Board diversity and firm innovation: a meta-analysis

Purpose - It is commonly stated that increased board diversity leads to the heightened financial performance of firms via the impact that it can have on innovation, but the latter association has, thus far, remained empirically controversial. The aim of this paper is to shed light on this unresolved debate and gap in the literature via studying different types of diversity. Design/methodology/approach - A meta-analysis was conducted on the existing empirical evidence on the topic to show whether such an association exists and compare cognitive (expertise and experience) and demographic diversity (gender, nationality and racial/ethnic). Findings - The results show that there is indeed a positive and statistically significant association between board diversity and firm innovation. This association is driven more by cognitive diversity of the board members than by demographic diversity. Research limitations/implications - Potential publication bias, heterogeneity in the quality of the existing studies and the diversity in operationalising innovation and board diversity remain as limitations to this meta-analysis. Practical implications - Instead of focussing on selecting board members based on demographic (surface-level) diversity, selections should be based on the interplay of the experience, expertise and background demographic characteristics of the potential candidates. Otherwise, the minority members might face a “token” status. Originality/value - The results of this paper suggest that there is a positive association between board diversity and firm innovation. Future research should examine why this link exists. Therefore, the paper concludes with a research agenda for the benefit of potential further studies.