Boardroom nationality and gender diversity: Implications for corporate sustainability performance

Drawing on the agency theory perspective and following the recent calls to contemplate multiple dimensions of diversity simultaneously, this study intends to empirically investigate the effects of board diversity as a multifaceted phenomenon, specifically nationality and gender diversity on the extent of corporate sustainability performance in a developing country, namely, Palestine over the period 2013 to 2018. Empirical evidence on the connection between board diversity and corporate sustainability performance from countries influenced by cultural and traditional terms is remarkably limited. This study handled this research gap and went beyond the narrow and pre-conceived perspectives. Thereby, contributes theoretically and practically to the corporate sustainability literature by providing in-depth insights about board diversity and corporate sustainability-related activities as paradigmatic evidence from a developing country with an exceptional cultural environment of business. The ambiguous findings are often deemed a consequence of endogeneity problem. Therefore, to provide a thorough and profound analysis, two-step system GMM are performed. Additionally, our findings are robust since four proxies for nationality and gender diversity are employed. The results unveiled that corporate sustainability-related actions are positively and insignificantly affected by nationality and gender diversity. This weak nexus between the two mechanisms is widely attributed to so-called geographically proximate cultures and gender discrimination in the workplace. These empirical results provide a useful and multidimensional insights for regulatory parties, companies, and different groups of stakeholders to promote the link between board diversity and corporate sustainability beyond the current boundaries. [Display omitted] •A content analysis technique was employed in analyzing the extent of sustainability performance.•Two-step generalized method of moments model is applied to account for endogeneity issue.•Companies pay less attention to environmental issues when they have not any harmful manufacturing activities.•Foreign board members from close countries will not significantly affect corporate sustainability decisions.•Having a minority of women on corporate board does not greatly affect corporate sustainability performance.