In a recent paper, four authors attempt to assess board cultural diversity and firm performance under competitive pressures. The authors conclude that "culturally diverse boards are associated with superior performance for firms operating in highly competitive industries". I wondered how these authors determined cultural diversity.
It turns out that the authors determined a director's ancestry using their last name and mapping the likely country of origin of that last name following recent literature. This strikes me as a highly unreliable way of determining ancestry. First of all, many people have mixed ancestry. Second, last names are patronymic in many cultures. What about the mother's culture? Third, people emigrate. Someone whose ancestor emigrated to the United States may have little or no knowledge of, much less identification with, the culture of his or her ancestor even though they have the same name. Fourth, people change their last names for a variety of reasons. For example, Charlie Sheen's name at birth was Carlos Irwin Estevez. Finally, the article is premised on the notion that an director's diversity is only determined by group membership. This ignores the fact that each of us is wonderfully unique. Given these obvious problems, it is difficult to credit any of the authors' conclusions.
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