The article we have in hand takes a look at the relationship between board diversity and a firm's performance. Different than other studies, it explores "mediators that explain how board diversity is related to the firm's performance". The core idea is twofold: first, the authors explore how much board diversity, whether racial, gender or both, is related to the firm's performance. They start by disclosing statistics reflecting the current situation of boards in major companies in the United States. Then they apply research studies to try to conclude solid facts on this issue. Diversity's different aspects are related to cultural backgrounds and various indications appear; they constitute the subject of this article. Second, the authors discuss the reasons behind the influence of board racial and gender diversity on innovation and reputation.
The general theoretical framework
The article adopts a clear structured framework which proceeds as follows: first a clear definition of innovation and reputation is given.
Then an analysis of the board diversity is done within the framework of two major theories, the behavioural theory and the signalling theory. Then the core process of the relationship between board diversity and the firm's performance is studied. Finally, the authors describe governance, present measures and statistical analyses then discuss findings and results.
To research their case, authors used a quantitative data analysis method known as the Ordinary Least Squares regression. It is known that such a method is used to expose and study relationships. As the article generates three major hypotheses and tests them "through empirical work and statistical analysis" we know the authors use Positivist research. Authors define a sample which will constitute the basis of the study. Independent variables are board diversity, innovation and reputation. The unique dependent variable put under study is the firm performance. Control...