Towards a Race and Gender-Conscious Conception of the Firm: Canadian Corporate Governance, Law and Diversity

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Queen’s Law Journal. Volume 35, Number 2 (2010), p. 569-624.


corporate governance; corporate law; racial/gender diversity


Recent scholarship in law and corporate governance has focused on the board of directors as a site of inquiry and noted a shift in the board's animating philosophy. It is argued the board's role is evolving from that of a passive stamp of acquiescence to an agent of reform. The current emphasis on the board raises a foundational question. In the context of a globally competitive marketplace and the transnational knowledge society, what are the appropriate characteristics of a corporate director? And more pointedly, has the dominant normative discourse surrounding this question resulted in an exclusionary cultural monolith? Has it served to preserve existing status hierarchies/structures of identity privilege? This paper explores the intersections of Canadian corporate law/governance and race/gender. Part II illustrates the governance landscape in Canada vis-a-vis statistics on corporate board composition. In doing so, a culture of widespread homogeneity is revealed. Following this, I offer possible rationales for the figures with reference to the so-called "pool problem" and issues of implicit cognitive bias. With respect to the latter, I rely on psychological science literature in an attempt to explicate the cognitive processes and structures that inform corporate decision-making. Drawing on available identity narratives, I then consider how unconscious discrimination manifests itself in the everyday lives of subordinated groups within the corporation. In this section, I explore aspects of organizational socialization and the spaces in which identity-formation takes place. Part III examines attempts by commentators to cast board diversification in terms of organizational performance, in other words, the argument that a heterogeneous board correlates to a more profitable, value-generating business. I review the literature in order to establish whether this claim can, in fact, be empirically established. To the extent that it can, I suggest Canadian corporations may actually be perpetuating corporate cultures that stifle factors which might otherwise enable them to successfully leverage diversity. Further, while I acknowledge the market-based approach has value and is attractive as a political strategy, I also express reservations and contend that it should be employed with caution. In Part IV, I canvass potential avenues for reform. Most importantly, I argue that aspects of the legal culture and practice that shape corporate activity should be revisited. The current system - as it relates to the director nomination process, shareholder proposals and existing governance principles - may ultimately serve to facilitate board homogeneity and to undermine future diversification initiatives. In Part V, I delineate four underexplored areas for future research and offer concluding remarks. I suggest that issues of board composition should be of concern not just to those who are preoccupied with corporate governance, but also to those who are concerned by the human rights-related impacts of Canadian transnational corporate activity.

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