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Board diversity and firm performance: evidence from the U.K. SMEs

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  • Nermeen Shehata
  • Ahmed Salhin
  • Moataz El-Helaly

Abstract

This study examines the relationship between board diversity and firm performance in small- and medium-sized enterprises (SMEs) in the U.K. In particular, we investigate the role of gender and age as two dimensions of diversity. Using a large sample of SMEs (34,798 firms) located in the U.K. and focusing on the period from 2005 to 2013, our results show a significant negative association between each of gender diversity and age diversity, and firm performance. Our evidence yields important insights on the association between board diversity and firm performance, and calls suggestions for increased board diversity into question. A possible explanation for our findings could be due to the fact that our sampled firms are SMEs, whereas those in previous studies have been large enterprises. This research provides insights to entrepreneurs on how to enhance their performance, and to governments and policymakers on the development of rules that would achieve better performance in the SME sector.

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  • Nermeen Shehata & Ahmed Salhin & Moataz El-Helaly, 2017. "Board diversity and firm performance: evidence from the U.K. SMEs," Applied Economics, Taylor & Francis Journals, vol. 49(48), pages 4817-4832, October.
    • Handle: RePEc:taf:applec:v:49:y:2017:i:48:p:4817-4832
    DOI: 10.1080/00036846.2017.1293796
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    8. Zaid Saidat & Claire Seaman & Mauricio Silva & Lara Al-Haddad & Zyad Marashdeh, 2020. "Female Directors, Family Ownership and Firm Performance in Jordan," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 11(1), pages 206-219, January.
    9. Tanveer Bagh & Muhammad Asif Khan & Natanya Meyer & Hammad Riaz, 2023. "Impact of boardroom diversity on corporate financial performance," Palgrave Communications, Palgrave Macmillan, vol. 10(1), pages 1-13, December.
    10. Charl de Villiers & Ruth Dimes, 2021. "Determinants, mechanisms and consequences of corporate governance reporting: a research framework," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 25(1), pages 7-26, March.
    11. María Consuelo Pucheta-Martínez & Isabel Gallego-Álvarez, 2020. "Do board characteristics drive firm performance? An international perspective," Review of Managerial Science, Springer, vol. 14(6), pages 1251-1297, December.
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    13. Kent Baker, H. & Pandey, Nitesh & Kumar, Satish & Haldar, Arunima, 2020. "A bibliometric analysis of board diversity: Current status, development, and future research directions," Journal of Business Research, Elsevier, vol. 108(C), pages 232-246.
    14. Oliver Lukason & María-del-Mar Camacho-Miñano, 2020. "Corporate Governance Characteristics of Private SMEs’ Annual Report Submission Violations," JRFM, MDPI, vol. 13(10), pages 1-19, September.
    15. Sattar, Mahnoor & Biswas, Pallab Kumar & Roberts, Helen, 2022. "Board gender diversity and firm risk in UK private firms," Global Finance Journal, Elsevier, vol. 54(C).
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    17. Timinepere Ogele COURT & Agu Okoro AGU, 2023. "Human Capital Diversity And Performance Consequences: A Firm Level Analysis Of Sub-Saharan Africa," Management Research and Practice, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 15(1), pages 50-62, March.
    18. , Aisdl, 2021. "The Impact of CEOs’ Gender on Organisational Efficiency in the Public Sector: Evidence from the English NHS," OSF Preprints mhcxv, Center for Open Science.
    19. Constantine Iliopoulos & Rando Värnik & Taavi Kiisk & George Varthalamis & Liis Sinnott, 2022. "Governance in Estonian Agricultural Cooperatives: Structures and Processes," Sustainability, MDPI, vol. 14(23), pages 1-24, November.
    20. Rachel Bocquet & Christian Le Bas & Caroline Danièle Mothe & Nicolas Poussing, 2019. "Strategic CSR for innovation in SMEs: Does diversity matter?," Post-Print hal-02380559, HAL.

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