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Board diversity on firm performance from resource-based view perspective: new evidence from Pakistan

Ismail Khan (Department of Management, Sunway Business School, Sunway University, Subang Jaya, Malaysia)
Iftikhar Khan (COMSATS University Islamabad, Abbottabad, Pakistan)
Ikram Ullah Khan (Institute of Management Sciences, University of Science and Technology Bannu, Bannu, Pakistan)
Shahida Suleman (Department of Economics and Finance, Business School, Sunway University, Subang Jaya, Malaysia)
Shoukat Ali (Department of Commerce, The Islamia University of Bahawalpur, Bahawalpur, Pakistan)

International Journal of Productivity and Performance Management

ISSN: 1741-0401

Article publication date: 6 March 2023

Issue publication date: 6 March 2024

954

Abstract

Purpose

This study aims to investigate the impact of extensive board diversity on firm performance from the perspective of resource-based view (RBV) theory in the context of Pakistan.

Design/methodology/approach

The analyses are made using a panel random-effects model and generalized method of moment (GMM) across 188 non-financial firms listed in the Pakistan Stock Exchange (PSX) over the period of 2009–2020. The robustness of findings is checked through alternative measurements of the variables and alternative estimation techniques.

Findings

The results show that board members' nationality, ethnicity and educational level diversities are significantly positively related to firm performance. In contrast, age and educational background diversities negatively affect firm performance. However, gender and tenure diversities have an insignificant relationship with firm performance.

Research limitations/implications

This study is conducted in the context of Pakistani firms; thus, the findings may not be generalizable to other economies because different economies have different institutional settings and governance structures.

Practical implications

The policy-makers should encourage the inclusion of board members' nationality, ethnicity and educational level diversities having relevant educational backgrounds to improve firms' competitive performance. The suggested structure of the corporate board may improve firm performance by attracting multiple stakeholders and fulfilling their expectations.

Social implications

The appointment of a director should be based on merit rather than on political connections or personnel relationships to improve social welfare and avoid their negative impact on firm competitive performance.

Originality/value

To the best of the authors' knowledge, this is the first study that investigates the impact of board diversity on firm accounting-based performance and market-based performance in the emerging economy of Pakistan. This study uses RBV theory to provide a unique corporate governance structure based on board diversity, particularly in Pakistan.

Keywords

Acknowledgements

The authors sincerely thank anonymous reviewers and the Editor-in-Chief for providing critical comments and suggestions for improving the quality of the paper.

Citation

Khan, I., Khan, I., Khan, I.U., Suleman, S. and Ali, S. (2024), "Board diversity on firm performance from resource-based view perspective: new evidence from Pakistan", International Journal of Productivity and Performance Management, Vol. 73 No. 3, pp. 649-675. https://doi.org/10.1108/IJPPM-01-2022-0055

Publisher

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Emerald Publishing Limited

Copyright © 2023, Emerald Publishing Limited

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