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Few Indians in boardrooms: Research

The Economist Intelligence Unit said world's largest companies have "remarkably homogeneous" boards, reports Nabanita Sircar.

india Updated: Mar 01, 2006 20:05 IST

Despite global interest in India and China there are very few from these countries find their way to boardrooms of top international companies, a research has said.

Companies based in Switzerland and the Netherlands however have the most cosmopolitan boards, as per the research which was published this week.

The world's largest companies have "remarkably homogeneous" boards, with fewer than one in five directors different in nationality to the companies they head, the Economist Intelligence Unit said.

Although large companies are continuously globalising, their top management still tends to reflect the domestic origins of individual companies, the EIU said.

The study found German and Japanese groups to be the most insular. International interest in China and India has not yet translated to the boardroom, with only six of the 3,352 executives in the 250 companies coming from the emerging markets' rapidly growing economies.

The research also suggests that the market for top company executives remains far from being free and international.

Researchers examined 25 companies with the highest market capitalisation in the world's 10 most important stock markets and found only 18.6 per cent of the executives had a different nationality to their employer.

The report said, "In every market we studied, the overwhelming majority of board executives came from the country where the firm was listed."

However the difference in countries is quite stark. Swiss and Dutch companies having more than 30 per cent of board members from another country, while less than 10 per cent of Australian, German and Japanese executives were foreign nationals.

US nationals were much more likely than others to be members of foreign company boards, with UK executives the second most common nationals to take a senior role in a company listed on a foreign stock exchange. European executives were more likely to sit on the boards of other European companies.

The report says that multinational companies would be more likely to perform better with a more diverse board, which would help provide local insight, improve lobbying clout and make for more motivated employees.