Faultlines: understanding how board composition may influence team dynamics and subgroup formation in corporate boards

Corporate governance scholars have shown an increasing interest in the concept of faultlines, i.e., the hypothetical dividing lines that fracture a group into two or more homogenous subgroups based on the alignment of multiple individual-level characteristics. Given this growing interest, I review the literature on board and top management team level faultlines and their influence of board- and firm- level outcomes. I synthesize the emerging literature along the lines of theoretical background, empirical findings and methodological focus. Based on this synthesis and in the context of pressures faced by boards due to societal challenges like inequality, climate change etc., I argue that faultlines may be a crucial perspective for corporate governance research on board composition going forward. Specifically, I suggest that research could benefit from a) drawing theoretically from other disciplines, b) exploring management of faultlines related dynamics in light of new corporate governance developments, and c) methodological considerations.