The relevance of board diversity features in a weak institutional business environment

The board diversity literature continues to advance a simplistic but empirically unsubstantiated rhetoric of the board diversity accountability, economic benefits and its relationship with other firm characteristics. Yet, less is understood about which board diversity features actually matter for business decision-making, especially in weak institutional business environments where policy-practice decoupling is prevalent. Therefore, proceeding from an institutional theory underpinning and a board diversity accountability mechanism – decision-making argument, we explore via interviews, the perspectives of 27 professional investors on the relevance of diversity features for their decision-making in the Nigeria banking environment. Our findings reveal four factors (1. denotation of experience and innovation, 2. dynamic capability enablers, 3. ideas rotation and stability; and 4. display of discipline and board independence) that explain why board age and tenure diversity are relevant arrangements for decision-making in weak institutional environments. Also, we find four factors (1. ephemeral impositions, 2. tokenism, 3. no ethnic disparity in business opportunities, and 4. symbolic inclusivity) that explain why board gender and ethnicity diversity are irrelevant arrangements. Our findings provide very unusual insights into the (ir)relevance of board diversity in a weak institutional context.

Business Strategy and the Environment

Business Strategy and the Environment

34

1099-0836

N/A

5

18