Fewer than half of the S&P500 companies have a foreigner on their boards, despite calling themselves multinationals, reports
Businessweek, citing the results of the first Egon Zehnder International
Global Board Index™ released on 1 December. By comparing the Global Board Index scores to the percentage of revenues each company generated internationally, the U.S. business magazine attempts to assess how global each firm actually is. Despite disappointing results at several firms, the Index revealed positive correlations between the “globalness” of boards and metrics such as annual average stock price growth and return on assets, reports
PR Newswire. Moreover firms where foreign nationals accounted for 30+ percent of directors tend to outperform their competitors, warns the study. “Particularly given the current global economic situation, our study findings serve as a warning to the vast majority of companies pursuing global strategies,” notes
George Davis, a consultant at Egon Zehnder International, Boston. Davis firmly believes that close-minded thinking is a trap for U.S. companies competing in global markets. “Usually people on the ground who come from those cultures offer a plethora of ideas,” Davis observes. “One lesson of the past couple of months has been that business today is inescapably interconnected and global. Companies that don’t apply that lesson to the composition of their boards will be increasingly at a competitive disadvantage,” Davis concludes.
