MUSCAT : Board cognitive diversity has become a burning issue all over the world. It became more pronounced in the United States due to the reported levels of racial/ethnic diversity that may have plateaued in the Russel 3000: S & P 500. The percentage of reported racially/ethnically diverse directors has barely increased inching up from 20 % in 2018 to 24 % in 2022 to 25 % in 2023.

Board cognitive diversity has been identified as plausible and retrospective necessities for the corporate culture and it will certainly offer panache over probable perceived predicaments and chart a credible course for the immediate future.

Several perspectives have been adduced for the observed board cognitive diversity paradigm that have become almost reiterated narratives of the financial and non-financial service institutions in the Sultanate of Oman.

There are internalist explanations that attribute board cognitive diversity conundrum and institutional deficiencies to successive corporate leader’s rapacity. Whatever these explanations may be, there is an emerging consensus that real progress cannot happen until the regional bloc addresses this pertinent issue and board room squabbles prevalent in some corporate entities.

This article therefore gives contextual nuances into board cognitive diversity within the nation’s economy.

The productivity of the governing board in the discharge of its statutory roles can only be feasible if bounded with appropriate composition and leadership configuration. As

the ultimate decision-making body, the competencies of directors are particularly important.

These competencies come from experience, knowledge, skills, attitudes, values and believes.

As a general proposition, the diversity of board involves having a well-balanced board membership that is made up of individuals from different socio-cultural background and professional fields which create synergy that helps the board in carrying out its statutory responsibilities. Diversity among board members provides them with the opportunity to use their diverse experiences and resulting viewpoints to identify a greater number and variety of initiatives in the decision-making process.

Board cognitive diversity is a subset of corporate governance and is presumed not to be an exact science, it cannot be exactly defined. Accordingly, its definitions tend to be contextually nuanced

or purpose specific. The later for example adopts a strict definition of board cognitive diversity because it has proved elusive and mutable, and also increasingly inclusive. The Sarbanes- Oxley Act (2002) in the United States of America (US) defines board of directors cognitive diversity as variability in experiences and background. The act calls for an increase in cognitive diversity while concurrently embracing the trend in demographic diversity, which encompasses variability in age, gender, nationality, and race (Jackson, May & Whitney, 1995). Despite the legislation, there is still confusion as to what comprises cognitive diversity, The concept of cognitive diversity defines the board by its variability about experiences, background and values as compared to demographic diversity in which boards would be defined by the variability about age, gender and race.

Board diversity can be bifurcated into two distinctive categories namely demographic and cognitive dimensions. Demographic diversity refers to the visible or readily detectable attributes of directors that include race or ethnicity, nationality, gender and age, while cognitive diversity dimension relates to less visible or unobservable attributes of directors that include race or ethnicity. Nationality, gender and age, while cognitive diversity dimension relates to less visible or unobservable attributes of directors, such as functional and educational backgrounds, education, skill, industry experience and organisational membership.

Pioneer investigations on board diversity focused on demographic characteristics of board members and its relationship with firm performance. This is because demographic characteristics of board members are easily observable and measurable.

Holistically, astute researchers have contended and buttressed the personal expertise these directors bring to bear on board in the performance of their statutory roles. In all ramifications, explorations on effect of board members education, industry experience, expertise and political connectedness on firm performance looms large.

Rhetorically, pressure from institutions and stakeholders have led firms to redefine what constitutes a diverse group of directors. Furthermore, board diversity is no longer a binary insider/outsider paradigm or a comparison of demographic characteristics amongst the board to constituent groups, but that the board is now fractured across demographic and more importantly, cognitive dimensions.

Although, cognitive elements had in recent times taken precedence over demographic variables, the existing literature on board cognitive diversity are skewed towards demographic issues, rather than competencies that often determine the degree to which directors add value to board processes and discuss. Keeping a well-diversified cognitive board can create an in-house self-reliance whereby everything the firm requires ranging from effective monitoring, resource co-optation, to qualify decisions and sound corporate initiatives are all within reach.

Conclusion and Recommendations

We observed that only a few dimensions of board cognitive diversity (Educational and Functional) had received minute empirical considerations with inconclusive results. There seems to be a paucity of empirics investigating board cognitive diversity within the context of emerging markets.

There is an extensive exploration gap on the issue of political connections dimensions of board diversity in emerging countries. An empirical investigation incorporating these dimensions of diversity will no doubt contribute substantially to the growing body of knowledge on board cognitive diversity.

We are earnestly advocating for more in depth utilisation multiple measures aligning the various indices of board cognitive diversity that will be useful to broader spectra of stakeholders.

Simultaneously, using all the measures will offer great potential for the discovery of important information about how and to what extent different boards influence firm performance.