Finding the key to the black box of board diversity and firm performance: A mediating effect analysis of technological innovation

A growing body of research has focused on the relationship between board diversity and firm performance. A series of empirical literatures have also examined a significant positive correlation between the two. But these results only demonstrate the relationship between the input of ‘diversity’ and the output of ‘firm performance’. Such research is more of a black box because board diversity must act on certain strategies or decisions to affect firm performance. Some scholars try theoretical analysis with the purpose of opening the black box. In order to verify the relevant theoretical analysis results, this study uses the mediating effect analysis model in the field of psychology, through multiple regression, impulse analysis, variance decomposition and other methods, to thus empirically test the mediating effect of technological innovation in the process of board diversification promoting corporate performance. We found that board diversity can improve firm performance by enhancing the level of technological innovation. Among them, technological innovation has played a complete mediating role in the diversity of board members’ functional and occupational background, and played a partial mediating role in the diversification of directors’ part-time jobs. Technological innovation is a key indicator bridging board diversity and firm performance. This study can explore and explain the inner workings of the significant relationship between board diversity and firm performance, and link research findings on similar phenomena. The research results may make the existing board governance theories more systematic, expand the extension of theoretical research, and provide some empirical research references for academics and practitioners.