Skip to ContentSkip to Navigation
About us FEB About us Departments IM&S
Header image Vinci blogs

Why Board Diversity Must Go Beyond One Dimension

Datum:29 maart 2023
Diverse boards are proven to be more effective in serving the interest of shareholders.
Diverse boards are proven to be more effective in serving the interest of shareholders.

In recent years, diversity in corporate boardrooms has become an increasingly important concern for shareholders. As shareholders typically have restricted information about the firm, they tend to rely on board composition as a relevant cue of a firm's ability to generate financial value. Diverse boards are proven to be more effective in serving the interests of shareholders as they have greater information processing capacity and are better at performing their monitoring and resource provisioning roles. Research has also shown that shareholders trust gender-diverse boards to carry out board tasks more effectively. Despite efforts to promote diversity on boards, the primary focus of research and popular press has been on gender as the crucial attribute, overlooking the importance of intersectionality, and leading to a lack of understanding and acknowledgment of the unique experiences of individuals with multiple minority identities.

Intersectionality is defined as dual or multiple minority-status memberships. Crenshaw (1991) originally introduced the idea of intersectionality in her study of discrimination against black women. It was based on the fact that black women's interests were not represented in either black movements (where black men sought equality with white men) or women's movements (where white women sought equality with white men) in the United States. Consequently, black women faced discrimination that was similar to both white women and black men, but they also experienced a unique form of discrimination that combined both racial and gender biases. This intersectional discrimination can be more complex and challenging to address in organizations.

In our research, we argue that the idea of intersectionality offers important insights into understanding how shareholders perceive and react to board diversity. Shareholders may not react the same way to diversity based on a single dimension, such as the appointment of a female director, as they do to dual minority status, where an individual represents more than one marginalized identity, for example, in the case of appointment of a female director with the migratory background. The presence of dual minority directors can invoke stronger adverse reactions from shareholders concerning the corporate governance dimensions of corporate leadership. This is because stereotypes and tokenism effects are likely to strengthen when an individual director exposes minority status with regard to more than one attribute.

We argue that by viewing diversity as a multidimensional concept, organizations can gain a more nuanced understanding of how the composition of a board influences shareholder activism and consequently the career outcomes of these dual minority directors. This approach avoids oversimplified conclusions based on a single dimension of diversity and instead promotes an appreciation for the unique experiences that arise at the intersections of multiple diversity dimensions, such as age, gender, physical ability, and sexual orientation. By embracing this perspective, organizations can develop more effective diversity and inclusion initiatives that account for the diverse experiences of all board members. It is crucial for organizations to be mindful of potential intersectional discrimination within the organization or externally in the form of shareholder activism. We urge managers and policymakers to consider the dual minority status of directors when developing strategies to promote diversity on corporate boards. In particular, organizations should take steps to prevent tokenism and stereotype reinforcement, especially in the case of dual minority directors, which can undermine the effectiveness of diverse boards.

Author: Sarosh Asad -   s.asad


Asad, S., & Georgakakis, D. (2023). Diversity on corporate boards and shareholder activism: an intersectionality approach. In Research Handbook on Diversity and Corporate Governance (pp. 113-123). Edward Elgar Publishing.

Crenshaw, K.  (1991), “Mapping the Margins: Intersectionality, Identity Politics, and Violence Against Women of Color,” Stanford Law Review, 43 (6), 1241–1299.