The Impact of Board Diversity on Corporate Performance


The benefits of diversity in boards are well-documented and the efforts to ensure greater representation of women and minorities in boardrooms are beginning to pay off. The impact of diversity on corporate performance is still largely sex toys
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One of the most common arguments is that increased demographic diversity can increase the knowledge base of a board and provides it with knowledge which would be lacking from a homogeneous group of men or women. In other words that a board that is more diverse is expected to have more “cognitive diversity” and consider different options when deciding on which direction to take the business ahead than a board with less diversity.

However, there are other factors that are at play. People who are seen as tokens or minorities in a group may self-censor and refrain from expressing opinions and opinions that are contrary to the majority. The board may not be able to take full advantage of its cognitive diversity.

Additionally, even though academic research suggests that a demographic diversity has a positive impact on board decisions, research also suggests that it isn’t the only factor that matters. Other attributes such as board independence and educational qualifications, measured by the amount of years of education that go beyond a bachelor’s degree can have a significant impact on the performance.

In order to get new members, companies should be creative when searching for them. Companies could, for instance, consider reaching out to businesses and universities to identify potential candidates. They could also form task forces tasked with exploring areas where the best candidates might not be readily available. This approach is a far more effective method of enhancing the diversity in an organization than relying on external or internal consultants to suggest names.