Board diversity and performance in a masculine, aged and glocal supply chain: new empirical evidence

• DOI: https://doi.org/10.1108/CG-09-2020-0417
• Published date: 19 July 2021
• Date: 19 July 2021
• Pages: 1440-1459
• Subject Matter: Strategy,Corporate governance
• Author: Giuseppe Giulio Calabrese,Alessandro Manello

Board diversity and performance in a

masculine, aged and glocal supply chain:

new empirical evidence

Giuseppe Giulio Calabrese and Alessandro Manello

Abstract

Purpose –This study aims to contribute to thedebate on the relationship between board diversity and

performance, a hot topic for scholars and shareholders. A number of studies have found contrasting

impacts of board diversity on firm performance and this paper adds new and original evidence in the

contextof the automotive supply chain focusingon gender, age and nationality diversity.

Design/methodology/approach –The authors propose a triple stage empirical analysis. First, the

authors use linearmodels according to different performance indexesfor investigating diversity (gender,

age and nationality) within the board of directors and executives. Second, the authors investigate the

issue of diversity in different contextssuch as position in the supply chain, nationality of the owner and

family/corporate ownership. Finally, the authors use non-linear models to find a better combination of

diversityin terms of gender and nationality for retrieving some managerialimplications.

Findings –First, the authors demonstrate a robust positive effectof women in board representation on

firm performance in termsof profitability and firm risk. In the case of, ageand nationality the results are

more equivocal in particular for the former. Second, the authors depict board diversity in different

contexts as follows:positioning in the supply chain, type and nationality of the final owner.Again, gender

heterogeneityis more adequate in the complexfirm as Tier 1 suppliers, corporate andforeign company.

Originality/value –The authors focused the analysison a specific industry, shedding light on the main

specificities linked to operating in certain phases of the supply chain, a substantial novelty in this field.

The empirical evidence is based on a very large data set containing quantitative and qualitative

information on a representative sample of 1,538 firms operating in the Italian automotive supply chain,

one of the most relevantin Europe.

Keywords Board of directors, Automotive supply chain, Performance measures

Paper type Research paper

1. Introduction

Diversity in corporate board composition is not only one of the most promising and fastest

growing areas of academic research (Perryman et al., 2016;Frijns et al.,2016;Comi et al.,

2017;Galia et al.,2017) but also it remains at the top of the public policy agenda in many

countries. However, after an extensive debate around the main effectsof board diversity on

performance (Murphy and McIntyre, 2007;Fern

andez-Temprano and Tejerina-Gaite,2020),

the literature has not converged on clear and definite findings (Christiansen et al.,2016;

Schwab et al.,2016;Green and Homroy,2018).

Board diversity may have different meanings and can be considered a combination of the

following three different spheres (Grosvoldet al.,2007;Kim and Rasheed, 2014): existential

(personal life choices, such as preferences, hobbies or abilities), cognitive (i.e. how people

approach life and problems) and demographic (i.e. age, gender, nationality, ethnicity,

education, professional expertise, etc.). The first two spheres may have a considerable

Giuseppe Giulio Calabrese

is based at CNR-IRCrES,

Moncalieri, Italy.

Alessandro Manello is

based at the Department of

ESOMAS, University of

Turin, Turin, Italy.

Received 16 September 2020

Revised 26 February 2021

26 April 2021

Accepted 11 May 2021

PAGE 1440 jCORPORATE GOVERNANCE jVOL. 21 NO. 7 2021, pp. 1440-1459, ©Emerald Publishing Limited, ISSN 1472-0701 DOI 10.1108/CG-09-2020-0417

impact on corporate board composition but are mainly statistically unobservable (Erhardt

et al.,2003

;Galia et al., 2017). Therefore, the main topic of research remains the

observable demographic diversity(Mahadeo et al.,2012).

Nevertheless, demographic diversity is a hot topic placed under growing pressure arising

from social justice motivations (Ali et al.,2014) and new board strategic decision-making

processes to better contribute to firm performance (Kim and Rasheed, 2014). Laws, rules

and regulations on board composition are part of the initiatives adopted by countries to

provide all members of society with equal opportunities, even though most of the attention

has been focused on board gender diversity (Dezso and Ross, 2012; Lu

¨ckerath-Rovers,

2013) or on public elective assemblies.

Following the Norwegian example (2003) and anticipating the European Union directive

(2012), some countries have issued laws about gender quotas in very large or listed

companies, with different targets and sanctions in different periods (The Netherlands in

2001, Spain in 2007 Belgium, France and Italy in 2012 and Germanyin 2015). The effects of

quota laws on corporate governance are still unclear. Positive spillovers might involve a

reduction in gender disparities in the labor market and improved work-family life balance. In

general, the hiring of more women as team leaders or top managers may stimulate women

to pursue business careers (Comi et al.,2017). On the flip side, the negative effects are

mainly related to new managerial conflicts and the tokenism practice of hiring women only

in symbolic positions, withouta corresponding increase in power.

As a matter of fact, despite generalized efforts and mounting pressure from the public

opinion, board composition remains mostly conservative, i.e. white, male and middle-aged

(Grosvold et al., 2007) and, at the current rate, an acceptable level of board diversity as

regard demographic characteristics will be achieved only in the long run (Ellemers et al.,

2012).

According to Ali et al. (2014) “board diversity can experience further sustained

improvements if there is also a pull factor in place,” that is, if a more heterogeneous

composition of its board actually provides the firm with a competitive advantage in terms of

performance; otherwise, efforts to enhance board diversity only reflect social trends (Carter

et al., 2003;Martinez-Jimenez et al.,2020). Also, in this case, empirical findings from the

literature are not clear, with results strongly influenced by the specific sample of the firms

analyzed and by the contexts in which theyoperate (Kim and Rasheed, 2014).

The aim of our paper is to contribute to the debate on the impact of thesocial dimensions of

demographic diversity (namely, gender, age and nationality) on corporate boards, focusing

on a specific industry and on the different phases of its supply chain, a true novelty in this

field.

The empirical evidence presented in this paper is based on a large data set, containing

quantitative and qualitative information on a representative sample of 2,126 firms operating

in the Italian automotive supply chain, one of the most important in Europe as for number of

firms and revenues (Manello and Calabrese, 2018). We concentrate on the Italian

automotive supply chain to reduce industry and country heterogeneity, as suggested by

Erhardt et al. (2003). To the best of our knowledge, no empirical work has so far looked at

board dynamics in a specific supply chain, and only few have considered the automotive

industry (Horak and Cui, 2016). Tier 1 automotive suppliers are more complex firms than

Tier 2 suppliers and are able to create stable relationships with automakers (also many of

them as highlighted by Manello and Calabrese, 2015) as follows: the average size of Tier 1

suppliers is on average eight times greater than Tier 2 (e120m compared to e16m;

Calabrese, 2009). Furthermore, product specialization of Tier 1 suppliers is focused on

modules and systems or very complex components, whereas Tier 2 mostly supplies

automotive parts (Calabrese,2012) and simpler components.

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