How Experience & Networking Affects Demographic Minorities

Posted on November 13, 2008. Filed under: Academic Publishings, Corporate |

Westphal, James D. and Laurie P. Milton. How Experience and Network Ties Affect the Influence of Demographic Minorities on Corporate Boards. Administrative Science Quarterly, Vol. 45, No. 2 (Jun., 2000), pgs. 366-398.

This article examines the influence of demographic majority and minority executive directors in diverse decision making groups and their ability to assimilate according to previous board member experience. Minority status is affected by functional background, industry background, education, race, and gender, from a large corporate sample of Fortune/Forbes Top 500 Companies.

Previous corporate boards had been viewed as being homogenous, and recent stakeholders had pushed for diversifying their boards in the hopes of improving decision making, in which they recruited others from outside their industries. However, although these new board members originated from different industries, the boards were still homogenous in their education, functional background, and also gender and race. “Research has shown that increases in the ratio of outside to inside directors do not necessarily improve decision making or performance (367).” Although they came from different industries, they were demographically similar, and thus their strategic approaches and decision making were also similar.

Throughout this article, the authors adopted the social psychologist definition of minority as referring to “an individual who has salient attitude, belief, or social feature, such as a demographic characteristic, that is possessed by less than 50% of the group (367).” The advantage of this definition is that it reflects the variability of minority status subject to context and situations. Although various academics are skeptical of demographic minorities successfully influencing group decision making, this study aims to demonstrate successful measures through which this may be achieved.

Academics are skeptical because “demographic differences lower social cohesion between group members and that these social barriers reduce the likelihood that minority viewpoints will be incorporated into group decisions (367).” This is consistent with Blass et al’s article on Politics Understanding and Networking Ability as a Function of Mentoring. In this article, the networking advantage is a direct result from learning the internal game of politics, developing a set of organizational competencies, including expectations, informal rules, and boundaries, that allow demographic minorities to assimilate into group categories.

Demographic minorities are categorized as out-group members, and begin to identify and categorize accordingly, and as out-group members, they will encounter both verbal and nonverbal resistance to group contributions, impacting their contribution quality. “Thus, out-group biases can limit the potential of minority board members to contribute to board decision making by challenging the conventional wisdom of the majority (369).” If out-group members do not provide quality contributions, and are viewed according to their salient categories, this greatly affects their performance evaluations as viewed by demographic majority group members. In fact, research shows the “tendency for demographically different individuals to receive less favorable evaluations and to become socially marginalized from group decision making…(369).” However, there are barriers that can be overcome, particularly through network experience and time spent in majority/minority status.

Demographic minorities could make more influential insights and decision making by highlighting common objectives that all group members share. “An effective minority influence style would involve faming an argument with reference to strategic or personal goals that directors have in common (370).” This method of identification presents itself as the more salient demographic identity, uniting both in and out-group members. When majority directors are supervised by a demographic minority, it allows majority directors to establish an in-group membership toward demographic minorities, and thus, enhancing demographic minority performance. This minority role experience is critical in developing effective decision making groups.

Minority role experience helps reduce salient out-group characteristics. “Prior experience in a minority role should help directors minimize the out-group bias facing directors in a minority position, enhancing their ability to influence board decision making… (371).” This experience allows them to identify with out-group members, and thus, improving group decisions. These concepts led to hypothesis 1a stating the positive relationship between previous relationship in a minority role and a director’s influence over the board. Hypothesis 1b states; there is a negative relationship between more experience as a majority director with decision making board members. Hypothesis 2 states a positive relationship with other majority board members in previous minority role positions and effective decision making groups.

This experience enhanced the perceived social similarity, in which networks create a positive stereotype. These network associations enhance minority confidence and provide more fair job evaluations. Perceived similarities also enhance trust, thus decreasing the tendency to marginalize minorities. Strong networks also make minorities less vulnerable to out-group categorization, which results in a reduce perceived threat to demographic majorities. Hypothesis 3a states that as common board membership increases the more positive the relationship is between minority status and majority director influence over decision making. Hypothesis 3b states that as 3rd party ties between minority and majority increase, the more positive relationship between minority and majority and the influence over decision making.

Results of tests show a strong positive correlation between minority status and prior experience in a minority role for 5 of 6 demographic characteristics. As majority directors experience as a minority increases, so does the ability to oversee effective decision making groups. Hypothesis 2 is strongly correlated with positive effects on minority status influence in decision making groups. “The results in Table 2 also generally support hypothesis 3a…the effect of minority status on director influence becomes more positive as the number of common board memberships with other, majority directors increase (388).” There is also a high correlation for 3b, involving the director’s ability to positively influence, as it is related to third party network ties.

Overall, their hypothesis were tested accurately and proved to be correct. However, they did discuss the future direction of studies, emphasizing how different demographic groups could work more effectively and avoid categorization and in-group allegiance. Again, this study greatly supports the previous referenced article on political networks and its influence on diverse decision making groups.

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