The Measurement of International Experience as a Dimension of Board Indices: Concept for an Improvement

Abstract

In recent years, the internationality of enterprises, relying on adequate management resources, has gained in importance. One resource is the "International Experience of the Board" which for lack of primary datavery often can be measured on the basis of secondary data only. The lack of primary data on the one hand and the public interest on the other hand leads to the creation of partly simplified board indices based on more or less random measures / variables or compositionswith limited informative value.The objective of this paper is to demonstrate the need for an improvement of such indices composed of secondary data and to develop a new concept for a board index(“InExWE”).The new indexis basedon the available secondary data, too, and has to be seen as a suboptimalsolution but in contrast to some other indices this indexoffers the advantage ofsubdividing "International Experience" into different subareas and separate weighting factors to improve its informative value. First results of a pilot study indicate an additional informative value.