Lack of Board Diversity In Global Business Experience: Another Crucial U.S. Corporate Governance Gap

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Lack of Board Diversity In Global Business Experience: Another Crucial U.S. Corporate Governance Gap
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The long-overdue pursuit by boards of U.S. public companies to diversify membership by gender, ethnicity and age is overlooking an additional extraordinarily critical goal

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The long-overdue pursuit by boards of U.S.-headquartered public companies to get finally serious about raising their games by diversifying membership by gender, ethnicity, and age is overlooking an additional extraordinarily critical goal: bringing on directors whose careers are marked by broad operational experience working on the ground in a variety of international geographies, both in other mature countries, and arguably even more important, in fast-growing emerging markets.

With each passing year, almost regardless of size or sector, U.S. businesses are facing intensified head-to-head competition within—what has become trite to say—a “globalized marketplace.” Critically, this increased rivalry is occurring in more fora and by very different players than in the past. A more robust picture emerges from a state-of-the-art analysis of a comprehensive cross-section, time-series dataset from BoardEx that covers a large number of public companies across 39 countries over the period of 2000-2013.

It appears that bringing on foreigners to a board does raise the prospects for a successful acquisition or greenfield investment in the director’s home country, but little else compared to what other board members contribute.

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