Does Task-Related Conflict Mediate the Board Diversity-Firm Performance Relationship?

The board diversity-firm performance relationship is theorized to be driven by the presence of task-related conflict. This study aims to empirically investigate whether task-related conflict indeed mediates this relationship. Consistent with the literature, we theorize how different types of board diversity affect task-related conflict, and how task-related conflict in turn affects firm performance. We test our hypotheses in the Dutch water authority sector 2008-2014, where we have access to the detailed board meeting minutes. Our results report no significant mediating effect of task-related conflict in the board diversity-firm performance relationship. Although diversity affects both task-related conflict and firm performance in the same way, we cannot conclude that task-related conflict is the mechanism by which board diversity affects firm performance. We conclude by discussing the implications for the board diversity literature.