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Differences make a difference: Board diversity and enterprise digital transformation

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  • Xu, Huaining
  • Liu, Shasha
  • Kong, Gaowen

Abstract

Our study examines the influence of board diversity on enterprise digital transformation and its underlying mechanisms. We find that board diversity significantly facilitates digital transformation, a finding that remains consistent across various tests. Notably, this positive effect is primarily attributed to the easing of financing constraints and a heightened tolerance for risk. Furthermore, the study indicates that in scenarios characterized by poor debt repayment capacity, low credit rating, excessive debt caution, pronounced underinvestment, and non-state ownership, the role of board diversity in advancing digital transformation becomes more pronounced. Additionally, our research highlights that the impact of occupational diversity is more significant than that of social diversity, and the influence of diversity among executive directors is more substantial than that among non-executive directors in driving digital transformation. With the enhancement of board diversity and the advancement of digital transformation, enterprise value has been significantly improved.

Suggested Citation

  • Xu, Huaining & Liu, Shasha & Kong, Gaowen, 2025. "Differences make a difference: Board diversity and enterprise digital transformation," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 545-558.
    • Handle: RePEc:eee:ecanpo:v:86:y:2025:i:c:p:545-558
    DOI: 10.1016/j.eap.2025.03.046
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    Keywords

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    JEL classification:

    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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