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This paper aims to assess the often repeated, but empirically unconfirmed, supposition that there is a positive connection between foreign board members (FBMs) and firm…
This paper aims to assess the often repeated, but empirically unconfirmed, supposition that there is a positive connection between foreign board members (FBMs) and firm innovativeness and to set a research agenda for future studies on the topic.
The analyses are based on a large sample of firms within the European Union, utilizing patent and trademark data together with information on the national diversity of the boards.
The analyses confirm that there is a positive association between FBMs and firm innovativeness. Contrary to expectations, FBMs from less innovative countries than the countries of their host companies are more associated with innovative firms than are FBMs from more innovative countries.
This study provides empirical support for propositions, drawn from resource dependency theory and group effectiveness/diversity theories, that diverse boards of directors can lead to greater firm-level creativity and innovativeness. It also outlines a detailed research agenda for future studies to build on the tentative findings presented in this paper.
The findings suggest that greater national diversity in the board of directors can enhance innovation.
Earlier studies on board diversity have not analyzed empirically the issue of national diversity. The originality of this paper lies in its attempt to address this gap in the corporate governance literature.