The dynamics of diversity on corporate boards
Fuente:
arXiv
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| Hauptverfasser: | , |
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| Format: | Preprint |
| Veröffentlicht: |
2024
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| author | Raddant, Matthias Karimi, Fariba |
| author_facet | Raddant, Matthias Karimi, Fariba |
| contents | Diversity in leadership positions, including corporate boards, is an important aspect of equality. It is important because it is the key to better decision-making and innovation, and above all, it paves the way for future generations to participate and shape our society. Many studies emphasize the importance of the visibility of role models and the effect that connectivity has on the success of minorities in leadership. However, the connectivity of firms, the dynamics of the adoption of minorities into leadership positions, and the long-term effects in terms of group dynamics and visibility are not well understood. Here, we present a model that shows how these effects work together in a dynamic model that is calibrated with empirical data of firm and board networks. We show that homophily -- the appointment of minorities is influenced by the presence of minorities in a board and its neighboring entities -- is an important effect shaping the trajectory towards equality. We further show how perception biases and feedback related to the visibility of minority members influence the dynamic. We find that reaching equality can be sped up or slowed down depending on the distribution of minorities in central firms. These insights bear significant implications for policy-making geared towards fostering equality and diversity within corporate boards. |
| format | Preprint |
| id |
arxiv_https___arxiv_org_abs_2404_11334 |
| institution | arXiv |
| publishDate | 2024 |
| record_format | arxiv |
| spellingShingle | The dynamics of diversity on corporate boards Raddant, Matthias Karimi, Fariba Theoretical Economics General Finance J.4 Diversity in leadership positions, including corporate boards, is an important aspect of equality. It is important because it is the key to better decision-making and innovation, and above all, it paves the way for future generations to participate and shape our society. Many studies emphasize the importance of the visibility of role models and the effect that connectivity has on the success of minorities in leadership. However, the connectivity of firms, the dynamics of the adoption of minorities into leadership positions, and the long-term effects in terms of group dynamics and visibility are not well understood. Here, we present a model that shows how these effects work together in a dynamic model that is calibrated with empirical data of firm and board networks. We show that homophily -- the appointment of minorities is influenced by the presence of minorities in a board and its neighboring entities -- is an important effect shaping the trajectory towards equality. We further show how perception biases and feedback related to the visibility of minority members influence the dynamic. We find that reaching equality can be sped up or slowed down depending on the distribution of minorities in central firms. These insights bear significant implications for policy-making geared towards fostering equality and diversity within corporate boards. |
| title | The dynamics of diversity on corporate boards |
| topic | Theoretical Economics General Finance J.4 |
| url | https://arxiv.org/abs/2404.11334 |