Citation

Dodd, Olga and Frijns, Bart and Garel, Alexandre, Cultural Diversity in the Boardroom and Corporate Social Performance (May 17, 2019). Available at SSRN: https://ssrn.com/abstract=3389707 or http://dx.doi.org/10.2139/ssrn.3389707

Olga Dodd

Auckland University of Technology ( email )

Auckland, 1142
New Zealand
+6499219999 ext 5423 (Phone)

Bart Frijns (Contact Author)

Auckland University of Technology - Faculty of Business & Law ( email )

3 Wakefield Street
Private Bag 92006
Auckland Central 1020
New Zealand

Alexandre Garel

Audencia Business School ( email )

8 Road Joneliere
BP 31222
Nantes Cedex 3, 44312
France

Labex ReFi ( email )

79 avenue de la République
Paris, 75011
France

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