Activating Board Diversity: Ownership Logics and Corporate Sustainability Performance in Hong Kong's Real Estate Sector

ABSTRACT Board diversity has been linked to corporate sustainability performance (CSP), yet empirical research cannot explain how diversity operates within governance systems. Unlike prior studies treating diversity as static demographics, this study introduces Diversity Activation Capacity (DAC)—the first processual framework explaining why identical board structures produce divergent sustainability outcomes. DAC theorises ownership logic as an institutional filter determining which diversity dimensions matter and how they translate into action, revealing activation mechanisms overlooked by Western‐centric theories in concentrated ownership environments. This study investigates how ownership logics—state, family, and hybrid—shape board diversity's relationship with CSP in Hong Kong's real‐estate sector. Through comparative case analysis of three property developers, we triangulate 32 interviews with longitudinal ESG performance (2019–2023). Findings reveal deep‐level diversity (functional expertise, international experience, ESG literacy) outperforms demographic variety in driving CSP, but only when activated through ownership‐appropriate mechanisms. State‐controlled firms activate through bureaucratic alignment; family‐controlled firms filter through socio‐emotional wealth priorities; hybrid firms leverage market accountability. The findings challenge Hong Kong's regulatory emphasis on gender quotas, suggesting mandatory ESG training would more effectively enhance governance. This demonstrates ownership logic as an institutional filter with critical implications for Asian markets where concentrated ownership predominates.