Board diversity in family firms across cultures: A contingency analysis on the effects of gender and tenure diversity on firm performance

The initial work on family firm diversity research argued that family influence negatively moderates the board diversity-financial firm performance relationship, whereas more recent empirical evidence has suggested the opposite. Drawing on upper echelons theory, we investigate national culture (i.e., the degree of masculinity in the country of the firm) as a contingency factor influencing how tenure and gender board diversity translate into superior or inferior financial performance in family and non-family firms. Our analyses of 4192 firm-year observations of publicly listed European firms support most of our hypotheses. Our results show that the positive direct financial performance effects of tenure diversity are weakened in family firms, suggesting that the larger differences in values, goals, experiences, and power among family and non-family board members may suppress the benefits of cognitive variety. Furthermore, our results support that the degree of masculinity is an important factor moderating the diversity-family firm-financial firm performance relationship for gender and tenure diversity. We thereby advance diversity research in family firms to explain under what conditions positive or negative diversity effects prevail by introducing national culture as a novel contingency factor that may help to reconcile prior conflicting findings.