Bottom line benefits of diversity in top management teams
To investigate this question, researchers from Copenhagen Business School, in conjunction with the European Commission, studied the business landscape as part of the GOVMNC project. The first part of the study focused on the TMTs’ abilities to deal with challenges in an international context. Results from the project show that the more nationally diverse a top management team is, the more successful a company is likely to be. The positive correlation increases for these teams the longer they work together, the more internationalized a company is and the more munificent the industry is. The effects of executives’ foreign nationalities differ from those of executives’ international experiences. Specifically, nationally diverse TMT are likely to create strategic alliances, whereas TMTs with international experience are more inclined to expand to other countries via Greenfield investments and cross-border mergers and acquisitions (M&As). Regarding EU discussions on women board members, the research shows that women decrease board conflict, increase development activities and influence board decisions. The level of influence depends upon the woman's personal work experience and, more interestingly, the woman's personal values. Women can influence board decision-making process and effectiveness. However, the influence of women directors decreases when women are perceived to be unequal board members. This research provides concrete evidence for women’s and foreigners’ place in top EU management and board positions. GOVMNC supports that diversity in gender increases board effectiveness whereas diversity in TMTs’ nationality improves a company’s bottom line.