Games CEOs Play and Interest Convergence Theory: Why Diversity Lags in America’s Boardrooms and What to Do About It

I. IntroductionAt its foundations, critical race theory holds that race in modern America is ubiquitous, that color-blind lawmaking is likely to address only the most blatant racism, and that any progress occurs only when the interests of the powerful converge with the interests of the racially oppressed.1 Recent events in corporate America illustrate these key points. First, as ever, the bastions of corporate governance remain the nearly exclusive province of white males, with no realistic end in sight.2 Second, this racial homogeneity exists with little overt racial discrimination and few violations of antidiscrimination law. Indeed, it appears far more likely that board members are chosen based upon cultural proximity to CEOs rather than color.3 It just so happens that upper class white males are frequently most culturally proximate to upper class white males.4 Third, any reform is unlikely unless sufficient political and economic pressure is levied upon the people with the power to restructure the law in this specific context. Simply put, this homosocial reproduction will end only when those with sufficient power see it in their interest to end it.5 In fact, the Sarbanes-Oxley Act of 20026 can only be termed a wasted opportunity to disrupt legally the homosocial reproduction that plagues board selection processes.7 Reform did not happen because the political calculus governing the reform effort failed to comprehend the racial stakes of the issues at hand.Implicit in that conclusion is cause for an optimism of sorts.8 The political calculus could have been different and fundamentally more in favor of a superior outcome in terms of race. Interest convergence theory holds that reform occurs when the interests of the racially oppressed align with the interests of the people who have the power to bring about reform.9 This process requires that the alignment be fully understood before reform can occur.10 This in turn underscores the importance of educating and persuading the relevant powers. ' ' Competing interests must be overcome. Alliances must be formed-and re-formed-as needed in each specific context. In short, the interest alignment that is fundamental to convergence theory is manipulable.12This Article seeks to demonstrate that convergence theory holds the promise of real and durable reform in the specific context of board selection processes and, by extension, in a host of other areas that may be key to racial progress. Part I of this Article posits that CEOs of many of the largest, most powerful corporations in America have exploited America's racial blind spots to entrench their power and enrich themselves. The Article does not seek to show that any particular CEO has engaged in intentional racial discrimination. Nor does the Article even attempt to argue that any CEO is, or is not, a racist. That is beside the point. The point is that race continues to operate in this specific context to favor whites and disadvantage blacks. Simply stated, CEOs seem highly inclined to take affirmative actions to favor culturally proximate (white) candidates for board membership over (less culturally proximate) candidates of color.13 They do this for the purpose of rationally maximizing their payoffs in a context ripe for strategic behavior.14 Thus, this is yet another context where race matters in our society even in the absence of any intent to discriminate on the basis of race. Part II concludes that CEOs seek to maximize their payoffs by playing the homosocial reproduction game.Part III of this Article hypothesizes that this dynamic of inadvertent discrimination can be disrupted by law. This type of legal reform could well enjoy broader support among key constituencies, leading to an interest alignment sufficient to support progressive reform. Senior level diversity serves to enhance corporate profitability, and board diversity should serve to quell corporate corruption, thereby further enhancing shareholder wealth. …