Project summary

A company board is a body of senior executives who represent the owners of a company. It is responsible for the company’s strategic direction and, alongside the annual general meeting, is one of the highest decision-making bodies. The decisions taken by company boards not only affect the company itself, but can also have an impact on the economy and society as a whole. Their strategic direction in terms of profitability, sustainability and social responsibility is perceived by the public and can influence the behaviour of other executives and decision-makers in the business and public sectors. Board members therefore often serve as role models for future generations of leaders.

Whilst the general composition of company boards has already been extensively researched, the factors influencing diversity within these bodies, as well as their effects, remain poorly understood. It is well known that diversity generally improves decision-making in groups; however, its specific influence on company boards has been less thoroughly investigated. Our project therefore focuses primarily on two research questions:

1. We aim to identify the mechanisms that influence the level of diversity on corporate boards over time. To this end, we are examining the networks of boards and their members, as previous research shows that these networks play a decisive role in the recruitment of new board members.
2. Furthermore, we aim to examine how diversity affects the board’s corporate governance – particularly decisions relating to profitability, sustainability and social responsibility. To this end, we analyse the extent to which quantitative indicators of these objectives are linked to diversity.

Diversity on corporate boards is therefore important for two key reasons: firstly, diverse boards tend to make better decisions. Secondly, diversity ensures that different societal perspectives are represented, which can improve the prospects of future generations for leadership positions in decision-making bodies.

In our research, we analyse diversity using two different data sources. Together with our collaboration partner at Keio University, we are examining data on corporate boards in Japan. In this sub-project, the focus is on changes in board composition over time, as well as on interaction effects within board networks. Furthermore, we are examining diversity in companies within the European Union and analysing how board diversity relates to corporate strategies in terms of profitability, sustainability and social responsibility.