The Cultural Diversity of German Companies' Executive Boards and the Success of Their Internationalisation

Title data

Weusthoff, Sebastian ; Grieser, Jana-Maria ; Meckl, Reinhard:
The Cultural Diversity of German Companies' Executive Boards and the Success of Their Internationalisation.
In: British Journal of Economics, Management & Trade. Vol. 4 (2014) Issue 7 . - pp. 1083-1101.
ISSN 2278-098X
DOI: https://doi.org/10.9734/BJEMT/2014/9144

Project information

Abstract in another language

The sociocultural composition of executive boards has a long-term relevance for the
success of their companies and their organisation’s internationalisation. Companies must
weigh the possible advantages of having employees from different cultural backgrounds
against possible inefficiencies caused by cultural misunderstandings. Using on Upper
Echelon theory and Social Capital theory we hypothesised that cultural diversity has a
positive effect on internationalisation success. We used the “Blau Index” to calculate
cultural diversity and measured internationalisation success as the level of
internationalisation, a common success measure in internationalisation studies. Data were
generated from companies’ annual reports. SMT members’ citizenships were additionally
validated by internet-based business-oriented social networks. Controlling for team size
and company size effects did not change our conclusions. Using a panel analysis, this
article examines the effect of the level of cultural diversity in the boards of the DAX30
companies on their success in internationalising. Complementing previous studies, a
slight but significant positive correlation was evident, assuming that a higher
internationalisation success can be found in firms having a culturally diverse senior management team. Our study revealed a positive correlation between cultural diversity in
SMTs and internationalisation success. The results of our study might serve as a good
reason for adapting the social structures of German SMTs to the firms’ economic reality.
Furthermore, it may encourage the legislative body to reexamine the German Corporate
Governance regulations from an international perspective. Future research could
investigate this correlation on a broader basis and reinforce our argumentation, possibly
by including cultural studies.