Discussions pertaining to diversity in board member characteristics have drawn increasing public attention. It refers to varied composition of intellectual and social human capital contributed by individual board members to decision making andgovernance process (Milliken and Martins, 1996). Among most research articles, gender diversity seems to be a focal point but there are many other attributes of board dynamics such as age, race and occupation. According to human capital theory, what distinguish the cognitive and productive capability of boardroom members and their organization are the cumulative stocks of education, training and experience (Becker, 1964). This essay will focus on how occupational background of board members potentially and actually benefits the public listed company.
首先，混合着不同的职业背景，会有助于淡化群体思维。由Janis指出（1982），群体思维产生很高的凝聚力和寻求一致性的倾向，影响评价。对成员的专业经验和意识形态的同质性减少会带来新的见解和观点（值得与Neuschel，1984）。企业领导者掌握管理技能，具有理论学术产品的开发和市场反应而lawyersmight关注公司活动的责任。独特的知识从不同的行业可以提高质量和交付公司信息量。和不同的方法和意见，每个组在董事会上创造一个有利的环境建设性的异议（卡特et al.，2010）。First, a mixture of directors with different occupational backgrounds could be helpful todilute groupthink. As pointed out by Janis (1982), groupthinkproduces high cohesiveness and concurrence-seeking tendency which interfere with critical evaluation. The reduction of homogeneity of members’ professional experience and ideology brings new insights and perspectives to the board (Worthy &Neuschel, 1984). Business leaders acquire management skills, academics possess the theory of products development and markets reaction while lawyersmight concern more about the liability of the company’s activities. Unique knowledge sets from distinct professions can improve the quality and quantity of information delivered to the company. And different approaches and opinions given by each groups create a favourable environment for constructive dissent during the board meeting (Carter et al., 2010).
Moreover, diverse background contributes potential external resources to the firm, according to the resource dependence theory supported by Carter et al. (2010), Ingley and van der Walt (2001). The board is considered to be an essential strategic connection between the company and external resources such as national business elite, capitals, competitors and industrial intelligence. In this case, a wider scope of professional background could benefit a publicly listed company with more access to outside resources, either tangible or intangible, which in return enhance the competitive advantages of the business and attract more investment from the public. Also, Pfeffer and Salancik (1978) addressed its “buffering” function of protecting the company from environmental disturbances due to the ease of inclusion of excessive identical views into strategy making (Alexander et al.,1993). #p#分页标题#e#
In addition, Cater, Simkins and Simpson (2003) suggested that dissimilar background on board may resolve the principle-agent conflicts by implementing stronger monitoring of managers through increasing member independence. Dispersed social background reduces the likelihood for board members to collude with managers. However, clear linkage between the occupational diversity and financial performance has not been directly proved by agency theory.
Provided the information asymmetry in the market, signalling theory states that publicly listed company can diversify the occupation on board to credibly convey relevant information to the target receivers. A dynamic board with experienced professionalsfrom distinct sectors might send more positive signals to its employees, consumers and the market than a homogeneous board does.A forward-looking, widely capable or socially responsiblecorporate image could be presented to the regulators, investors and other interest parties that ultimately promote the development of the business, growth of share price or attraction of investment (Broome, Conley &Krawiec, 2008).
Having discussed the potential benefits, we will see controversial opinions held by different researchers from their empirical evidence. Scholars like Broome (2011) argued against the actual connection between occupational or other boardroom diversity and corporate performance. From his qualitative studies, Broome found that board diversity are more oftenly designed to quiet vocal critics, but not really generating real costs or benefits for shareholders (Shinagawa, 2013).
However, Baysinger and Butler (1985) surveyed 266 public companies in the US. Firms contained a mixture of board members with occupational backgrounds in top management,general officers, financial and legal professions showed a superior performance in operation. Though the specific combination depends on the organizational and environmental features for each firm, the researchers concluded that it is more favourable for a firm to diversify boardroom members’ affiliation and occupation.
A research based on 240 Young Men's Christian Association (YMCA) organizations was conducted by Siciliano(1996) using published statistics. The data included a variety of board members’ occupational background (see Table 1) and three measures of organizational performance were constructed for the analysis. The operating efficiency measurement concerned fiscal performance and represented the total revenues to total expenses of the company. The social factors were measured based on the provision of community or charitable services (Oleck, 1980). And the third measure was the level of donations contributed to the firm.
The research calculated partial correlations for occupational diversity, with comparison to other diversity factors, against each performance measures affecting the public firms (see Table 2). Occupational diverse boardrooms appeared to have stronger performance in social agency mission and donation contribution. No apparent influences were found on the operating efficiency. The strongest impact was found on the social performance. It was suggested that boards with varied member backgrounds were able to keep their social agency purpose in the forefront. Better corporate social image could also benefit YMCA companies for related state tax exemption (NonprofitTimes, 1989).#p#分页标题#e#
To conclude, Scholars have presented different attitudes towards the actual impact of occupational diversity in boardroom and empirical evidence has shown distinct results for each performance measures.While many potential advantages have been discussed above in terms of groupthink dilution, resource dependence, agency and signalling theory, it is difficult to detect direct and tangible links between the actual enhancement of business capability and boardroom diversity, especially when just considering one occupational factor alone. And diversity does not have to be a top corporate motive, which seems less predictable.Other business initiatives like advertising might produce more compelling, factual evidence of payback on investment (Robinson and Dechant, 1997). Despite the counter arguments, occupational diversity is still encouraged by the UK Corporate Governance Code (2010) and recognised as a potential factor to ensure a well-balanced board and avoid groupthink. Board members with different background should also be chosen taking into account of the social justice outcomes and board value creation according to the feature of its industrial sector(Van der Walt et al., 2002).
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