Demographic diversity on boards and employer/employee relationship

Abstract

Purpose The purpose of this paper is to explore the relationship between demographic diversity on boards and employer/employee relationship (EER) and to test the moderating effect of contextual factors such as a firm’s financial situation. Design/methodology/approach This paper analyzes data from over 1,000 publicly listed US firms and uses hierarchical regression. Findings Demographic diversity on boards of a given firm, such as ethnic diversity and gender diversity, should have positive effects on EER, which can be considered as an important dimension of overall human resource management performance in a given firm. Contextual factors such as a firm’s financial situation should moderate the relationship between demographic diversity on boards and the EER. Originality/value First, this research contributes to the current literature by showing that EER can be influenced by demographic diversity on boards, which further helps to highlight the beneficial effect of demographic diversity in top management team. Second, this study uncovers the moderating role of some contextual factors such as a firm’ financial situation. Third, this study also contributes to the corporate governance literature by studying the link between demographic diversity on boards and EER.