Board ethnic diversity: a systematic review and agenda for future research

In recent decades, board diversity has emerged as one of the most debated issues in corporate governance and public policy. Scholars, practitioners, and regulators alike have emphasised the need for boards to reflect the demographic heterogeneity of the societies in which they operate (Baker et al., 2020; Khatib et al., 2021). Board ethnic diversity (BED), in particular, which we define as the representation of diverse ethnic, racial, tribal, ancestral, linguistic, and cultural backgrounds on a company's board of directors, has received increasing scholarly attention due to its potential implications for organisational legitimacy, information processing, and firm performance (Carter et al., 2003; Gyapong et al., 2016; Nguyen and Muniandy, 2020; Sarhan et al., 2019; Tee and Rassiah, 2020). However, despite these purported benefits, the contemporary discourse surrounding diversity, equity, and inclusion (DEI) entered a complex and contested phase around 2024, with many long-standing assumptions about the benefits and purpose of diversity being challenged in both corporate and political arenas (see, e.g. Betts, 2024; Sasfai et al., 2025).

The debate on diversity has increasingly entered the political sphere, particularly in Anglo-American contexts, where polarisation, backlash, and legal challenges have led major institutions to recalibrate their approaches. For example, BlackRock, once a strong advocate of board diversity, removed explicit race and ethnicity targets from its 2025 U.S. proxy voting guidelines (Sasfai et al., 2025), while Goldman Sachs has softened its earlier policy requiring at least one diverse board member for companies seeking to go public (Natarajan and Gillespie, 2025). At the regulatory level, diversity policies have also faced legal and political challenges. For instance, in the United States, California's Assembly Bill 979, which mandated board representation of underrepresented minority communities, was struck down by a state court in 2022 (Greene et al., 2025), while several other U.S. states have introduced legislative measures that restrict DEI initiatives in public institutions (Betts, 2024). Such shifts from broad institutional support to increasing political and legal contestation make the study of BED more urgent and complex than ever. On the one hand, BED continues to be promoted as a mechanism for enhancing decision quality, stakeholder trust, and firm legitimacy (Carter et al., 2003; Nguyen and Muniandy, 2020; Ntim, 2015; Tee and Rassiah, 2020). On the other hand, scepticism regarding the effectiveness of BED and the fairness of DEI policies (Kim and Gilliland, 2025) has raised new questions about the motivations, outcomes, and measurement of ethnic diversity in the boardroom. As organisations navigate societal expectations and institutional constraints, understanding how and why BED matters and under what conditions it generates value has become a central concern for both researchers and practitioners.

Academic research on BED has expanded substantially over the past 2 decades, yet the literature remains fragmented and context dependent. Another major challenge is defining and measuring BED, with researchers often narrowly interpreting diversity through the lens of ethnicity and race, while failing to capture other aspects, such as tribe, ancestry, caste, culture, and linguistic characteristics (see Kanbur et al., 2011). Moreover, the definitions and operationalisations of BED vary widely across cultural, institutional, and regulatory environments. For instance, in Western contexts, ethnic diversity often refers to the inclusion of Black, Latino, or Asian directors, whereas in Asian or Middle Eastern settings, Western or Caucasian directors may constitute ethnic minorities. These contextual nuances highlight the need to better understand how BED is conceptualised, measured, and theorised across different institutional settings.

Besides, existing research presents conflicting findings. For example, while some studies suggest that BED positively influences corporate outcomes (e.g. Carter et al., 2003; Cho et al., 2025; Nguyen and Muniandy, 2020; Tee and Rassiah, 2020), others report no significant impact (e.g. Carter et al., 2010; Guest, 2019; Hartmann and Carmenate, 2020) or even detrimental effects due to increased communication complexity (e.g. Hearn, 2012; Kolev and McNamara, 2020). This ambiguity may further reinforce scepticism surrounding the real benefits of BED. Furthermore, considering the mixed results from the existing studies, recent research has moved beyond simple linear models to incorporate more complex approaches, including non-linear dynamics, interactions, and moderating and mediating factors, to better capture how BED influences corporate outcomes (e.g. Fredette and Sessler Bernstein, 2019; Gyapong et al., 2016; Hartmann and Carmenate, 2020; Kolev and McNamara, 2020; Miller and Del Carmen Triana, 2009). Additionally, a growing number of studies are investigating the antecedents of BED (e.g. Gyapong et al., 2016; Hillman et al., 2002; Mohamad-Yusof et al., 2018; Upadhyay and Triana, 2021). However, despite these advancements, there is still a notable lack of comprehensive systematic reviews that synthesise the existing findings and critically examine the drivers and barriers to BED implementation across different national contexts to provide useful insights to policymakers and practitioners.

Against this backdrop, the aim of this study is to offer an up-to-date, comprehensive, and systematic review of the BED literature and propose future research directions. Specifically, we analysed 121 peer-reviewed articles from top-ranked ABDC journals published between 1992 and 2025. This comprehensive approach captures not only publication trends and theoretical underpinnings but also scrutinises the geographical focus and methodological orientations of the studies. By synthesising diverse strands of literature, we construct an integrative framework that maps the empirical landscape of the BED research field.

Although several reviews have been conducted on board diversity, most have either addressed corporate structures in general (e.g. Khatib et al., 2021; Zattoni et al., 2023) or focused on specific dimensions, such as gender (e.g. Kirsch, 2018; Nguyen et al., 2020), while overlooking other important aspects, such as BED. The lack of a comprehensive synthesis of the BED literature is particularly concerning amid the Western backlash against DEI initiatives and the mixed empirical evidence regarding the effects of BED at both board and organisational levels across different contexts. As a result, the current understanding of the economic significance of BED remains fragmented, limiting its practical and policy relevance. This study addresses this gap by providing a comprehensive review of BED research, analysing its outcomes, antecedents, and barriers, as well as the interactions, moderators, and mediators of the BED-firm outcomes relationship.

Consequently, this study contributes to the literature in several ways. First, to the best of our knowledge, this is the first extensive review of BED, offering an overview of the state-of-the-art in this field. Second, we synthesised a wide range of studies into an integrative framework that highlights the key dimensions of BED and explains its complex relationship with corporate outcomes and outlines how various factors ranging from the individual to the global level affect BED implementation. Additionally, our review expands the current understanding of BED by highlighting barriers that hinder its effective implementation in different national contexts. The study also addresses gaps in the literature regarding the moderating and mediating mechanisms that shape the relationship between BED and firm outcomes, offering new insights to guide future research. We also identified the interaction between BED and other board attributes and their joint impacts on corporate outcomes. Finally, we identified several theoretical, methodological, analytical, and conceptual limitations that future studies should address to further enhance our understanding of BED. By critically analysing the literature, mapping empirical evidence, and integrating insights from various theoretical and methodological perspectives, we ultimately provide policymakers, practitioners, and researchers with a clearer understanding of the implications of ethnic diversity on corporate boards and its potential effects on organisational outcomes.

This study adopted similar SLR procedures to those proposed by Tranfield et al. (2003) to survey studies on BED, leveraging its advantages over traditional narrative reviews. SLR methodology is widely recognised as a rigorous and transparent approach for identifying, selecting, and critically analysing relevant literature within a research domain (Paul et al., 2021; Shree et al., 2021; Snyder, 2019). By following a predetermined, structured process for literature search and evaluation using a multi-level review strategy (Shree et al., 2021), SLR reduces bias and enhances the quality and replicability of the review. It also enables researchers to reconcile contradictory findings, identify research gaps, and propose a novel research agenda (Paul et al., 2021).

Consistent with Nguyen et al. (2020), we applied a three-step approach to sampling, reviewing, and analysing the studies. The first step involved identifying databases for locating relevant studies. We selected three reputable databases, namely, Web of Science (WOS), Scopus, and Business Source Complete (EBSCOhost). These are commonly used in review studies (e.g. Redshaw et al., 2025) due to their broad coverage of high-quality, peer-reviewed publications across various disciplines. Combining these databases allowed us to compare, contrast, and complement what was missing from each.

We began the second step by identifying and building a pool of keywords and phrases following the good practices approach proposed by Bodolica and Spraggon (2018). The blocs of search strings include “board ethnic diversity” OR (“board ethnicity” and “corporate governance”) OR “board ethnic minorities” OR (“ethnicity” and “board diversity”) OR “board racial diversity” OR “race” OR “minority leaders” OR “indigenous directors” OR “people of color” OR “board ethno-racial diversity” OR (“ethnicity” and “corporate board diversity”) OR “board demographic diversity” OR “board characteristics” OR “board composition” OR “underrepresented directors” OR “racial minority directors”. Consistent with a previous review (Redshaw et al., 2025), we used this pool of keywords to search each database in December 2020, February 2022, June 2025, and February 2026, restricting the results to articles published in English to avoid language barriers. As recommended by Snyder (2019), we did not limit our search to any specific research areas, journal outlets, or years to avoid missing relevant studies. Instead, we explored the field's general development to incorporate as wide a range of articles as possible. As suggested by Paul et al. (2021), we restricted our search to academic journals because they usually undergo rigorous peer review before publication. These initial search criteria yielded 7,530 articles.

Following Khatib et al. (2021), we screened the titles, keywords, and abstracts of the articles to remove duplicates (n = 53). To ensure objectivity in the inclusion and exclusion process, three co-authors independently analysed the articles and resolved minor discrepancies through discussion. We excluded studies on board diversity that did not primarily focus on BED (n = 7,226) and studies on ethnic diversity not related to boards of directors (n = 72). We also excluded inaccessible articles (n = 8), working papers (n = 5), and studies that used BED alongside other board attributes to construct a composite diversity index without disentangling the effects of BED (n = 12) (see, e.g. Ozdemir, 2020; Ozdemir et al., 2021). This screening process resulted in 154 relevant articles.

Following prior reviews (e.g. Ponomareva et al., 2022), we complemented the database search with the ancestry approach from bibliometric analysis, which involves tracking and screening references cited in the relevant studies to identify their initial sources. This snowballing process yielded 35 additional articles. The resulting 189 articles were then subjected to a quality assessment using the ABDC 2022 Journals Ranking List. This resulted in the exclusion of 37 articles not ranked by ABDC. Additionally, we removed studies published in low-ranked journals to enhance the robustness of the evidence and thus provide stronger guidance for policymakers and practitioners. Consequently, a further 31 articles ranked as “C” by ABDC were excluded, resulting in a final sample of 121 articles (see Figure 1).

The third step involved analysing the final sample. From each study, we extracted and coded: (1) descriptive information (e.g. publication year, discipline, context, sample size, firm type, and sector); (2) research approach (qualitative, quantitative or mixed methods), including use of moderators, mediators, interactive effects and non-linear relationships; (3) theoretical perspectives; and (4) study themes (antecedents, barriers or outcomes). This analysis formed the basis for categorising and mapping the studies into a multi-dimensional integrative framework, as discussed later.

Figure 2 presents the annual distribution of studies included in the review. The articles span the period from 1992 to 2025, with significant growth (85.95%) occurring after the global financial crisis. This surge in scholarly attention may stem from the growing demand for ethnic minority directors in the post-crisis era (Gyapong et al., 2016), driven by the argument that their presence could strengthen board monitoring and enhance governance effectiveness, despite evidence suggesting that these groups often face constraints in voicing their opinions and exerting meaningful influence within boardrooms (e.g. Tuggle et al., 2021). Another contributing factor may be the introduction of gender quota laws in several countries around the world during this period. Although these reforms primarily targeted gender diversity, they stimulated debates on board diversity more generally, thereby extending scholarly and policy attention to ethnic representation in corporate boards.

The studies were published in 70 journals across seven disciplines (see Table 1), with the majority appearing in management (42.98%), accounting (24.79%), and finance (18.18%) (see Table 2 Panel A). The top publishing journals were Corporate Governance: An International Review (6.61%), Journal of Business Ethics (5.79%), Managerial Auditing Journal (3.31%), and Non-Profit and Voluntary Sector Quarterly (3.31%) (see Table 2 Panel B). Interestingly, we observed that studies conducted in the U.S. context (e.g. Abebe and Dadanlar, 2021; Balakrishnan et al., 2023; Field et al., 2020; Jung et al., 2023; Mendiratta and Tasheva, 2025; Tuggle et al., 2021) were mostly published in world-leading journals (i.e. rank A*, see Table 3), whereas those from Malaysia and other emerging economies in Africa (e.g. Garba and Abubakar, 2013; Gyapong and Afrifa, 2019; Karim et al., 2023; Tee, 2023) have predominantly appeared in rank B outlets. This disparity may reflect structural biases within academic publishing systems (Moses and Hopper, 2022), including limited data availability in developing markets (Baker et al., 2020), lower research conditions and funding, and editorial preferences for studies conducted in the U.S. or Western settings (Moses and Hopper, 2022). It is also worthy to note that many of the pioneering studies in the BED research field (e.g. Carter et al., 2003; Erhardt et al., 2003), whose novel contributions laid the foundation for the development of the field across different disciplines, primarily focused on the U.S. market, thereby reinforcing this geographical concentration in the literature.

The vast majority of the studies relied on single-country data (91.74%), focusing mainly on the U.S. and Malaysian markets (see Table 4 Panel A), possibly due to heightened political interest in BED in these two countries. In contrast, despite Africa being often regarded as one of the most ethnically diverse continents, emerging African economies accounted for fewer studies, while European contexts were also underrepresented. We observed a clear scarcity of cross-country studies (8.26%) (see Table 4 Panel A). Many studies relied on samples drawn from large S&P 500, Fortune 500, and Forbes 500 firms. Notably, 35.54% of the studies analysed samples of fewer than 200 firms, and only 18.18% used samples exceeding 1,000 firms (see Table 4 Panel B). Empirical research dominated the field (99.17%), with a strong preference for quantitative approaches (95.87%) (see Table 4 Panel D).

OLS regression was the most commonly used method (40.48%), while more advanced techniques, such as structural equation modelling, were used sparsely (3.57%) (see Figure 3), and none of the studies utilised Fuzzy set analysis. Only 12.40% of the studies explored the interaction effects, and even fewer included moderating (8.26%) and mediating (4.95%) variables in their research designs. Similarly, only 9.52% of the studies examined non-linear relationships. Notably, most of the studies employed fixed effects models, complemented by the inclusion of control variables to address endogeneity issues such as omitted variable bias and unobserved heterogeneity (e.g. Gyapong et al., 2016; Janahi et al., 2025; Kanj et al., 2024). In contrast, only a limited number of studies applied a combination of sophisticated econometric methods, such as the instrumental variable two-stage least squares (IV-2SLS) regression and/or the Heckman two-stage model, and/or difference-in-differences analysis, or propensity score matching to mitigate endogeneity concerns arising from reverse causality, simultaneity, measurement error, and selection bias (e.g. Cao et al., 2021; Gyapong et al., 2016; Tawiah et al., 2024a, b).

BED was primarily conceptualised in terms of ethnic (71.07%), racial (24.79%), or ethno-racial characteristics (4.13%) (see Table 5 Panel A). Most studies measured it using metrics such as fractions, percentages, and dummy variables (71.90%), while only 25.62% utilised the Blau index (Table 5 Panel B), despite it being regarded as one of the most suitable measures for capturing heterogeneity within diverse groups (see Tee and Rassiah, 2020).

In our sample, 47 articles (38.84%) adopted a single-theoretical perspective, 43 (35.54%) combined two to six theories, and 31 (25.62%) did not adopt any specific theoretical framework (see Table 4 Panel C). We found no significant differences in the theoretical approaches used between studies from developed or developing countries. Our analysis reveals that scholars have drawn on a wide range of theories to inform BED research (see Table 6). We categorised these theories into two broad groups: management and organisational theories, and socio-psychological theories. In the following section, we present our findings from these different theoretical perspectives.

Agency (n = 49) and resource dependency (n = 30) theories are the most widely used theoretical perspectives in BED research. This may be because ethnically diverse directors are often viewed in terms of their monitoring and resource provision roles (Gyapong et al., 2016). Agency theory (AT) addresses conflicts between principals (shareholders) and agents (managers), with a view that ethnically diverse boards may help to mitigate these conflicts through their stronger monitoring roles (Guest, 2019). Resource dependency theory (RDT), on the other hand, posits that BED helps firms access critical external resources (Ntim, 2015).

While AT has been the most widely used theory, it does not offer a clear prediction of the relationship between BED and corporate outcomes (Carter et al., 2003, 2010), while RDT appears to provide a more direct link (Sarhan et al., 2019). However, both theories have notable limitations. For example, AT tends to over-emphasise distrust and the abuse of executive powers while overlooking the institutional contexts and social relationships that influence human behaviour (Filatotchev and Wright, 2017), while RDT focuses primarily on financial stakeholders. To overcome these limitations, recent studies have often combined AT with RDT or other theories to offer a broader understanding of BED's impact (e.g. Janahi et al., 2025; Tee and Rassiah, 2020).

Stakeholder theory (n = 11) is also frequently used in BED research. This theory holds that firms are social institutions whose obligations exceed their fiduciary duties to their shareholders. As such, firms must balance the needs of other stakeholder groups in order to survive (Fernandez and Thams, 2019). BED contributes to enhancing legitimacy and aligning corporate actions with diverse stakeholder expectations. Based on this argument, the studies in our sample mainly used this theory to examine the relationship between BED and corporate non-financial outcomes, such as CSR performance (Harjoto et al., 2015a), corporate disclosure (Balakrishnan et al., 2023), and disclosure of corporate governance practices to shareholders and stakeholders (Gyapong and Afrifa, 2019). While most findings align with its assumptions, applications of this theory often remain normative, treating legitimacy as an outcome rather than a contested process. Another recurrent perspective is the upper echelons theory (n = 10). According to the upper echelon theory, the demographic composition of the board plays a vital role in shaping firms' strategic actions. Based on this theoretical perspective, ethnically diverse directors are claimed to enhance access to information due to their broader perspectives and network ties (Carter et al., 2010). Consequently, the studies in our sample primarily applied this theory to examine the impact of BED on financial performance (e.g. Cho et al., 2025; Kanj et al., 2024). However, the findings remained mixed.

A few emerging frameworks, mainly drawn from sociology and psychology, have begun to inform BED research. However, their use remains marginal compared to dominant management and organisational theories, even though ethnic diversity is, by nature, a sociological and anthropological construct. For instance, critical mass theory (n = 5), tokenism theory (n = 4), similarity-attraction theory (n = 2), and self-categorisation theory (n = 2) have been employed in only a small number of studies. Other theories, such as information processing theory, power struggle theory, inter-group relations theory, visibility threat theory, social interaction theory, and status characteristics theory, were applied in one study each (see Table 6). These emerging theories provide valuable but underexplored insights into the social and psychological mechanisms through which ethnic diversity shapes board dynamics and decision-making. However, scholarship clearly has yet to fully engage with their potential, often restricting application to analysing the antecedents and barriers of BED. For example, Westphal and Stern (2007) applied self-categorisation and social categorisation theories to show how similarities between ethnic minorities and incumbent directors can increase their likelihood of securing board appointments, while Mohamad-Yusof et al. (2018) drew on historical institutionalism theory to explain how ethnic politics can lead to greater representation of directors from a particular ethnic group in the boardrooms. Only a few studies have used these theories to examine how behavioural dynamics and social interactions among directors from diverse ethnic backgrounds impact corporate outcomes (e.g. Abebe and Dadanlar, 2021; Cao et al., 2021; Harjoto et al., 2018).

To enhance understanding of BED research, we synthesised the reviewed articles into a multi-dimensional integrative framework (see Figure 4). Specifically, we classified the studies into three broad categories. The first category analysed the antecedents and barriers to BED, the second category synthesised studies on BED outcomes, while the last part of the integrative framework presents results from studies that analysed moderating and mediating variables, as well as interactions between BED and other board attributes.

Limited attention is given to BED antecedents, with only 18.18% of the reviewed studies specifically addressing this aspect. However, the few that did examine this issue explored several factors (see Table 7). We classified these into five levels, namely firm, social, country, individual, and global.

Firm-level antecedents are the most frequently studied. Notably, a higher number of ethnically diverse directors on the board significantly increases the likelihood of hiring directors from other ethnic backgrounds, as LeRoux and Medina (2023) found among Black or Latino board members of U.S. firms. Board size and composition can likewise influence the recruitment of ethnic directors, as Brammer et al. (2007) observed in the UK and Carter et al. (2003) for US firms, though the effect declines as the number of insiders increases. Firm operational complexity (Upadhyay and Triana, 2021), size, age, and visibility have also been associated with the appointment of ethnic directors, although the direction can vary. For example, ethnic minorities in Canada were found to have more opportunities to serve as directors in well-established, high-profile firms than in smaller, younger, or less well-known firms (Bradshaw and Fredette, 2013), but in Australia, they have more opportunities to do so in smaller firms and companies with large boards or poor dividend payouts (Wang and Clift, 2009). Firm performance also shapes BED. Empirical evidence shows that although negative performance is associated with a decline in board ascriptive diversity, including racial diversity (Jung et al., 2023), this negative association is significantly attenuated when racial minorities hold chair positions. This suggests that minority leadership mitigates the decline in BED associated with underperformance. Interestingly, CEO power suppressed BED before the introduction of the Sarbanes–Oxley Act (SOX), but this effect disappeared after its enactment (Upadhyay and Triana, 2021).

Cross-sector variations may also influence the presence of ethnically diverse directors, although evidence from the UK shows no significant association between industry characteristics and the appointment of ethnic minority directors (Brammer et al., 2007). The need to attract legitimacy through CSR initiatives can also encourage BED to boost firm's reputation and community acceptance (Bernardi et al., 2005; Singh, 2007), as can mimetic pressures for board diversity, especially when competing firms have complied with policies in that regard (Singh, 2007; Van der Walt and Ingley, 2003). Government ownership has also been found to enhance BED, although higher levels of executive and foreign ownership tend to reduce it (Gyapong et al., 2016). Finally, firms' exposure to diversity issues may also encourage the recruitment of ethnically diverse directors. For example, Balakrishnan et al. (2023) found that after the Murder of George Floyd, U.S. firms appointed more Black directors to their boards.

Social-level antecedents are the second most frequently explored group of factors influencing the appointment of ethnically diverse directors. Socially shared characteristics with incumbent directors may lead to their emergence. For example, Westphal and Stern (2007) and Zhu et al. (2014) found that existing board members in U.S. firms often favour the recruitment of ethnic minorities if they share demographic features such as elite educational backgrounds, work experience, membership of the same prestigious clubs, functional expertise, and senior executive experience. Previous social and friendship ties with incumbent directors particularly increase the likelihood of longer board tenure, opportunities to serve as board chairs, and appointment to important board committees (Westphal and Stern, 2007; Zhu et al., 2014).

Meanwhile, ethnic minorities in the U.S., who lack elite credentials, can still secure board appointments through ingratiatory behaviours towards their peer directors, who control access to board appointments (Westphal and Stern, 2007). In Western contexts, they may also secure board appointments based on their social capital, including network ties and links to external constituencies, such as government, community, public, charitable, and educational institutions (Hillman et al., 2002; Singh, 2007; Van der Walt and Ingley, 2003). Community characteristics, media scrutiny, and socio-economic pressures for board diversity further support the inclusion of ethnic minority directors (Bradshaw and Fredette, 2013; Van der Walt and Ingley, 2003). Finally, social movements, such as Black Lives Matter, have recently influenced the recruitment of ethnic minority directors among U.S. firms (Pajuste et al., 2024).

Few studies examined country-level antecedents. In one that did, ethnic politics and affirmative action were identified as key drivers of an increase ethnic diverse board appointment. Particularly, Mohamad-Yusof et al. (2018) note that in Malaysia, ethnic politics and affirmative policies led to an increase in the representation of ethnic Malays on boards from 20% to almost half. Government regulations promoting good governance practices also influence the hiring of ethnic directors. For example, Upadhyay and Triana (2021) documented that the introduction of SOX in the U.S. is positively associated with BED, while Greene et al. (2025) found that the enactment of AB 979 in California significantly increased the recruitment of underrepresented minority directors. Finally, institutional environments equally shape BED. For instance, firms located in U.S. states with higher levels of economic freedom tend to exhibit lower ethnic diversity on their boards (Lee et al., 2022), suggesting that market-oriented institutional contexts may reduce pressures or incentives to appoint ethnic minority directors.

The above analysis shows that cross-national institutional differences shape the patterns of recruitment of ethnically diverse board members. For instance, in Malaysia, ethnic representation is strongly shaped by affirmative action policies and ethnic politics (Mohamad-Yusof et al., 2018), whereas in the United States, BED tends to emerge from regulatory reforms (e.g. the SOX and AB 979, Greene et al., 2025; Upadhyay and Triana, 2021) and social advocacy movements such as Black Lives Matter (Pajuste et al., 2024). In contrast, in countries such as the United Kingdom and Australia, voluntary governance codes and market-driven legitimacy concerns appear to play an even stronger role (Groutsis, 2024). These variations highlight how institutional frameworks, legal systems, political environments, and cultural attitudes toward diversity mediate the extent to which antecedents translate into actual appointments of ethnic directors.

Fewer studies explored individual-level antecedents. The analysed studies show that individuals from diverse ethnic backgrounds can become directors based on their human capital, such as advanced qualifications (Hillman et al., 2002; Singh, 2007), specialised expertise in functional areas such as banking, finance, law, public relations, and marketing (Singh, 2007; Van der Walt and Ingley, 2003; Westphal and Stern, 2007), the number of years of experience within a particular industry (Singh, 2007; Van der Walt and Ingley, 2003), skills and knowledge (Van der Walt and Ingley, 2003), and access to strategic resources (Singh, 2007; Van der Walt and Ingley, 2003). It was also observed that ethnic minority directors in the U.S. can increase their chances of acquiring multiple board appointments by engaging in lower levels of monitoring and control behaviour on their current boards, as this can lead their CEOs to recommend them to other firms on whose board nomination committees they serve (Westphal and Stern, 2007).

Global-level antecedents are the least explored category. Some of the factors highlighted by the literature include the internationalisation of boards and the geographical location of firms. Specifically, Singh (2007) noted that multinational firms operating in post-colonial environments often recruit more nationals of these countries into board positions as a strategy to attract customers and ensure continued survival in these environments. Likewise, organisational learning, especially when it is cross-cultural and cross-sectoral, can generate more opportunities to appoint ethnic directors. For instance, most international firms seeking access to new resources, such as new technologies and innovations, often appoint directors from various ethnic backgrounds to facilitate the connections needed to access such resources (Singh, 2007).

The need for international cooperation can also encourage the appointment of ethnically diverse directors. For example, telecom and media firms, which are commonly associated with global networks, mostly recruit people from diverse ethnicities who can provide the knowledge needed to understand local markets in the global arena (Singh, 2007). Similarly, Gyapong et al. (2016) found that South African firms appointed more ethnically diverse directors during the last global financial crisis to increase board monitoring and facilitate access to financial resources.

There is a paucity of studies on the barriers to BED (9.92%). A few studies suggest that the longstanding discrimination and social biases against ethnic minorities may have weakened due to growing pressure for board diversity (e.g. Jiraporn et al., 2009; Naumovska et al., 2020; Peterson et al., 2007). However, most studies indicate that, despite global DEI rhetoric, the representation of ethnic minorities in the boardrooms of many countries remains low (e.g. Groutsis, 2024; Gyapong et al., 2016; LeRoux and Medina, 2023; Wright et al., 2024). This is especially true in Europe and even more so in Australia (Groutsis, 2024; Wright et al., 2024). This has been attributed to a lack of regulatory reporting requirements or quotas for ethnic diversity, overreliance on networks and informal recruitment, and limited referrals, mentorship, and sponsorship for minority candidates (Groutsis, 2024; Wright et al., 2024).

The studies also suggest that ethnic minorities still face subtle discrimination and social barriers that reduce their chances of securing board appointments (e.g. McDonald and Westphal, 2013; Westphal and Stern, 2007). Even when appointed, they often struggle to attain senior leadership roles, regardless of their qualifications (Field et al., 2020). They also tend to perceive less influence on board decision-making and participate less actively in meetings due to their lower ascribed status (Tuggle et al., 2021), receive lower compensation (Guest, 2017), and are less likely to be retained, promoted to key positions (Chidambaran et al., 2022), or hold multiple board seats (McDonald and Westphal, 2013). These barriers persist due to several factors, such as glass ceilings, competency gaps, and in-group bias (Gyapong et al., 2016; McDonald and Westphal, 2013; Westphal and Stern, 2007).

Most studies in our sample (81.82%) primarily examined BED outcomes. For analytical purposes, we categorised these outcomes into financial and non-financial. Although the impact of BED on corporate outcomes across both categories remains inconclusive, the vast majority of studies reported positive effects (see Table 8), suggesting that the benefits of BED may outweigh its costs.

Financial outcomes (n = 84) are the most frequently explored. Our analysis included articles on accounting performance, financial reporting quality, stock market performance, mergers and acquisitions (M&A), compensation, dividend policy, corporate risk-taking, firm innovation, CEO turnover, intellectual capital, and product development.

Accounting performance is the most frequently examined outcome (34/84). These studies predominantly explored direct relationships, while only a few provided evidence of a non-linear link. For instance, Gyapong et al. (2016) reported a concave relationship in which, at low levels, BED is positively related to accounting performance, but at higher levels, the relationship turns negative. This is because an increase in BED may exacerbate board faultlines, resulting in sub-group conflicts and decision-making complexities that could neutralise its value-enhancing effects. Similarly, a limited number of studies (e.g. Gyapong et al., 2016; Salloum et al., 2019) explored critical mass arguments, which suggest that increasing the number of ethnic minorities on the board could enhance corporate outcomes. Interestingly, these studies yielded contradictory findings. Specifically, Tawiah et al. (2024a, b) found that having two or more directors from ethnically diverse backgrounds improves a firm's accounting performance, but Gyapong et al. (2016) and Salloum et al. (2019) reported that the presence of three or more ethnically diverse board members leads to a decline in a firm's accounting performance. However, it is important to recognise that achieving a critical mass of ethnic minority directors on corporate boards is rare in practice, particularly in contexts where ethnic homogeneity or social hierarchy is entrenched. This scarcity of cases may partly explain why empirical research on critical mass effects in BED remains limited and inconclusive.

The vast majority of studies (67.65%) reported positive effects of BED on accounting performance (e.g. Carter et al., 2003; Cho et al., 2025; Erhardt et al., 2003; Gyapong et al., 2016; Oehmichen et al., 2017; Salloum et al., 2019). However, a reasonable number (26.47%) found no effect (e.g. Carter et al., 2010; Guest, 2019). One possible reason for this could be that the strong demographic faultlines among ethnic directors may generate in-group/out-group divisions, which weaken board cohesion and information exchange, thereby neutralising their potential positive impacts (Carter et al., 2010). A negative impact of BED on accounting performance was only observed in developing countries, particularly in Africa (e.g. Garba and Abubakar, 2013). This may reflect ethnic tensions that can lead to interpersonal conflicts among directors, thus hindering consensus and resulting in suboptimal decision-making. This finding suggests that in certain contexts, the costs of BED may outweigh its potential benefits.

Another commonly explored theme is the impact of BED on financial reporting quality. Again, the findings are mixed, with some studies finding that BED constrains earnings management (e.g. Waweru, 2018), enhances earnings quality (e.g. Tee and Rassiah, 2020), improves audit quality, and reduces audit delay (Harjoto et al., 2015b) and external audit fees (Yatim et al., 2006). It also has a positive influence on auditors' choices, but only between switches from non-Big 4 to Big 4 firms (Nazri et al., 2012). Firms with a higher number of ethnically diverse directors have also been linked with higher audit fees, suggesting that ethnically diverse directors may demand more rigorous audits or higher-quality auditors (Muniandy, 2022). Interestingly, Nasir et al. (2019) reported that ethnically homogeneous boards are significantly associated with financial statement fraud, potentially due to weaker corporate governance practices. These findings suggest that ethnically diverse boards contribute to higher financial reporting quality than homogenous boards. However, a few researchers challenge these claims, arguing that BED neither mitigates earnings management (e.g. Rahman and Mohamed Ali, 2006; Wan Mohammad and Wasiuzzaman, 2020) nor reduces accounting irregularities and financial statement fraud (e.g. Guest, 2019).

Researchers have paid limited attention to several other financial outcomes, such as compensation, innovation, dividend policy, stock market performance, risk-taking, and M&A (see Table 8). Emerging areas such as CEO turnover, product development, and intellectual capital were explored only in one study each (see Table 8). While the findings are mixed, the studies generally reported positive impacts (see Table 8). For example, BED has been linked to a positive non-linear relationship with stock liquidity (Nguyen and Muniandy, 2020) and higher stock returns, especially during periods of mass protest associated with movements such as Black Lives Matter (Pajuste et al., 2024). Empirical evidence also suggests that BED mitigates agency conflicts in firms with free-cash-flow agency problems through higher dividend payouts, particularly in firms with high ownership concentration, entrenched management, and low CEO ownership (Ahmed Al-Dhamari et al., 2016; Byoun et al., 2016). BED also enhances oversight of total director remuneration (Abdul et al., 2018), curbs excess CEO pay in poorly governed firms (Enos and Gyapong, 2017), and improves CEO pay-to-performance sensitivity, particularly in firms with high agency costs (Do, 2023). These findings suggest that ethnically diverse directors may serve as effective monitors.

BED likewise fosters firm innovation (e.g. Cook and Glass, 2015a; Miller and Del Carmen Triana, 2009) by promoting a collaborative and inclusive work environment for ethnic minority inventors (Cao et al., 2021), leading to increased patenting and strategic experimentation (Giannetti and Zhao, 2019). Nevertheless, this increased innovation may be accompanied by greater performance volatility due to heightened decision-making frictions among ethnically diverse directors (Giannetti and Zhao, 2019). BED also helps firms implement less risky strategies without negatively affecting firm performance (Kanj et al., 2024), which has been attributed to differences in uncertainty avoidance associated with cultural backgrounds (Kanj et al., 2024).

However, a few studies show that BED is not uniformly beneficial, with some reporting either negative or no significant effects. For instance, Hearn (2012) found that BED is associated with higher IPO underpricing, particularly in emerging African markets. Kolev and McNamara (2020) documented a negative effect of BED on divestiture returns, while Delis et al. (2017) showed that it is associated with higher risk-taking, especially in the banking sector. Ahmed Al-Dhamari et al. (2016) reported negative or no significant effects of BED on dividend payout when measured using dividend yield. Guest (2019) reported no significant effect on executive compensation, Bernile et al. (2018) found no association with corporate risk-taking, and Harjoto et al. (2018) documented no significant impact on investment oversight, particularly under- and over-investment.

Fewer studies in our sample explored non-financial outcomes than financial ones. Research in this area primarily focused on CSR and corporate disclosure, while other aspects such as sustainability reporting, corporate governance practices, human resource management, and firm reputation have received less attention (see Table 8). Like studies on financial outcomes, most examined direct linear relationships; only a few investigated critical mass logic and non-linear relationships (e.g. Abebe and Dadanlar, 2021; Fredette and Sessler Bernstein, 2019). Specifically, Fredette and Sessler Bernstein (2019) provided evidence of a cubic (S-shaped) and second-order quadratic (U- or inverted U-shaped) relationship, characterised by periods of accelerating and decelerating effects. While findings across studies were inconclusive, the majority reported positive effects (see Table 8). Notably, BED enhances CSR performance and alleviates stakeholder concerns in manufacturing firms (Harjoto et al., 2015a). It also makes firms more responsive to CSR issues in their host communities (Azmat and Rentschler, 2017), and positively impacts IFRS disclosure, especially when firms have two directors from diverse ethnic backgrounds. However, the impact is not significant if there are more than two, suggesting potential coordination or communication challenges at higher diversity levels (Tawiah et al., 2024a, b).

BED is also associated with equitable practices such as the hiring of individuals with disabilities, promotion of diverse talent, supplier diversity, offering work-life balance benefits, and supporting LGBT-inclusive policies (Cook and Glass, 2015b). It also reduces corporate lawsuits against workplace discrimination when there are three or more ethnic minority directors on the board (Abebe and Dadanlar, 2021). BED likewise enhances employer-employee relations (Li et al., 2018), including better union relations, profit-sharing programmes, health and safety policies, and employee involvement (Li et al., 2024), especially when boards include a greater number of women. However, a smaller number of studies reported non-significant effects. For example, BED has no direct or indirect effect on governance effectiveness (Fredette and Sessler Bernstein, 2021) or sustainability reporting practices (Shamil et al., 2014).

Given the mixed findings of previous studies, researchers have been encouraged to incorporate moderators and mediators to understand better how these factors influence the relationship between BED and corporate outcomes. However, only a small percentage of studies (8.26%) included moderators such as institutional investors (Tee and Rassiah, 2020), governance strength (e.g. Guest, 2019; Gyapong et al., 2016), and political connection (e.g. Tee and Rassiah, 2020). Notably, most of these studies reported positive associations between BED and key moderators of firm performance. For example, Tee and Rassiah (2020) documented a positive moderating effect of domestic institutional investors on the relationship between BED and earnings quality, as did Sarhan et al. (2019) and Gyapong et al. (2016) for governance strength on the association between BED and accounting performance, while Li et al. (2018) reported a similar effect for firms' financial situations on the link between BED and employer-employee relations. Even fewer studies (4.95%) examined mediators, but most of these also reported positive effects. For instance, Buse et al. (2016) found that board diversity policies and inclusion behaviours positively mediate the link between BED and firms' internal and external governance practices, and Miller and Del Carmen Triana (2009) reported similar findings for the mediating impact of corporate reputation and innovation on the link between BED and accounting performance. These findings suggest that incorporating moderators and mediators can provide a broader view of how BED influences organisational performance.

Although few studies treated BED as a moderator, the evidence shows that it mostly strengthens the relationship between the independent variables and the outcomes studied. For example, Tee (2023) demonstrated that BED exerts a significant moderating effect on the pay–performance relationship in high free cash flow and low-growth firms. Tee (2019) documented that it reduces the cost of debt in politically connected firms. Anifowose et al. (2017) reported that it positively moderates the association between intellectual capital disclosure, cost of capital, and market capitalisation, and Muniandy (2022) found that BED improves the relationship between board independence and audit fees. Nevertheless, Karim et al. (2023) provided evidence that BED plays a varying moderating role in Malaysian listed firms. By disaggregating ethnic diversity into Chinese, Indian, and foreign directors, the study revealed distinct governance effects, whereby Chinese directors significantly moderated key governance–performance relationships, strengthened the negative association between ownership concentration and firm value, and positively moderated the relationship between board independence and firm value, enhancing the advisory effectiveness of independent directors. In contrast, Indian directors exhibited no significant moderating effects across the tested relationships, which the authors attribute to their limited representation on corporate boards constraining their ability to shape governance outcomes.

Recent studies have begun to explore interactions between BED and other board attributes (e.g. Abebe and Dadanlar, 2021; Hartmann and Carmenate, 2020; Kolev and McNamara, 2020; Li et al., 2024; Nguyen and Muniandy, 2020; Tuggle et al., 2021), based on the premise that different dimensions of diversity may not operate independently (Nguyen and Muniandy, 2020). However, most of these studies primarily focused on the interactions between BED and gender (e.g. Hartmann and Carmenate, 2020; Kolev and McNamara, 2020; Nguyen and Muniandy, 2020), often overlooking other board characteristics. Although limited in number (n = 15), a significant majority (73.33%) concluded that BED does not operate in isolation but interacts with other board attributes to shape corporate outcomes (e.g. Abebe and Dadanlar, 2021; Hartmann and Carmenate, 2020; Li et al., 2024; Tuggle et al., 2021). For instance, Hartmann and Carmenate (2020) reported that BED alone has no significant effect on firms' CSR reputation, but in combination with gender diversity, it has a positive effect. Similarly, Li et al. (2024) found a similar effect of this combination on human resource management. These findings suggest that examining BED in isolation may be insufficient, as its effect may depend on its interaction with other forms of demographic diversity. Nevertheless, a few studies documented negative interactive effects (e.g. Kolev and McNamara, 2020; Nguyen and Muniandy, 2020). Specifically, Kolev and McNamara (2020) found that the interaction between BED and gender diversity leads to longer divestiture completion times and lower divestiture returns. One possible explanation is that the joint presence of ethnic and gender diversity increases cognitive heterogeneity within the boardroom, making consensus-building more complex and time-consuming. This suggests that the intersection of these diversity dimensions may reinforce demographic faultlines, thereby intensifying subgroup divisions and slowing strategic decision-making.

Our analysis of the BED literature reveals significant gaps across contextual, methodological, theoretical, conceptual, and empirical dimensions. Addressing these gaps is crucial for advancing our understanding of BED and its implications for corporate performance.

Although the review indicates that BED research has been growing gradually since the global financial crisis, most studies have focused on the U.S. context, with limited representation of European, African ^[1], and cross-country levels. This imbalance can be attributed to several factors. In many European countries, ethnicity is considered a sensitive topic (Singh, 2007), and there is a reluctance to acknowledge ethno-racial diversity and its historical significance, often resulting in statistical blindness. In emerging African economies, research is constrained by limited access to corporate governance data. Additionally, scholars may prefer single-country studies to avoid endogeneity concerns in cross-country samples (Tee and Rassiah, 2020) and the need to navigate challenges related to linguistic, cultural, legal, political, and socio-economic differences between countries that may affect the generalisability of findings (Nguyen et al., 2020). However, overreliance on single-country studies could hamper the development of a comprehensive framework to address our limited understanding of BED as a multilayer concept. Moreover, the review finds that researchers often generalise results across sectors, despite evidence that BED may vary significantly by industry (Brammer et al., 2007). This can lead to oversimplified conclusions that could hinder the formulation of industry-specific strategies.

There are several methodological limitations in the BED research stream. First, the field is dominated by quantitative studies, with comparatively limited use of qualitative, conceptual, and mixed-method approaches. Although quantitative research can provide more uniform interpretations of findings, it lacks the rich contextual insights needed to understand the characteristics and behaviours of ethnically diverse directors. Second, most studies, especially those conducted in emerging economies, rely on small samples and OLS estimation techniques, which may reduce statistical power and increase susceptibility to omitted variable bias and measurement error (Guest, 2019). More importantly, despite the well-documented challenges of endogeneity in governance research, including reverse causality, simultaneity, measurement error, and selection bias (Cao et al., 2021; Hill et al., 2021; Khatib, 2025; Zattoni et al., 2023), many studies do not adequately control for these problems (e.g. Effiezal Aswadi Abdul et al., 2018; Salloum et al., 2019). This raises concerns about the validity of their findings (Alhossini et al., 2021) and the reliability of the resulting theoretical and managerial implications (Khatib, 2025). Prior studies have also noted the difficulty of eliminating endogeneity and omitted variable biases from secondary data analysis, even when multiple endogeneity tests are applied (Ntim, 2015). Nonetheless, limited attention has been devoted to qualitative research, despite its potential to uncover board dynamics (Azmat and Rentschler, 2017) and support the development of new theoretical perspectives.

Additionally, previous research has primarily measured BED by quantifying the proportion and number of ethnic minorities on boards. This often overlooks the influence of ethnic majorities on decision-making, leading to a distorted perception of diversity. Furthermore, ethnicity is just one aspect of the broader concept of diversity, which may also interact with less visible dimensions such as religion, sexual orientation, culture, class, and political orientation. However, studies exploring these interactions are scarce and typically focus on gender diversity. Besides, the concept of critical mass in BED is still underdeveloped; as a result, understanding of how it operates in BED context remains limited.

A considerable number of studies in our sample were not explicitly anchored in a particular theoretical framework (e.g. Giannetti and Zhao, 2019; Greene et al., 2025). While some researchers addressed this gap by integrating multiple theories to provide a broader perspective on BED, the majority relied on single-theoretical frameworks. This is despite arguments that no single theory can adequately capture the complex relationship between BED and corporate outcomes due to the inherent limitations of each framework (see Carter et al., 2003). Furthermore, studies from emerging economies often adopt Western-developed theories, even though institutions differ significantly between developed and developing countries (Filatotchev and Wright, 2017). Thus, the mimetic generalisation of Western theories to emerging countries without considering their institutional complexity and unique socio-cultural dynamics constitutes a major weakness in the field. Moreover, as BED is fundamentally a sociological and anthropological concept, the dominance of management and organisational theories may also be delaying progress in the field.

Another critical issue is the lack of a clear and consistent definition of BED. This conceptual ambiguity has led to disagreement over what constitutes BED, which often reduces it to an instrumental concept with mechanistic implications. Most researchers have conceptualised BED using ethnic, racial, and ethno-racial characteristics, which is useful given that diversity itself is multifaceted. However, the concept of ethnicity is often framed through a Western lens, emphasising the representation and collective identity of minority groups. In non-Western contexts, this framing is problematic, as ethnic diversity is frequently equated with minority presence, even when that is not applicable. Besides, ethnic diversity can also be defined by dimensions such as tribe, ancestry, caste, culture, or language (see Kanbur et al., 2011), yet these have been largely overlooked in BED research. The resulting lack of conceptual clarity contributes to systemic incoherence and fragmentation, presenting fundamental dilemmas that hinder the development of a cohesive body of knowledge.

There is a noticeable gap in the literature concerning the antecedents and barriers to BED. Most studies have focused on examining the relationship between BED and corporate outcomes, with limited attention to the factors that drive or hinder it across other contexts. Moreover, the few studies that investigated BED determinants are largely based on Western contexts with similar institutional settings. This is a significant weakness because the antecedents of BED in developing countries may differ considerably due to colonial legacies, national regulations, institutional structures, and the political interests of post-colonial elites.

Additionally, much of the literature discusses the relationship between BED and corporate financial outcomes, particularly accounting-based performance, while significant gaps remain in our understanding of non-financial outcomes. For example, only a few studies have examined the relationship between BED and the adoption of diversity, equity, and inclusion policies, and these have mainly focused on non-profit and for-profit organisations in developed countries, while studies exploring this area in developing countries are still lacking. Also, insufficient attention has been given to the effect of BED on human resource management, SDG disclosure, and the extent and quality of sustainability reporting.

The identified gaps in the literature highlight the need for future research in several key areas within the BED research field. It is crucial to focus efforts across a wider range of organisational contexts, recognising that board dynamics are complex and vary over time and across geographies. Greater attention should be paid to contextual factors through more cross-country studies that account for diverse ethnic and racial dynamics. For instance, comparing countries with multi-ethnic traditions (e.g. Nigeria, the U.S., Brazil, Cameroon, Lebanon) could offer nuanced insights into ethnicity and its role in board dynamics. Comparative research between developed and developing countries is also needed to build context-specific theories, integrate diverse epistemologies, and prevent the superficial application of theories without regard for contextual appropriateness. Additionally, industry-specific research, including studies on SMEs and non-profit organisations, could yield valuable insights, such as whether advocacy on public issues varies with the board's racial composition.

A strong theoretical foundation is vital to improving the explanatory power of empirical findings. Therefore, it would be beneficial to incorporate political theories that have yet to be applied in BED research. Researchers can combine socio-psychological theories, such as intergroup contact, similarity attraction, social categorisation, and social identity theories, as these could offer strong theoretical support for explaining how behavioural dynamics among ethnically diverse directors influence board decision-making. Additionally, Putnam's (2007) constrict theory is an extremely daring prediction of a direct link between ethnic diversity and social trust. Surprisingly, no study has utilised this approach, even though it could help explain how and why BED might, under certain conditions, erode social trust and foster fragmentation among board members. Also, social exchange theory can be applied to ascertain whether the formulation of diversity policies and the creation of an inclusive work environment could boost commitment among ethnic minority directors and reduce BED conflicts. Moreover, integrating post-colonial theories could enhance understanding of how colonial legacies shape BED in regions like Africa and Latin America.

Researchers should adopt qualitative methods, such as interviews, case studies, shadowing, and direct observations, to generate rich data that could help to uncover how ethnic directors influence board decision-making processes (Kolev and McNamara, 2020; Vairavan and Zhang, 2020). Mixed-method approaches that integrate primary and secondary data can also improve scholarly rigour and provide a more holistic understanding of BED's impact, while conceptual studies are needed to build robust, context-sensitive frameworks that extend the theoretical boundaries of BED research. More effort should be made to clearly define ethnic diversity on the board. BED research must move beyond Anglo-American ethnicity theorising, embracing broader conceptualisations, such as tribe, ancestry, caste, cultural and linguistic identity dimensions that have been largely overlooked.

In quantitative studies, researchers should prioritise establishing causality rather than relying solely on correlations. Notably, a few studies addressed reverse causality issues using IV-2SLS and the Heckman two-stage model, possibly due to the difficulty in identifying suitable and reliable instruments (Zattoni et al., 2023). Future research could therefore employ alternative estimation techniques such as GMM and experimental or quasi-experimental research designs, which could also help mitigate endogeneity concerns arising from reverse causality, simultaneity bias, and unobserved firm-level heterogeneity (Khatib, 2025; Zattoni et al., 2023). More importantly, we encourage researchers to first identify the specific type of endogeneity affecting their research before choosing the appropriate methods, rather than following methods applied in prior studies, which may not be suitable for their research contexts (see Hill et al., 2021; Zattoni et al., 2023). Moreover, BED measurements should extend beyond merely counting ethnic minorities on board, as this neglects the influence of ethnic majorities on board decisions. Diversity indices such as Blau, Shannon, or Teachman's Entropy Index could offer more comprehensive alternatives.

Substantial gaps also remain in understanding the mechanisms through which BED affects organisational performance. Therefore, research should examine non-linear relationships and the role of moderators and mediators for a more nuanced view. Future studies should also explore how BED interacts with board attributes beyond gender. Understanding these interactions can provide a more complete picture of their effects on corporate outcomes. In addition, further investigation is needed into BED's influence from a critical mass perspective. Specifically, researchers should examine whether its effects are tied to numerical representation or more complex mechanisms.

Finally, there is a notable lack of research on the antecedents and barriers to BED, which can influence the extent and nature of its impact. Another key limitation of the existing literature is its over-emphasis on the recruitment challenges faced by ethnic minorities in Western contexts, while little is known about other settings, such as Africa, where even ethnic majorities may face difficulties securing board positions (see Gyapong et al., 2016), particularly in multinational corporations. Studies on BED outcomes also continue to focus largely on accounting performance, leaving gaps in areas such as non-financial outcomes (e.g. human resource management, DEI initiatives, sustainability, SDG reporting, and corporate reputation) and financial outcomes (e.g. M&A, agency costs, taxation, investment behaviour, ethnic pay gaps, CEO turnover, goodwill impairment, stock price crash risk, and corporate information environment). Addressing these gaps will help to develop a more comprehensive understanding of BED and its diverse impacts, thereby supporting more effective and inclusive board practices.

This study carries important implications for BED research, practice, and policy. From a research standpoint, it advances theoretical and empirical understanding by proposing an integrative framework to guide future inquiry. The review exposes the fragmented and often instrumental nature of existing studies, revealing not only unexplored areas but also conceptual and methodological blind spots that may underlie the inconsistent findings on BED–performance relationships. Rather than treating such inconsistencies as purely empirical, this analysis suggests they stem from the narrow theoretical framing of diversity, typically as a variable to be measured rather than a social process to be understood. Hence, the study helps reorient future research agendas and re-examine the value-in-diversity proposition, which continues to assume a straightforward link between diversity and firm performance (see Herring, 2009).

The findings also carry important implications for organisational leaders and practitioners, particularly in light of the growing politicisation of diversity in corporate life. While prior studies highlight that ethnically diverse boards can enhance governance quality (Buse et al., 2016), transparency (Gyapong and Afrifa, 2019), and innovation (Miller and Del Carmen Triana, 2009), the significance of BED extends beyond business efficiency. Ethnic diversity on boards increasingly reflects a social and political demand for representation, fairness, and recognition—values that resonate with broader societal demands for inclusion rather than solely corporate performance metrics. In this context, leaders should approach BED not as a compliance exercise or instrumental strategy, but as an ethical and institutional commitment to the diverse social contexts in which the organisations operate. As major firms in Anglo-American contexts recalibrate or retreat from explicit DEI commitments under shareholder and political pressures, reaffirming BED may reflect social responsiveness and moral accountability rather than merely a strategy for maintaining legitimacy. Ultimately, firms that embrace BED as a civic and ethical practice, rather than a calculative one, are more likely to sustain legitimacy and trust in an increasingly polarised society.

The findings also have important policy implications for governments and regulators. Some of the reviewed studies (e.g. Groutsis, 2024; Gyapong et al., 2016) show that despite the adoption of diversity quotas in several countries, BED levels remain persistently low, exposing the limited effectiveness of regulation without consistent enforcement. This weakness reflects the tendency of global governance frameworks to prioritise symbolic compliance over structural change. Meaningful progress requires moving beyond representational quotas toward equity-oriented measures that address pay disparities, recruitment transparency, and leadership development for underrepresented groups. The UK‘s ethnicity pay gap reporting guidance illustrates how complementary policies can reinforce board-level inclusion, yet recent political backlash against DEI initiatives threatens these gains. To counter this trend, regulators must embed diversity objectives into enforceable governance standards and accountability mechanisms, ensuring they are not subordinated to shifting political or market logics.

Finally, ethnic diversity on boards is not merely a question of representation or business performance; it is also a political domain in which identity, belonging, and justice are negotiated. In diverse societies, ethnicity operates as a form of political leverage, shaping how decision-makers conceive inclusion, merit, and legitimacy. Approaching BED as a technocratic goal, therefore, risks depoliticising an issue that is deeply tied to social struggles over recognition and redistribution. The persistent lack of ethnicity-related data also reflects institutional reluctance to confront these inequalities. Regulators should look beyond symbolic board quotas to address exclusion at lower organisational levels, where access and opportunity are initially constrained. Establishing standardised yet ethically sensitive reporting systems could make structural inequities visible and open to accountability. Ultimately, the significance of BED lies not in its efficiency claims but in its capacity to democratise corporate governance and contribute to a more just and plural social order.

Despite extensive research, BED still lacks a systematic synthesis that integrates findings across theoretical, methodological, contextual, and thematic dimensions. Consequently, the current understanding of BED's impact on organisational outcomes remains fragmented, limiting its practical and policy relevance. This gap is particularly concerning in light of the recent backlash against DEI initiatives and rising scepticism about the benefits of BED. To address this, our study provides a comprehensive review of the BED literature. Using a three-step SLR approach, we identified and synthesised 121 peer-reviewed articles published in top-ranked ABDC journals from 1992 to 2025. The review reveals that the field is largely dominated by quantitative studies, which often lack contextual information and a clear definition of BED. Moreover, most of the existing studies primarily focus on developed nations, with research from emerging economies often relying on Western-developed theories, while overlooking institutional differences. Furthermore, most studies focus on the outcomes of BED, while limited attention is given to its antecedents and barriers. Finally, the relationship between BED and corporate outcomes remains inconclusive. We attribute this to methodological issues, such as omitted variable bias, reverse causality, endogeneity, and measurement errors. Addressing these challenges presents promising avenues for future research.

Despite offering valuable insights, our study has some limitations. First, the search was restricted to English-language publications, potentially excluding relevant research in other languages. Second, we focused exclusively on peer-reviewed articles, thereby excluding potential insights from other academic sources, such as books, editorials, book chapters, and conference proceedings. Nevertheless, our findings make a significant contribution to the literature by offering a theoretically grounded and integrated framework that advances understanding of how BED operates across contexts. The study also contributes to knowledge by outlining several future research avenues, which include, but are not limited to, exploring the non-linear, multi-level, and cross-cultural dynamics of BED, as well as investigating how institutional, technological, and societal shifts shape how BED promotes inclusion, legitimacy, and sustainable corporate performance.