Diversity tokenism

Key takeaways

• After pressure for diversity increased, firms appointed more minority directors and executives
• But total board and executive team sizes did not grow proportionally
• The result: minorities replaced other minorities rather than expanding representation
• Firms "rearranged the seats" rather than "expanding the tent"
• This pattern is consistent with tokenism rather than genuine organizational change

Abstract

We examine whether corporate responses to diversity pressure represent genuine organizational change or superficial tokenism. Using novel data on the race and ethnicity of directors and executives, we find that firms increased minority representation following heightened pressure for diversity. However, this increase came primarily through replacement rather than expansion. Board and executive team sizes remained relatively stable, suggesting that minorities were substituted for other minorities rather than added to existing positions. Our findings indicate that firms engaged in tokenism, meeting diversity expectations without fundamentally changing their organizational structure.

Methodology note

This paper uses Chain-of-Thought (CoT) prompting with large language models to classify the race and ethnicity of corporate directors and executives. We developed a systematic approach to ensure accuracy and reproducibility. See our technical explainer on Chain-of-Thought prompting for details on the methodology.