Beyond the Boardroom: Hierarchical Diversity, Internal Inequality, and Firm Performance in Chilean Territorial Economic Systems

This paper examines how internal organizational hierarchies within large corporations shape socio-economic outcomes in territorial economic systems, using evidence from Chilean listed firms. Moving beyond board-centric approaches, firms are conceptualized as territorially embedded actors whose internal governance structures influence both firm performance and the distribution of socio-economic outcomes. Using fixed-effects panel data models for 31 IPSA-listed firms over the period 2018–2025 (248 firm-year observations), we estimate three stepwise model specifications with Tobin’s Q, ROE, and P/E ratio as dependent variables. The results show that diversity effects are strongly hierarchical. Executive-level gender diversity is positively associated with firm value, while board-level diversity shows no systematic effect. In contrast, diversity at intermediate levels is negatively associated with market valuation, consistent with limited decision-making authority and organizational frictions. Gender pay gaps are negatively related to firm performance, particularly in territorially embedded firms, suggesting that internal inequality contributes to broader socio-economic disparities within territorial systems. Overall, the findings highlight that diversity matters primarily when located in positions of effective decision-making power, and that corporate governance operates as a hierarchical mechanism through which socio-economic outcomes are shaped within territorial economic systems.