A comparison of the international diversity on top management teams of multinational firms based in the United States, Europe, and Asia: status and implications.

Abstract

Numerous studies have examined the effects of diversity on team performance under a variety of circumstances, but little attention has been directed to the national composition or the international qualifications of top management teams. The results of three exploratory studies of the extent of internationalisation among boards of directors and executives from samples of the largest multinational corporations (MNCs) based in the United States, Europe, and Asia are presented. The findings clearly show that European MNCs have a greater proportion of internationally qualified personnel on both their boards of directors and within the executive ranks than do USA-based companies. In both the USA and European samples, executives were more likely to have international qualifications than directors, while data from the Asian sample suggest that directors might be more likely to have international qualifications.

Key words: Strategy, Organisational Learning, Knowledge Productivity, Organisational Diversity, Top Management, International Diversity

Introduction

The last decade has seen increased globalisation of businesses. At the same time the national workforce in many countries has diversified (Adler, 1997). As a result of dealing with people from many different backgrounds both internationally and domestically on a daily basis, companies have to develop policies and processes that can minimise misunderstanding and harness the potential benefits of diversity.

While the internationalisation/globalisation is a worldwide phenomenon, it is interesting to note that companies have taken different routes in their attempt to globalise. Typically the goal behind the internationalisation is to capture new technologies, increase market share, and gain a competitive advantage. Nestle and Caterpillar (CAT), for example, have expanded their global networks by adding international subsidiaries and dealerships. DaimlerChrysler chose the path of a merger to span the globe. Furthermore, by buying a controlling share of Mitsubishi Motors, DaimlerChrysler was hoping to expand into the Asian market. Still another path is the purchase of foreign companies. The Swiss company Ciba Geigy bought the American company Funk Seeds to enter the seed business in the United States. Ciba Geigy then was bought by the Swiss company Novartis.

The internationalisation of businesses is reflected in the research literature. Many of these publications focus on marketing, advertising, production, and staffing issues, particularly the selection, training, and repatriation of expatriates (Osman-Gani and Tan, 2005; Randolph and Sashkin, 2002; Kealey and Prothero, 1996; Deshpande and Viswesvaran, 1992). The research addresses questions such as: When is expatriation successful (Palmer and Varner, 2002; Tung, 1998; Caligiuri, 1997; Shay and Tracey, 1997; Harzing, 1995)? How do diverse teams capture the potential of varying viewpoints? What factors contribute to the success or failure in international ventures? What skills do expatriates need to be successful in an international environment (Yamazaki and Kayes, 2004)?

The research suggests that diversity can improve performance (Early and Mosakowski, 2000). Particularly, diverse teams can be more productive than homogeneous teams (DiStefano and Maznevski, 2000). Team members bring their own backgrounds and personalities to the task at hand. Their views are also influenced by their individual personalities, their professional backgrounds, and their cultural backgrounds. Dahlin et al (2005) found that educational diversity on a team influences the range and depth of information use positively; whereas it may influence the integration of information negatively. Research shows that successful teams do not merely draw on the individual contributions of their members but are able to create a new synergy (Varner and Palmer, 2002; Liden et al, 2001; Bolton, 1999) which Bell (1992) calls "transactional culture". Out of the diversity, teams form a new common culture (Varner, 2000).

Since Corporate Boards of Directors are teams, one may ask the question whether diverse boards would have a positive impact on the functioning of the board and consequently on the functioning and performance of the company. At this point, however, studies of team diversity tend to focus on managers and employees rather than top executives or board members.

There is little research to date on the impact of globalisation on corporate governance, particularly the internationalisation of the board of directors of international/global companies. There also has been little attention to the national composition of top management (Gong, 2003; Hambrick et al, 1998). This is changing very slowly. For example, one study by Alexander and Esser (1999) found that between 1995 and 1998 the percentage of companies with directors from other than the headquarters country increased from 39 per cent to 60 per cent. Also, Carpenter and Fredrickson (2001) indicate that "... firms were most likely to be highly global when they had diverse Top Management Team (TMTs)--diverse in terms of the breadth of their international experience and the heterogeneity of their educational backgrounds and firm tenures (2001:541)"

Lublin (2005) argues that corporate boards of MNCs are going global, particularly in Europe where 90 per cent of Europe's largest companies by market capitalisation have at least one director from outside the home country. By contrast, only 35 per cent of the largest USA companies have a foreign board member (Lublin, 2005).

Research Question

The goal of this study is to find an answer to how international are boards of directors and executives of multinational companies headquartered in the United States, Europe, and East Asia?

Review of Literature

The majority of studies on boards of directors examine boards in view of two theories: agency theory and dependence theory. Under the agency theory, the role of boards is to monitor the performance of companies (Hillman and Dalziel, 2003). Lynall et al (2003) emphasise the monitoring role as well, but they also point out that the monitoring easily leads to a focus on headquarters mentality and domestic regulations rather than providing independent and outside viewpoints and opinions including different rules in different countries.

Aguilera and Jackson (2003) argue that agency theory does not consider country differences in board roles. To illustrate this, they point out that boards in Europe and Japan, for example, have greater power and need to disclose less information than boards in the United States. However, they do not address the impact of national composition of boards on company policies and performance.

Under the dependence theory the role of the board is to provide resources (Hillman and Dalziel, 2003). Lynall et al (2003) maintain that the resources the board provides have to be seen in the context of the environment of the firm, in other words, the board is not totally independent but acts in view of the company's environment. Likewise Aguilera and Jackson (2003) place board actions in the social context of governance.

The types of resources a board can provide need closer examination. By shaping policy and strategies for the international firm, the board may point the way to tangible resources, such as finances and materials. However, the board also provides more intangible resources, and these may be more crucial than the tangibles in the long run. First and foremost, the board members provide their individual and professional expertise. When board members exchange ideas and share their expertise, they create new knowledge (Smith et al, 2005; Nahapiet, and Ghoshal, 1998). The organisational climate also plays a role in the ability to create knowledge (Smith et al, 2005). This means that the climate of the organisation has to be supportive of new ideas, and board members need to be supportive of each other. If the differences between board members are too great, the diversity may become a hindrance (Lau and Murninghan, 2005). In an environment where board members contribute their expertise, they meet the requirements under both the agency and dependence theories.

The human capital that the board can provide comprises a major part of a firm's tacit knowledge, and this knowledge is crucial in the success of the firm (Hitt et al, 2001; Grant, 1996). The knowledge of the firm is embedded in the working relationships of key players (Szulanski, 1996). With their tacit knowledge, board members understand the impact of different viewpoints. Therefore, they should also be cognisant of the impact board members from different cultures and other cultures can have on the operations of the firm. If they are familiar and comfortable working with other cultures, they can draw on that knowledge and apply it. Leveraging this tacit knowledge is the essence of a learning organisation (Senge, 1990). Two of the actions that Watkins and Marsick (1996) identified as action imperatives of firms moving toward becoming learning organisations was that they use leaders who model and support learning at the individual, team and organisational levels and connect the organisation to its environment. A learning organisation recognises, shares, and builds on the knowledge of members. In the international arena that knowledge broadens because individuals from different countries bring different expertise (Dixon, 1999).

In summary, under the agency theory the board monitors performance including legal compliance whereas under dependence theory the board looks at, among other things, the contribution that board members make and the resources they can provide. Dallas (1996), in analysing the literature on theories roles of corporate boards, indicates that while monitoring is an important function of the board, it is not the only useful role of the board. Other useful roles include providing a flexible means for the firm to acquire needed assets and as a traditional way for a corporation to receive valuable advice. She states: "The board of directors provides a valuable and often unique means for the corporation to acquire a number of relational resources, including coordination, information, support, status, legitimacy, advice monitoring, and direction." (Dallas, 1996). The capital that board members provide includes mental capital (Hillman and Dalziel, 2003) that allows board members to not only understand the business issues at hand and the priorities of other members, but also to have a firm grasp of themselves and their own likes and dislikes (Varner and Palmer, 2005). For the purposes of our research, we are particularly interested in the composition of boards and the potential contributions that international board members can make, and this contribution can be seen as a subpart of dependence theory.

Aguilera and Jackson (2003) argue that board composition reflects priorities of national corporate models. For example, American board members tend to be generalists with a rather heavy emphasis on finance (O'Sullivan, 2000). German board members, in contrast, tend to hold PhD degrees with an emphasis on technical expertise (Lawrence, 1980). Japanese boards, on the other hand, are rather large so as to integrate a large number of managers in the governance of the firm. As a result, Japanese board members tend to be generalists (Wakabayashi, 1980). While these sources look at different national orientations of boards in view of legal and social differences, they do not examine the impact of national diversity on the effectiveness of boards of companies.

If board members bring their national orientation and personal expertise to their roles as board members, one would expect that the national composition would play a role in the performance of the company and result in potential synergy of different views. Furthermore, the research on teams indicates that diverse teams have the potential of better performance than homogeneous teams. For example, Ellstrand et al (2002) argue that board composition plays a crucial role in the board's effectiveness. However, their focus in terms of composition is on length of tenure of board members and number of representatives from other firms and industries on the board rather than international diversity. Both these variables may be connected with the level of internationalisation of the company (Sherman et al, 1998; Sanders and Carpenter, 1998). Similarly, Simons et al (1999) discuss diversity of board members in terms of differences in functional background, tenure, age, and level of education rather than difference in nationality. The literature also points out that there is a tendency to replace outgoing board members with members who have similar characteristics, a tendency that Lynall et al (2003) describe as homophilic selection. In this case, board members might be reluctant to accept candidates from other countries.

Contrary to the studies that found a correlation between board membership and performance, the research by Dalton et al (1999) does not support the conclusion that diverse backgrounds on the board affects company performance. They found no significant relationship between the composition of a board and the financial performance of the company. Lau and Murninghan (2005) discuss both positive and negative implications of diversity in groups. While diversity can increase creativity (Pelled et al, 1999), diversity can also increase group conflict (Jehn, 1995), and decrease commitment and communication (Tsui et al, 1992). Ultimately, the effect of diversity partially depends on the degree of diversity or the degree of "demographic faultlines" (Lau and Murninghan, 2005).

Raatikainen (2002) emphasises that diverse groups make better decisions. This would indicate that diversity on boards will lead to better performance by companies. So far the research results concerning the performance of diverse teams are inconclusive (Dahlin et al, 2005). Additional research is needed to determine how diversity affects diverse teams.

The current research illustrates a focus on diversity of board members in a variety of areas; however, the national composition of boards does not seem to have been examined in detail. A recent Wall Street Journal article (Hymowitz, 2004) discussed the increase in foreign-born CEOs in American firms. For example, the CEO of Kellogg is from Cuba, at Alcoa from Morocco, at Altria from Egypt, and at Schering-Plough from Pakistan. In the UK the CEOs at Vodafone and Burberry are from the USA, and at Glaxo-Smith the CEO is from France. In that context, the Wall Street Journal also mentions increased internationalisation of boards. The board at Kellogg has international members from Indonesia, Italy, and Australia, and the board of the UK firm of Rexam has a Swedish CEO and board members from the UK, the USA, Sweden, and France. The article seems to indicate a movement towards more international representation; however, the question remains on whether these are isolated examples and how the changing board composition influences company performance.

Methodology

For this study we examined the composition of boards of directors and executives of USA, European, and Asian firms. For a list of companies in the sample, please refer to Exhibits 1, 2, and 3. We based the sample of USA companies on the Fortune 1000 list organised by industry (Fortune magazine 5 April 2004). Specifically, we examined the composition of boards of directors of 36 companies in 18 industries. Fourteen of the industries are in manufacturing, four in services. We chose industries that had at least 10 companies listed and were more likely to be involved in international business.

Two industries, Beverages and Network and Communication Equipment, list only nine firms, but they include highly profiled international companies. From each industry chosen we selected the leading companies based on profitability as percentage of assets.

The sample of the European companies came from the most recent Europe's 15,000 Largest Companies (2004-05). Companies in this data set are organised into eight industries. To have a similar sample size, we chose companies from each industry to get a total of 31 companies. All companies selected were from the 50 largest companies within each industry.

The sample of Asian companies came from the 2003 edition of Asia's 7500 Largest Companies. Similar to the European index, these companies are divided into eight industries (although they are not the same as the European classifications) and we selected companies from each industry. The Asian sample presented some unique difficulties as fewer companies from Asia provide information about top management to the public. This resulted in the inclusion of some companies in the Asian sample for which there was much less complete data than the companies in the USA and European samples. Additionally, there are fewer countries represented in the 50 largest corporations within each industry classification than there were for Europe. To assure national diversity within the sample, we included some companies for which we were able to obtain little more than the identification of board members and executives. The Asian sample included 32 companies.

In our data collection we examined Internet sites only. If the leading companies in an industry did not provide the necessary information about their boards and top management teams in the Web site, we went to the following companies in that industry until we found the information. Once we found the first sample company for which information was available, we moved down the list to the next company from a different country for which data were available. We continued that process until we had identified four companies for each industry, going back to the top of the index listings and including subsequent companies from the same countries already in the industrial sector only if were unable to find enough companies from different countries with data available.

Availability of data on top management for Asian companies was extremely limited. As with the research for USA and European companies we restricted the search to official corporate Web sites. A number of companies had no Web sites, or the Web sites were not available in English. We contacted businesspeople, professors, and friends in Asian countries, and we also wrote to the companies directly asking for information or at least for leads where we could get the information. In all cases we were told that this information was not available to the public and that by law companies were not required to provide that information.

When information on Asian companies was available, the Web site typically listed names only. We checked with colleagues from each particular country to assess whether the names of members of the board were, for example, Korean or Japanese. While this is not an ideal way to establish nationality correctly, it was the only way of evaluating the results to some extent.

Information from former British colonies Hong Kong and Singapore was more readily available indicating a more transparent corporate structure based on British practices.

Findings

The data (Tables 1 to 6) from the USA, European, and Asian samples identify some interesting similarities and differences. Information on boards of directors and executives was less readily available on company websites for European companies than those in the USA. The 36 companies in the USA sample were ranked from one to nine within their industries, while the 31 companies in the European sample had rankings from one to 27 within their industries. For the 32 companies in the Asian sample, the company ranks ranged from one to 47 within their respective industries.

In both the USA and European data sets, executives are more likely to have international experience than directors. Only eight of the 36 (22.2 per cent) companies in the USA sample have a higher proportion of directors than executives with international qualifications. The representation of internationally qualified directors in USA companies ranges from 0 per cent (nine companies) to 50 per cent. Internationally qualified executives in USA companies ranges from 0 per cent (one company) to 77 per cent, with seven of the 32 companies (20.6 per cent) providing directors data having 50 per cent or more of their executives so qualified.

Among Asian companies, those having 50 per cent or more of members of the board of directors with international experience/qualifications included: First Pacific (HK, 100 per cent), Thai Airways International (Thailand, 93.3 per cent), Fraser and Neave Ltd. (SGP, 66.7 per cent); and Samsung (ROK), SK Corp (ROK), and Swire Pacific Ltd. (HK) all with 50 per cent.

Among boards of directors, the two companies with the highest proportions having international qualifications and/or responsibilities among European companies are SAB Miller and Skanska (both 100 per cent), from the Drink, Food, and Tobacco and Agricultural industries, respectively. The two highest from the USA are Eli Lilly (66.7 per cent) and Avon (63.6 per cent) from the Pharmaceutical and Household and Personal Products industries. The companies having the lowest representation of directors having international qualifications/responsibilities from the European sample are Heineken (16.7 per cent, Drink, Food, and Tobacco) and Daimler Chrysler (30 per cent, Industrial.) For the USA, the lowest for directors are US Bancorp (6.7 per cent, Banking) and Merck (9.1 per cent, Pharmaceuticals.)

The highest proportions of executives from European companies with inter national experience/responsibility include five companies with 100 per cent, including Zurich (Insurance), Royal Dutch and Schlumberger (Agriculture), and Nokia and BP (Industrial.) The highest for executives among USA companies are Dell (Computer and Office Equipment) at 94.4 per cent and Kellogg (Food and Consumer Products) at 92.3 per cent. The USA companies with the lowest representation of executives with international experience/responsibility were US Bancorp (Banking) at 10 per cent and American Axle (Motor Vehicles and Parts) at 18.2 per cent. The lowest among European companies are Skanska (Agriculture) at 20 per cent and BT (Communications) at 25 per cent.

Among European companies, 10 of 31 (32.3 per cent) had a higher proportion of directors with international qualifications than executives. The representation of internationally qualified directors in European companies ranged from 16.7 per cent to 100 per cent, with 19 of 31 companies (61.3 per cent) having half or more of directors with such qualifications. The proportion of internationally qualified executives in European companies ranged from 0 per cent to 100 per cent, with 19 companies (63.3 per cent) having half or more of their executives with international qualifications.

The data in the Asian sample only provided limited data for executives for 12 of the 32 companies in the sample. Therefore, we are not able to say much about executives from Asian companies. The only Asian company for which the data indicate international experience is First Pacific (Business, Personal Service) with two of six (33.3 per cent).

One of the more interesting findings for us was the proportion of executives and directors whose jobs included international responsibilities but who apparently did not have international experience. That proportion was noticeably larger for USA companies (16.6 per cent for directors and 20.3 per cent for executives) than for European ones (7.7 per cent and 8.9 per cent, respectively.) As pointed out above, the data on Asian executives was too limited to draw any meaningful conclusions.

Discussion

Clearly, USA boards are less global than European ones. Since boards of directors have the responsibility for directing international corporations and setting policies, not having the benefit of international experience raises questions about the true international perspective that directors bring to their jobs. Given that MNCs derive major portions of their revenues from international operations and talk about global operations, the existing level of international experience among directors of USA MNCs (16.3 per cent) seems rather abysmal. Boards of Asian companies in our sample have very limited internationalisation. The big exception is Hong Kong. The greater internationalisation in the case of Hong Kong is in all likelihood connected to Hong Kong's history as a British colony. In Thai companies, even though board members in our sample were all Thais, they were almost all educated in Europe, mostly Great Britain.

A recent article in the Wall Street Journal discussed the growing globalisation of boards of directors citing European and Japanese examples, such as Nisssan and Sony. The roles of Carlos Goshn at Nissan and Howard Stringer at Sony has received much attention, but these are exceptions (Hymowitz, 2005; Lublin, 2005). Furthermore, when a foreigner gets on the board in Japanese firms, it is usually because of mergers and/or outside pressures. For example, Renault had a controlling share of Nissan and could, therefore, put Goshn in a leading position. Likewise, after DaimlerChrysler had bought a controlling share of Mitsubishi Motors, the Germans could put Germans on the board of Mitsubishi. However, this is not a widespread pattern. Our research indicates that the internationalisation of Asian corporations is very limited.

With the exception of one Filipino and one Malaysian corporation, no Asian company in our sample had a single woman on the board of directors. While the number of women on USA and European boards is small, it appears to be even smaller in Asia. The Malaysian firm has one woman among the 11 (9 per cent) board members. The Filipino corporation had one woman which constitutes 11 per cent. Four of the seven executive officers (57 per cent) of that corporation were also women.

The history of business in the Philippines may shed some light on the difference. Typically, Philippine companies have emerged from family dynasties. They may be big corporations today, but the family influence is still very strong. In Philippine families women can play very strong roles, and this is reflected in the corporate boards. Two Hong Kong companies, even though with no women on the board, had several female executives. A company in the Business and Personal Services Industry had two women executives, and a one company in the Hotel, Restaurant, and Leisure Industry had four female executives. All six of these women had international qualifications.

The lack of international qualifications among board members in Asian corporations also emphasises that Asian companies by and large have grown through exporting. When they have established foreign subsidiaries, these subsidiaries are considered closely governed divisions of the headquarters country. As a result, most Asian companies still consider themselves as national corporations that do business around the globe. That means they stick to deeply engrained cultural practices and don't necessarily look for diverse viewpoints in establishing corporate missions and goals. Typically, foreigners have faced an impermeable glass ceiling in the promotion ladder. The question is whether this pattern will be changing in the future. Nissan and Sony illustrate that there is a crack in that ceiling, but based on our research, the ceiling has not been broken.

Companies in Japan, South Korea, and Taiwan are also influenced by the Confucian value system which emphasises loyalty to the group and is suspicious of outsiders (Yan and Sorenson, 2004). Since the collectivist ideology is the prototype for all business interactions, outsiders are admitted into the group only reluctantly (Tan and Chee, 2005; Slote and DeVose, 1998; Hofstede, 1991).

Executives in USA MNCs are somewhat more international (37.5 per cent with international experience) than board members and seem to reflect more polycentric staffing and direct exposure to international experience while coming up through the ranks. This may be encouraging for boards in the future, but this wave has not yet made it to the very top levels.

The composition of corporate boards has not kept up with the increased focus on global operations in the USA. The data suggest that USA-based MNCs appear to remain very focused on the headquarters country. As a result, boards may concentrate on the monitoring of corporate processes to ensure that companies follow the laws and government regulations. This approach seems to be much more supportive of agency theory than of dependence theory (Hillman and Dalziel, 2003). The philosophy that might explain this traditional board composition in today's turbulent times is, "When things go well: why rock the boat; When things don't go well: circle the wagons." The application of the agency theory suggests that USA MNCs do not take sufficient advantage of the potential synergies of cultural diversity on boards of directors. While the agency theory facilitates the compliance with national laws, particularly of the headquarters country, it does not facilitate the coalescence of different cultural viewpoints.

There is also the issue of geographic size. The United States is not one monolithic cultural block. For example, the distance from California to New York or Florida is greater than the distance between most European countries and includes lots of different cultural viewpoints, preferences, and cultural influences.

At first sight, Europe is much more global both at the board of directors and the executive levels. One of the probable explanations for this is geographic size. Today, traveling to a neighbouring country in Europe is similar to traveling to a neighboring state in the USA. The shorter distances involved, coupled with educational efforts and common business practices that encourage international experience at early career stages result in high levels of exposure to and awareness of languages, cultures, and laws among the population. In addition, companies from smaller European countries, such as Sweden and Denmark, may have limited native personnel and may have to rely on international board members and executives to fulfill their missions.

These higher levels of international qualifications of directors and executives are generally supportive of the dependence theory, as the broad levels of international expertise should enhance the effectiveness of policy setting and organisational decision making, particularly in the global arena (Hillman and Dalziel, 2003). A closer examination of the findings reveals some interesting points that puts the greater internationalisation of European boards and top executives in a different light. The international expertise identified in directors and executives came mostly (but certainly not exclusively) from within Europe. For example, at one Danish company almost all board members (80 per cent) and executives (100 per cent) have an international background. However, these international members come mostly from other Scandinavian countries. This might raise the question as to whether the differences between Scandinavian countries are really greater than the differences between Texas and Massachusetts in the USA. While Scandinavian countries are sovereign countries with their own laws and traditions, their histories are closely intertwined. For example, Sweden and Norway were one country for part of their history. Likewise, a Spanish MNC in our sample has 50 per cent per cent of board members and 82 per cent of top executives with international backgrounds. Most of these people come from other Latin countries. It might be interesting to study the degree of cultural differences and the resulting viewpoints on corporate philosophy and cultural outlook.

Larger European countries such as Germany, France, and the UK were generally less international than smaller ones. One Danish company, for example, had 100 per cent of its executives of non-Danish citizenship. At the German company, Daimler Chrysler, on the other hand, of 11 executives, nine are German, one from the USA, and one from Canada. And that is in spite of the 'official' merger of the German Daimler and the American Chrysler. One of the reasons of the lack of diversity at the board level lies in the German 1976 Co-determination Act which is very prescriptive and limits national diversity of corporate boards. Restrictive laws such as this can make it difficult to achieve a board with a truly global outlook.

Summary

This has been an exploratory study of international expertise and outlook on MNC boards and executives in Europe, the United States, and Asia. Based on this study, European boards and executives bring greater international expertise than their American counterparts, and Asian boards (based on the limited information available) generally bring the lowest amount. Overall, executives are more international than board members. However, in many ways, this study raises more questions than it provides answers. This is an area where much more research needs to be done. Some specific areas that should be investigated are:

* Do corporations set specific goals regarding the desirability of international expertise on boards of directors and among executives, or is internationalisation pure happenstance?

* What is the relationship between internationalisation and performance?

* Is the degree of internationalisation affected by the form of corporate structure, such as joint venture, acquisition, or merger, and does it matter if directors are truly independent?

* How do executives and board members view internationalisation issues? Personal interviews and surveys of executives and board members could add greater insight into the potential contributions of international members.

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Teresa M Palmer

Iris I Varner

Department of Management and Quantitative Methods

Illinois State University, USA

Table 1: USA Boards of Directors

Industry Total              Directors   International   Per cent
                                         Experience

Aerospace, Defence              8                         0.00
                               12             1           8.33
Beverages                      15             1           6.67
                                9             1          11.11
Chemicals                      13             2          15.38
                                9             1          11.11
Commercial Banks               16             3          18.75
                               15                         0.00
Computer & Data Services        9             1          11.11
                               11                         0.00
Computer                       10             3          30.00
Office Equipment               12             3          25.00
Computer Software              10                         0.00
                               15             2          13.33
Electronics & Electrical
  Equipment                     8             2          25.00
                               12             5          41.67
Engineering Construction       11             1           9.09
                                8                         0.00
Food Consumer Products         16             1           6.25
                               11             3          27.27
Food Services                   9                         0.00
                               12             2          16.67
Household & Personal
  Products                      9             3          33.33
                               11             4          36.36
Industrial Farm Equipment      10             2          20.00
                               NA            NA           0.00
Medical Products &
  Equipment                    10             2          20.00
                                9                         0.00
Motor Vehicles & Parts          9             1          11.11
                               10             5          50.00
Network & Other
  Communication Equipment      11             4          36.36
                               10                         0.00
Pharmaceuticals                11                         0.00
                               12             6          50.00
Semiconductor & Other
  Electronic Components        11             2          18.18
          Total               374            61          15.77

Industry Total              International   Per cent   Total   Per cent
                               Reponse

Aerospace, Defence                1          12.50        1     12.50
                                  4          33.33        5     41.67
Beverages                         2          13.33        3     20.00
                                  2          22.22        3     33.33
Chemicals                                     0.00        2     15.38
                                              0.00        1     11.11
Commercial Banks                  1           6.25        4     25.00
                                  1           6.67        1      6.67
Computer & Data Services                      0.00        1     11.11
                                  5          45.45        5     45.45
Computer                          3          30.00        6     60.00
Office Equipment                  3          25.00        6     50.00
Computer Software                 1          10.00        1     10.00
                                  6          40.00        8     53.33
Electronics & Electrical
  Equipment                       1          12.50        3     37.50
                                  4          33.33        9     75.00
Engineering Construction          2          18.18        3     27.27
                                  4          50.00        4     50.00
Food Consumer Products            3          18.75        4     25.00
                                  3          27.27        6     54.55
Food Services                     2          22.22        2     22.22
                                              0.00        2     16.67
Household & Personal
  Products                                    0.00        3     33.33
                                  3          27.27        7     63.64
Industrial Farm Equipment         1          10.00        3     30.00
                                 NA           0.00       NA      0.00
Medical Products &
  Equipment                       2          20.00        4     40.00
                                  1          11.11        1     11.11
Motor Vehicles & Parts            1          11.11        2     22.22
                                              0.00        5     50.00
Network & Other
  Communication Equipment                     0.00        4     36.36
                                  1          10.00        1     10.00
Pharmaceuticals                   1           9.09        1      9.09
                                  2          16.67        8     66.67
Semiconductor & Other
  Electronic Components           2          18.18        4     36.36
          Total                  62          16.01      123     31.79

Table 2: USA Executives

           Industry              Total   International   Per cent
                                 Execs    Experience

Aerospace, Defence                19           7          36.84
                                  19           7          36.84

Beverages                         11           8          72.73
                                  NA          NA           0.00

Chemicals                         NA          NA           0.00
                                  10           4          40.00

Commercial Banks                  10           3          30.00
                                  10                       0.00

Computer & Data Services          10           2          20.00
                                  11           3          27.27

Computer Office Equipment         18           9          50.00
                                  21           6          28.57

Computer Software                 19           7          36.84
                                  NA          NA           0.00

Electronics & Electrical           7           1          14.29
  Equipment                       27          17          62.96

Engineering Construction          17           9          52.94
                                   5          NA           0.00

Food Consumer Products            15           5          33.33
                                  13          10          76.92

Food Services                     NA          NA           0.00
                                   3           1          33.33

Household & Personal Products      8           6          75.00
                                  14           6          42.86

Industrial Farm Equipment          7           1          14.29
                                  16           8          50.00

Medical Products & Equipment      NA          NA           0.00
                                  16           3          18.75

Motor Vehicles & Parts            22           4          18.18
                                  10          NA           0.00

Network & Other Communication     16           3          18.75
  Equipment                       12           4          33.33

Pharmaceuticals                   11           4          36.36
                                  26          18          69.23

Semiconductor & Other             32           7          21.88
  Electronic Components           13           5          38.46

            Total                            168          30.28

           Industry                      International   Per cent
                                           Response

Aerospace, Defence                             3          15.79
                                               5          26.32

Beverages                                      1           9.09
                                              NA           0.00

Chemicals                                     NA           0.00
                                               1          10.00

Commercial Banks                               1          10.00
                                               1          10.00

Computer & Data Services                       3          30.00
                                               4          36.36

Computer Office Equipment                      8          44.44
                                               6          28.57

Computer Software                              4          21.05
                                              NA           0.00

Electronics & Electrical                       2          28.57
  Equipment                                    7          25.93

Engineering Construction                       4          23.53
                                               1          20.00

Food Consumer Products                         4          26.67
                                               2          15.38

Food Services                                 NA           0.00
                                                           0.00

Household & Personal Products                  1          12.50
                                               6          42.86

Industrial Farm Equipment                      1          14.29
                                               3          18.75

Medical Products & Equipment                  NA           0.00
                                               1           6.25

Motor Vehicles & Parts                                     0.00
                                                           0.00

Network & Other Communication                  6          37.50
  Equipment                                    3          25.00

Pharmaceuticals                                5          45.45
                                               2           7.69

Semiconductor & Other                          5          15.63
  Electronic Components                        1           7.69

            Total                             91          17.09

           Industry              Total     Per cent

Aerospace, Defence                10         52.63
                                  12         63.16

Beverages                          9         81.82
                                  NA          0.00

Chemicals                         NA          0.00
                                   5         50.00

Commercial Banks                   4         40.00
                                   1         10.00

Computer & Data Services           5         50.00
                                   7         63.64

Computer Office Equipment         17         94.44
                                  12         57.14

Computer Software                 11         57.89
                                  NA          0.00

Electronics & Electrical           3         42.86
  Equipment                       24         88.89

Engineering Construction          13         76.47
                                   1         20.00

Food Consumer Products             9         60.00
                                  12         92.31

Food Services                     NA          0.00
                                   1         33.33

Household & Personal Products      7         87.50
                                  12         85.71

Industrial Farm Equipment          2         28.57
                                  11         68.75

Medical Products & Equipment      NA          0.00
                                   4         25.00

Motor Vehicles & Parts             4         18.18
                                              0.00

Network & Other Communication      9         56.25
  Equipment                        7         58.33

Pharmaceuticals                    9         81.82
                                  20         76.92

Semiconductor & Other             12         37.50
  Electronic Components            6         46.15

            Total                259         47.37

Table 3: EUROPE Board of Directors

Industry               Country     Total     International   Per cent
                                 Directors    Experience

Agriculture, Mining,
  Construction           NL         21            17          80.95
                         NOR         9             3          33.33
                         SW          7             1          14.29
Bank                     GB         18             8          44.44
                         CH         10             5          50.00
                         NL         11             4          36.36
                         NL          6             2          33.33
Communication            GB          8             6          75.00
                          F          7             4          57.14
                         CH         10             4          40.00
                         ES          6             3          50.00
Food,
Beverages, Tobacco       IE          9             4          44.44
                         NL          6             1          16.67
                         GB          2             2          100.00
                         GB         11             2          18.18
Hotels, Restaurants,
  Leisure                GB         10             5          50.00
                         DE         10             4          40.00
                         GB          5             2          40.00
                         GB         11             4          36.36
Industrial Firms         GB         20            12          60.00
                         DE         20             6          30.00
                         ES         14             6          42.86
                         FL          8             5          62.50
                         NL         10             4          40.00
Finance, Insurance,
Investments              DE         20             9          45.00
                         CH          9             7          77.78
                         NL         10             5          50.00
Services                 GB         NA                         0.00
                         GB         13             3          23.08
                         SW         15            NA           0.00
Total                              316           138          43.06

Industry               Country   International   Per cent
                                   Response

Agriculture, Mining,
  Construction           NL                        0.00
                         NOR                       0.00
                         SW            6          85.71
Bank                     GB            5          27.78
                         CH                        0.00
                         NL                        0.00
                         NL                        0.00
Communication            GB                        0.00
                          F                        0.00
                         CH                        0.00
                         ES                        0.00
Food,
Beverages, Tobacco       IE                        0.00
                         NL                        0.00
                         GB                        0.00
                         GB            2          18.18
Hotels, Restaurants,
  Leisure                GB                        0.00
                         DE                        0.00
                         GB            1          20.00
                         GB                        0.00
Industrial Firms         GB            2          10.00
                         DE                        0.00
                         ES            1           7.14
                         FL            1          12.50
                         NL            3          30.00
Finance, Insurance,
Investments              DE                        0.00
                         CH                        0.00
                         NL                        0.00
Services                 GB                        0.00
                         GB            4          30.77
                         SW                        0.00
Total                                 25           8.07

Industry               Country       Total       Per cent

Agriculture, Mining,
  Construction           NL           17           80.95
                         NOR           3           33.33
                         SW            7          100.00
Bank                     GB           13           72.22
                         CH            5           50.00
                         NL            4           36.36
                         NL            2           33.33
Communication            GB            6           75.00
                          F            4           57.14
                         CH            4           40.00
                         ES            3           50.00
Food,
Beverages, Tobacco       IE            4           44.44
                         NL            1           16.67
                         GB            2          100.00
                         GB            4           36.36
Hotels, Restaurants,
  Leisure                GB            5           50.00
                         DE            4           40.00
                         GB            3           60.00
                         GB            4           36.36
Industrial Firms         GB           14           70.00
                         DE            6           30.00
                         ES            7           50.00
                         FL            6           75.00
                         NL            7           70.00
Finance, Insurance,
Investments              DE            9           45.00
                         CH            7           77.78
                         NL            5           50.00
Services                 GB                         0.00
                         GB            7           53.85
                         SW                         0.00
Total                                163           51.13

Table 4: EUROPE Executives

Industry               Country   Total   International   Per cent
                                 Execs    Experience

Agriculture, Mining,
  Construction           NL         5           4          80.00
                         NOR        9           4          44.44
                         SW        15           0           0.00

Bank                     GB        14           4          28.57
                         CH         8           5          62.50
                         NL         7           4          57.14
                         NL        11           7          63.64

Communication            GB         8           2          25.00
                          F        10           5          50.00
                         CH        10           3          30.00
                         ES        11           8          72.73

Food, Beverages,
Tobacco                  IE         9           7          77.78
                         NL         5           4          80.00
                         GB        12           8          66.67
                         GB         3           1          33.33

Hotels, Restaurants,
Leisure                  GB         4           3          75.00
                         DE         6           5          83.33
                         GB         3           0           0.00
                         GB         6           2          33.33

Industrial Firms         GB         6           6         100.00
                         DE        11           6          54.55
                         ES        10           4          40.00
                         FL        12          11          91.67
                         NL        12          11          91.67

Finance, Insurance,
Investments              DE        10           7          70.00
                         CH        10          10         100.00
                         NL         4           2          50.00

Services                 GB        16          12          75.00
                         GB        NA                       0.00
                         SW         7           4          57.14

Total                             254         149          56.45

Industry               Country   International   Per cent
                                   Response

Agriculture, Mining,
  Construction           NL            1          20.00
                         NOR                       0.00
                         SW            3          20.00

Bank                     GB            4          28.57
                         CH                        0.00
                         NL                        0.00
                         NL                        0.00

Communication            GB                        0.00
                          F                        0.00
                         CH                        0.00
                         ES            1           9.09

Food, Beverages,
Tobacco                  IE                        0.00
                         NL                        0.00
                         GB            1           8.33
                         GB                        0.00

Hotels, Restaurants,
Leisure                  GB                        0.00
                         DE                        0.00
                         GB            1          33.33
                         GB                        0.00

Industrial Firms         GB                        0.00
                         DE                        0.00
                         ES            1          10.00
                         FL            1           8.33
                         NL                        0.00

Finance, Insurance,
Investments              DE                        0.00
                         CH                        0.00
                         NL                        0.00

Services                 GB            1           6.25
                         GB                        0.00
                         SW                        0.00

Total                                 14           4.80

Industry               Country       Total       Per cent

Agriculture, Mining,
  Construction           NL             5         100.00
                         NOR            4          44.44
                         SW             3          20.00

Bank                     GB             8          57.14
                         CH             5          62.50
                         NL             4          57.14
                         NL             7          63.64

Communication            GB             2          25.00
                          F             5          50.00
                         CH             3          30.00
                         ES             9          81.82

Food, Beverages,
Tobacco                  IE             7          77.78
                         NL             4          80.00
                         GB             9          75.00
                         GB             1          33.33

Hotels, Restaurants,
Leisure                  GB             3          75.00
                         DE             5          83.33
                         GB             1          33.33
                         GB             2          33.33

Industrial Firms         GB             6         100.00
                         DE             7          63.64
                         ES             5          50.00
                         FL            12         100.00
                         NL            11          91.67

Finance, Insurance,
Investments              DE             7          70.00
                         CH            10         100.00
                         NL             2          50.00

Services                 GB            13          81.25
                         GB                         0.00
                         SW             4          57.14

Total                                 164          61.55

Table 5: ASIA Board of Directors

Industry               Country     Total     International   Per cent
                                 Directors    Experience

Agriculture, Mining,      J          40             0           0.00
  Construction            J          19             0           0.00
                          J          17             0           0.00
                          ROC        15             0           0.00
Business, Personal        J          15             0           0.00
  Service                 ROK         9             0           0.00
                          HK         12            12         100.00
                          PI         16             0           0.00
Finance, Insurance,       J          12             0           0.00
  Investments              HK         9             2          22.22
                          J          11             0           0.00
                          SGP        12             5          41.67
Food, Beverages,          J          12             0           0.00
  Tobacco                 J           4             0           0.00
                          HK         14             7          50.00
                          SGP         9             6          66.67
Hotels, Restaurants,      MAL        11             0           0.00
  Leisure                 MAL        10             1          10.00
                          J           6             0           0.00
                          ROK        14             7          50.00
                          ROK        10             5          50.00
                          J          12             0           0.00
                          J          20             8          40.00
Transportation,           J          15             0           0.00
  Allied Services         T          15            14          93.33
                          J          14             0           0.00
Wholesale, Retail         J          16             0           0.00
                          J           7             0           0.00
                          J           4             0           0.00
Total                               380            67          18.07

Table 6: ASIA Executives

Industry               Country   Total   International   Per cent
                                 Execs    Experience

Agriculture, Mining,    J
  Construction          J          56           0           0.00
                        J          26           0           0.00
                        ROC        19           0           0.00
Business, Personal      J
  Service               ROK
                        HK          6           2          33.33
                        PI
Finance, Insurance,     J          10           0           0.00
  Investments           HK
                        J
                        SGP
Food, Beverages,        J          23           0           0.00
  Tobacco               J
                        HK
                        SGP
Hotels, Restaurants,    MAL
  Leisure               MAL
                        J           8           0           0.00
Industrial Firms        J
                        ROK
                        ROK
                        J
                        J
Transportation,         J
  Allied Services       J          26           0           0.00
                        T
                        J
Wholesale, Retail       J          38           0           0.00
                        J          21           0           0.00
                        J          16           0           0.00
                        J           9           0           0.00
Total                             258           2           2.78

Exhibit 1: Data Set USA

           Industry                    Company         Rank

Aerospace, Defence               Rockwell Collins       1
                                 United Technologies    2

Beverages                        Coca-Cola              1
                                 PepsiAmericas          5

Chemicals                        Ecolab                 3
                                 Praxair                6

Commercial Banks                 Mellon                 2
                                 US Bancorp             3

Computer and Data
  Services                       eBay                   7
                                 First Data             9

Computer Office Equipment        Dell                   2
                                 IBM                    3

Computer Software                Oracle                 1
                                 Adobe                  2

Electronics and
  Electrical Equipments          APC                    1
                                 Whirlpool              8

Engineering
  Construction                   Fluor                  5
                                 Integrated
                                 Electrical Services    8

Food Consumer Products           Campbell Soup          5
                                 Kelloggs               8

Food Services                    Wendy's                8
                                 Jack in the Box        9

Household and Personal
Products                         Colgate                1
                                 Avon                   2

Industrial Farm Equipment        International Game
                                   Technology           2
                                 Black and Decker       5

Medical Products and Equipment   St Jude Medical        3
                                 Medtronic              4

Motor Vehicles and Parts         American Axie          3
                                 Autoliv                7

Network and Other
  Communication Equipment        Qualcomm               2
                                 Scientific Atlanta     4

Semiconductor and Other
  Electronic Components          Intel                  1
                                 Texas Instruments      2

Pharmaceuticals                  Merck                  2
                                 Eli Lilly              5

Exhibit 2: Data Set Europe

  Industry      Country          Company           Rank

Agriculture       NL      Royal Dutch/Shell          1
                  NOR     Statoil                    4
                  SW      Skanska                    8

Bank              GB      Royal Bank of Scotland     2
                  CH      UBS                        3
                  NL      ING                        4
                  NL      ABN-AMRO                   7

Communication     GB      BT                         7
                  FR      Orange                    10
                  CH      Swisscom                  14
                  ES      Telefonica                27

Drink, Food,
  Tobacco         IE      Diageo Plc                 6
                  NL      Heineken                  13
                  GB      SAB Miller                16
                  GB      Assoc British Foods       19

Hotels            GB      IHG Plc                    5
                  DE      Accor                     15
                  GB      Luminar                   17
                  GB      Punch Tavern              20

Industrial        GB      BP                         1
                  DE      DaimlerChrysler            2
                  ES      Repsol-ypf                11
                  FL      Nokia                     19
                  NL      EADS                      21

Insurance         DE      Allianz                    2
                  CH      Zurich                     5
                  NL      Aegon                      6

Services          GB      WPP                        1
                  GB      Royal Mail                 5
                  SW      Securitas                 11

Exhibit 3: Data Set Asia

        Industry            Country            Company            Rank

  Agriculture, Mining,
  Construction                J       Kajima                        1
                              J       Taisei Corp                   2
                              J       Sekisui                       3
                              PRC     CPC                           6

Business and Personal
  Services                    J       Nippon Television Network     1
                              ROK     Korea Gas                     7
                              HK      First Pacific                14
                              PL      Metropolitan Waterworks      47
                                      & Sewerage

Food, Beverages & Tobacco     J       Japan Tobacco                 1
                              J       Snow Brand Milk Products      2
                              HK      Swire Pacific Ltd            31
                              SGP     Fraser & Neave Ltd           39

Industrial Firms              J       Toyota                        1
                              ROK     Samsung                      13
                              ROK     SK Corporation               17
                              J       Mitsubishi Heavy Ind         21
                              J       Sony Corp                    30

Insurance, Financial
  Investments                 J       Nissan Fire & Marine          3
                              HK      Jardine Strategic             7
                              J       Tokyo Livable                13
                              SGP     Keppel Fels Energy &
                                      Infrastructure Ltd           21

Restaurants, Hotels &
  Leisure                     MAL     Berjaya Group                13
                              MAL     PT Bumi Resources            19
                              J       Sapura Crest                 40

Transportation, Allied
  Services                    J       Japan Airlines                4
                              J       All Nippon Airways            8
                              T       Thai Airways International   30
                              J       Seino                        31

Wholesale, Retail             J       Mitsui                        2
                              J       7-11 Japan                   19
                              J       Hitachi Joho                 26
                              J       S Foods                      28