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Board demographic diversity, firm performance and strategic change

Author

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  • Daniel Kipkirong Tarus
  • Federico Aime

Abstract

Purpose - – The purpose of this study is to examine the effect of boards’ demographic diversity on firms’ strategic change and the interaction effect of firm performance. Design/methodology/approach - – This paper used secondary data derived from publicly listed firms in Kenya during 2002-2010 and analyzed the data using fixed effects regression model to test the effect of board demographic and strategic change, while moderated regression analysis was used to test the moderating effect of firm performance. Findings - – The results partially supported board demographic diversity–strategic change hypothesis. In particular, results indicate that age diversity produces less strategic change, while functional diversity is associated with greater levels of strategic change. The moderated regression results do not support our general logic that high firm performance enhances board demographic diversity–strategic change relationship. In effect, the results reveal that at high level of firm performance, board demographic diversity produces less strategic change. Originality/value - – Despite few studies that have examined board demographic diversity and firm performance, this paper introduces strategic change as an outcome variable. This paper also explores the moderating role of firm performance in board demographic diversity–strategic change relationship, and finally, the study uses Kenyan dataset which in itself is unique because most governance and strategy research uses data from developed countries.

Suggested Citation

  • Daniel Kipkirong Tarus & Federico Aime, 2014. "Board demographic diversity, firm performance and strategic change," Management Research Review, Emerald Group Publishing Limited, vol. 37(12), pages 1110-1136, November.
    • Handle: RePEc:eme:mrrpps:v:37:y:2014:i:12:p:1110-1136
    DOI: 10.1108/MRR-03-2013-0056
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    Citations

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    Cited by:

    1. Azhar Abdul Rahman, 2018. "Quality of Information and the Moderating Effect of Board Size on SME Financial Structure: Malaysian Evidence," The Journal of Social Sciences Research, Academic Research Publishing Group, pages 851-859:2.
    2. Laura Padilla-Angulo, 2020. "The impact of board diversity on strategic change: a stakeholder perspective," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 24(4), pages 927-952, December.
    3. Sundari, Made Siti & Dewi, Komang Indah Suryani, 2018. "Orientasi kewirausahaan dalam turbulensi lingkungan bisnis," OSF Preprints kbj89, Center for Open Science.
    4. Neba Bhalla & Inderjit Kaur & Rakesh Kumar Sharma, 2022. "Examining the Effect of Tax Reform Determinants, Firms’ Characteristics and Demographic Factors on the Financial Performance of Small and Micro Enterprises," Sustainability, MDPI, vol. 14(14), pages 1-18, July.
    5. Talavera, Oleksandr & Yin, Shuxing & Zhang, Mao, 2018. "Age diversity, directors' personal values, and bank performance," International Review of Financial Analysis, Elsevier, vol. 55(C), pages 60-79.
    6. Tutun Mukherjee & Som Sankar Sen, 2022. "Impact of CEO attributes on corporate reputation, financial performance, and corporate sustainable growth: evidence from India," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-50, December.
    7. Ariani, Mintarti & Maharani, Raden Roro Irfani, 2018. "Entrepreneurial orientation dan pricing capability," OSF Preprints qek96, Center for Open Science.

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