the conditions appear to be consistent with our findings.
Moreover, from a practical perspective, Burke’s (2000b) contention that there are not
enough talented male directors to go around might indeed be true. It may also be that the
continuing reliance on male CEOs for board members is growing increasingly less practical. In addition, the claims of Bilimoria and Wheeler (2000), Mattis (2000) and Selby (2000)
appear to be plausible in that women directors may be better reflecting the diversity of the
firm’s customer base and lab our pool, and thereby may be enhancing firm performance.
Therefore, our results support the contention that firms should expand their searches
beyond traditional talent pools.
From an empirical perspective, the results reported herein shed some light on the relationship between diversity and organizational performance, but also raise future research
questions. First, there is a need to develop a solid theoretical framework to better understand diversity and its advantages in the business arena. This study provides alternative suggestions as to the positive results between diversity and organizational performance. One aspect that needs further attention is generating theoretical models aimed at how diversity improves the oversight function of boards of directors. Perhaps women and minorities who serve on boards of directors may be more effective decision-makers. There
is a common argument that women and minorities experience work disadvantages
compared to their white male counterparts (Davidson, 2002). Under this assumption,
women and minorities must outperform many of their white male counterparts in order to
become promoted, which would suggest that performance is generated from higher expectations and qualification standards. Perhaps it minimizes CEO influence on board of director
oversight. Perhaps people of the same race and gender are less critical of each other’s
ideas. Or it could be that a broader information base is considered providing more effective input into the decision-making process. In any event, research is needed to address how
diverse boards operate differently from less diverse boards.
In conclusion, this paper has begun to address, at the firm level, what Burke and
Mattis (2000) term the outcomes “associated with increased representation of women at the
top”. In a business climate where much is demanded from boards of directors and where
firm performance is being subject to ever increasing due diligence, the logic of diversifying boards becomes even more compelling. Our findings are that diverse boards are found
in conjunction with increased firm financial performance. And regardless of whether it is
the cause or result of performance, it does appear that firms should seriously consider the potential for the enhanced representation and perspective diversity might create.