Value-creating Boards—Diversity and Evolved Processes

Abstract

This qualitative study is based on 47 interviews with board members of UK-listed companies and reveals that value-creating boards have two main characteristics: a diversity of perspective and evolved board processes. The findings of the study show that the critical attributes of boardroom diversity are members’ culture/nationality, functional background and gender diversity. Value-creating boards also have evolved processes, such as an objective nomination process, periodic evaluations of the board and its members and their ability to work as a team. The article contributes to the Strategic Leadership theory and other role-effectiveness theories. It makes a significant contribution to existing literature on board diversity and value creation by suggesting that board diversity needs a broader definition—more than mere demographic attributes of directors and board processes—to improve boards’ ability to create value for organizations. The article also contributes to praxis by presenting evidence of the impact of board diversity on value creations and suggesting the most critical aspects of value-creating boards. The findings may also guide the formulation of legislation for improving corporate governance by defining diversity more broadly.