Democracy across Gender Diversity and Ethnicity of Middle Eastern SMEs: How Does Performance Differ?

Abstract

This paper examines the relationship between boards of directors' demographic diversity and firms' financial performance. In particular, we highlight how women and ethnic minorities can affect Middle Eastern SMEs' financial performance. Using an unbalanced panel of 1,855 firm‐year observations of 371 boards of directors from nine Middle Eastern countries, our results support the positive impact of women and ethnic minority group members on Middle Eastern firms' performance. However, our evidence implies that when Western ethnic minority members increase, firms' performances tend to decrease, because these board members are appointed for regional and international board reputation legitimacy, personal business agendas, and links to the external corporate environment.

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Notes on contributors

Charbel Salloum

Charbel Salloum is Associate Professor and Associate Dean for Research, Faculty of Business and Commercial Sciences at Holy Spirit University of Kaslik, Lebanon.

George Jabbour

George Jabbour is Professor and Associate Dean for Executive Education, School of Business, George Washington University.

Catherine Mercier‐suissa

Catherine Mercier‐Suissa is MCF HDR, Iaelyon School of Management, Lyon 3 University, France.