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Diversity of perspective: impact of director experience on board effectiveness in FTSE companies

Goyal, R. (2018) Diversity of perspective: impact of director experience on board effectiveness in FTSE companies. PhD thesis, University of Reading

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Abstract/Summary

This doctoral research pursues the impact of the diversity of perspective on board effectiveness. This research is conducted by collecting data through elite interviews with thirty board members. Collected data are then thematically analysed, and observed themes are reported. The findings of the study suggest that the diversity of perspective on boards is critical for improving board effectiveness and can be obtained by appointing Directors with diverse experiences. The different experiences of board members that influence their perspective, such as gender, functional background, nationality, may impact board effectiveness differently. The gender of board members is a unique experience altering their perspectives markedly. As a result, gender diversity on boards may have the broadest impact on board effectiveness. The diversity of functional experience and of nationality on boards also has a wide range of impacts on board effectiveness. Age diversity strengthens boards' decision-making ability by providing access to unique inputs regarding the aspirations and critical knowledge of the younger generation. However, boards may put a higher premium on the experience of Directors than the potentially unique input of younger Directors. Additionally, diverse ethnicity may endow board members with a unique perspective, but only if other diverse experiences augment it. The findings of this study also reveal that hitherto less researched experiences such as religious affiliation, parenthood, and socioeconomic background may also impact board members' perspective significantly. This research may make a significant contribution to theory, practice, and policymaking. The study is guided by Strategic Leadership theory (Finkelstein et al., 2009), and contributes notably to its application. The findings of the research present evidence suggesting that board members take actions and decisions based on their cumulative experiences, which impact their perspective. The study also contributes to role-performance theories - Agency theory (Jensen and Meckling, 1976; Fama, 1980), Resource Dependency theory (Pfeffer and Salancik, 1978), and Signalling theory (Spence, 1973). The findings of the research may also contribute to improving practices in companies by suggesting that board diversity, when defined broadly may result in improved board effectiveness. This research may have significant policy implications, as it presents the views of corporate elites who have an exclusive perspective on board diversity and effectiveness.

Item Type:Thesis (PhD)
Thesis Supervisor:Kakabadse, N. and Kakabadse, A.
Thesis/Report Department:Henley Business School
Identification Number/DOI:
Divisions:Henley Business School
ID Code:84883

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