Do women leaders promote positive change? Analyzing the effect of gender on business practices and diversity initiatives

• DOI: http://doi.org/10.1002/hrm.21838
• Date: 01 July 2018
• Author: Alison Cook,Christy Glass
• Published date: 01 July 2018

SPECIAL ISSUE ARTICLE

Do women leaders promote positive change? Analyzing

the effect of gender on business practices and diversity

initiatives

Christy Glass

1†

| Alison Cook

2†

1

Department of Sociology, Social Work &

Anthropology, Utah State University, Logan,

UT, 84322-0730

2

Department of Management,

Jon M. Huntsman School of Business,

Utah State University, Logan, UT, 84322-3555

Correspondence

Christy Glass, Professor of Sociology, Dept. of

Sociology, Social Work & Anthropology, Utah

State University, 0730 Old Main Hill, Logan,

UT 84322-0730, Ph: (435) 797-1258,

Fax: (435) 797-1240.

Email: christy.glass@usu.edu.

While most scholarship on gender leadership diversity and organizational outcomes considers

the impact of board composition on firm performance, we consider the impact of women CEOs

and board members together on a range of organizational outcomes. We test three competing

theoretical perspectives related to gender in organizations: gender difference,homophily, and

diversity. We rely on a unique data set of CEO characteristics, board composition and firm out-

comes of all Fortune 500 companies from 2001 to 2010. We find that firms with women CEOs

or gender diverse boards are associated with stronger business and equity practices. We also

find that gender diverse leadership teams demonstrate stronger business and equity outcomes

than teams characterized by gender homophily.

KEYWORDS

diversity, gender, leadership, organizations

1|INTRODUCTION

Women remain numerically rare in leadership positions in American

firms. Yet as more women ascend to these top positions, scholars

have considered the consequences of gender diversity on firm out-

comes. While some argue that leadership diversity increases innova-

tion and creativity (Dahlin, Weingart, & Hinds, 2005; Shropshire,

2010; K. Williams & O'Reilly, 1998), others argue that diversity

increases conflict and impedes problem solving (van Knippenberg &

Shippers, 2007; van Dijk, van Engen, & van Knippenberg, 2012).

Most research on the impact of gender leadership diversity has

focused on financial performance. While some find positive benefits

of diversity on performance (e.g., Cook & Glass, 2014a), others find a

negative or null effect (e.g., Kochan et al., 2003). Much less research

has sought to identify the impact of women leaders on a broad range

of firm governance initiatives, such as corporate transparency, work-

life policies, or supplier diversity. However, there is evidence that

women may be more likely than men to emphasize non-financial per-

formance measures in favor of innovation and equity (Brown,

Brown, & Anastasopolous, 2002; van Dijk et al., 2012). Indeed, many

initiatives, such as those that promote fairness, effective governance,

product development, transparency, or social responsibility, may be

valuable to firms in the medium or long term but may not translate

into short-term performance outcomes due to increased costs and

investments (Barnett & Salomon, 2006; Margolis & Walsh, 2003;

Matsa & Miller, 2013). Thus, the overfocus on financial performance

may obscure the full range of impacts that women have on firms'

policies and practices.

In addition to an overfocus on financial performance outcomes,

most research in the field focuses on board composition(e.g., Bilimoria,

2006; Singh, 2008; Skaggs, Stainback, & Duncan, 2012). Less under-

stood are the ways in which the demographic characteristics of the

CEO and the board combine to affect corporate strategy.While boards

exert significant influenceover corporate governance and overall strat-

egy (e.g., Matsa & Miller, 2013; Shropshire, 2010; Westphal & Milton,

2000), CEOs have enormous leverageover the design and implementa-

tion of policy and practice (Graffin, Wade, Porac, & McNamee, 2008).

To the extent that firm strategy is guided by chief executives and

boards jointly, therefore, understanding the ways in which gender

diversity at both levelsaffect firm outcomes is critical.

This study addresses these gaps and seeks to identify whether

and how the gender of the CEO and gender composition of the board

of directors impacts firm practice in the areas of governance, product

†

The authors contributed equally to this manuscript. For convenience, they

alternate author order.

DOI: 10.1002/hrm.21838

Hum Resour Manage. 2018;57:823–837. wileyonlinelibrary.com/journal/hrm © 2017 Wiley Periodicals, Inc. 823