Firm Governance and Functional Strengths: The Impact of Board Diversity on Firm Marketing Capability

The traditional view of firm capability building stems from the strategic as well as the tactical levels of firm activities. However, corporate governance entities such as the board may exert influence on firm capabilities by creating the necessary architectural basis and resource configurations that drive the development of firm capability. The current research bridges this important gap and connects firm boardroom diversity to marketing-side capability. This link is investigated more deeply by including two moderating factors – firm size and CEO power – to present an enriched model of the relationship. Results from our analyses show that an increase in board diversity significantly improves marketing capability. Further, this relationship is stronger (a) for firms that are smaller and (b) for firms with lower CEO power. This study provides useful contributions towards firm board diversity research, as well as for firm capability building in the marketing area.