Gender and Cultural Diversity on Boards: Their Impact on Internationalisation

This study investigates whether—and how—board gender diversity, board cultural diversity, and their interaction shape the internationalisation of large U.S. firms. Drawing jointly on Upper Echelons, Resource Dependence and Human-Capital theories, we analyse 5,754 firm-year observations for 427 non-financial S&P 500 companies from 2007 to 2021. Internationalisation is gauged with three alternative proxies—foreign-sales ratio, foreign-assets ratio and foreign-operating-income ratio—and, for robustness, a stochastic-frontier estimate of technical efficiency abroad; gender diversity is measured by the share of female directors and, alternatively, by the share of female executives. Two-stage least-squares regressions mitigate endogeneity. Results reveal a positive but U-shaped relationship between gender diversity and international engagement, a consistently positive influence of cultural diversity, and a significant substitution effect whereby one dimension partly compensates for low levels of the other. These findings extend the three theoretical lenses by identifying boundary conditions under which diversity matters and suggest that simple numerical diversity targets may be less effective than aligning the combined gender-and-culture profile of the board with a firm’s global ambitions.