Gender Diversity and Board Performance: Women's Experiences and Perspectives

• Author: Jessica Hong Yang,Mustafa F. Özbilgin,Katerina Nicolopoulou,Nada K. Kakabadse,Andrew P. Kakabadse,Catarina Figueira
• Date: 01 March 2015
• Published date: 01 March 2015
• DOI: http://doi.org/10.1002/hrm.21694

Human Resource Management, March–April 2015, Vol. 54, No. 2. Pp. 265–281

© 2015 Wiley Periodicals, Inc.

Published online in Wiley Online Library (wileyonlinelibrary.com).

DOI:10.1002/hrm.21694

Correspondence to: Catarina Figueira, Cranfield School of Management, Cranfield University, Cranfield, Bedfordshire

MK43 0AL, UK. Phone: +44 (0)1234 754846, Fax: +44 (0)1234 752106, E-mail: catarina.figueira@cranfield.ac.uk

GENDER DIVERSITY AND BOARD

PERFORMANCE: WOMEN’S

EXPERIENCES AND PERSPECTIVES

NADA K. KAKABADSE, CATARINA FIGUEIRA,

KATERINA NICOLOPOULOU, JESSICA HONG YANG,

ANDREWP.KAKABADSE, AND MUSTAFA F. ÖZBILGIN

Despite considerable progress that organizations have made during the past 20

years to increase the representation of women at board level, they still hold few

board seats. Drawing on a qualitative study involving 30 companies with women

directors in the United Kingdom, the United States, and Ghana, we investigate

how the relationship between gender in the boardroom and corporate govern-

ance operates. The fi ndings indicate that the presence of a minority of women on

the board has an insignifi cant effect on board performance. Yet the chairperson’s

role is vital in leading the change for recruiting and evaluating candidates and

their commitment to the board with diversity and governance in mind. Our study

also sheds light on the multifaceted reasons why women directors appear to be

resisting the discourse of gender quotas. ©2015 Wiley Periodicals, Inc.

Keywords: board diversity, women representation, board performance, corpo-

rate governance, boardroom behaviors

Recently, the composition of corporate

boards has been widely debated (Sayce

& Özbilgin, 2014; Singh, Terjesen, &

Vinnicombe, 2008). Motivated by the

divergence in findings relating to the

links among gender diversity, board effectiveness,

and firm performance (Dalton & Dalton, 2009),

this article presents results from a qualitative

study, based on interviews with women direc-

tors from the top 50 companies in the United

Kingdom, United States, and Ghana by exploring

their perceptions regarding the role they play in

the boardrooms. The findings reveal women’s

personal motives, boardroom development activ-

ities, board working relationships, and perspec-

tives on board performance and gender quotas.

We unpack the interplay of gender diversity and

boardroom performance, as perceived by our

participants.

The role of women in top management teams

and leadership positions is well documented

(Wittenberg-Cox & Maitland, 2008). A growing

literature (McKinsey & Company, 2010) indicates

the potential benefits of women at the board

level. However, women still hold few board seats.

According to a recent report by Board Watch, only

15 percent of directors in the United Kingdom’s

FTSE 100 companies are women, and there were

just 9.4 percent in the FTSE 250 in 2011 (News

Alert, 2012). In the United States, women consti-

tute 16 percent of the directors of S&P 500 com-

panies (Spencer Stuart, 2010) and in most other

countries that figure ranges between 0.1 percent

and 15 percent (Catalyst, 2011).

266 HUMAN RESOURCE MANAGEMENT, MARCH–APRIL 2015

Human Resource Management DOI: 10.1002/hrm

As the European

champion, Norway

jumped from having

22 percent of women

on boards in 2004 to

28.8 percent in 2006,

to 44.2 percent in

2010, as a result of

quota legislation.

research focuses on whether functional diversity

such as education, technical abilities, functional

background, and nonregulated aspects of diver-

sity such as socioeconomic background, personal-

ity characteristics, or values (Milliken & Martins,

1996) affect board effectiveness. The presence

of a small number of women on the board has

an insignificant effect on board performance. If

women are a minority in the boardroom, they

are less likely to challenge their male counter-

parts. Research also suggests that the chairperson’s

role is vital in addressing diversity (Kakabadse &

Kakabadse, 2008).

More generally, this paper contributes to

the literature on diversity and governance by

providing a better understanding of how the

relationship between board gender and corpo-

rate governance operates. Despite numerous

studies on gender issues and corporate perfor-

mance (Dobbin & Jung, 2011), the real effects

of women directors on corporate governance

are still not clearly understood. It is important

to probe the factors in board processes that

are crucial to board effectiveness. This study

extends the literature by providing evidence

of key determinants of women’s representa-

tion and contributions by adopting a relational

approach. A relational approach emphasizes

interactions between multiple levels of analysis,

moving beyond the unidirectional relationship

between “cause and consequence” (Özbilgin,

2006), which has largely dominated the corpo-

rate governance literature. Such an approach

(Özbilgin, 2006; Özbilgin & Tatli, 2005) offers a

unique understanding of how governance struc-

tures and individual perceptions and practices

interplay in their specific historical and local

context and web of relationships.

The study sheds light on the contexts of

three countries, of which one is non-Western/

Anglo-Saxon. Ghana, however, includes elements

of “residual” culture (Bryson, 2008), which, in a

dialectic interaction with other societal norms

and beliefs, might explain culturally “dominant”

aspects of education, career paths, or corporate

behaviors.

The article is structured as follows. First, we

review theoretical perspectives on the relation-

ships between board diversity and corporation

governance effectiveness. The methodology

and sample characteristics of the study are then

explained. After this, the article offers the key find-

ings and analysis of the results regarding whether

and how gender composition of corporate boards

matters. The study concludes with a discussion

of the implications of our research on literature,

practice, and future research.

The difficulties involved in improving boards’

gender balance have prompted the introduction

of new governance guidelines such as the Higgs

(2003) report, drawing attention to the need for

increased diversity in the United Kingdom, which

requires all FTSE 350 companies with less than 20

percent of women on the board to explain their

board composition. Some European countries

have introduced gender quota legislation (Tatli &

Özbilgin, 2012). In Norway, since 2006, all listed

companies must have 40 percent women direc-

tors on their board; otherwise, the stock exchange

will delist them (Clarke & Branson, 2010). As the

European champion, Norway jumped from hav-

ing 22 percent of women on boards in 2004 to

28.8 percent in 2006, to 44.2 percent in 2010,

as a result of quota legislation. Norway’s impres-

sive growth path is followed by that of Sweden

(26.9 percent), Finland (25.7 percent), and

Denmark (18.1 percent). Although controversial

(Forstenlechner, Lettice, & Özbilgin,

2012), such a “quota” system has

proven efficient to boost the num-

ber of women on boards.

Quota legislations are often

based on the view that the repre-

sentation of women on boards may

significantly affect the governance

of companies. One argument is that

women’s equal participation may

enhance company financial per-

formance (Catalyst, 2011), change

board behavior, and enhance inde-

pendence (Adams & Ferreira, 2009)

and proactivity (Westphal & Bednar,

2005). Most importantly, gender

diversity reportedly guards against

the “groupthink” phenomenon

(Daily, Dalton, & Cannella, 2003; Robinson &

Dechant, 1997) and can provide greater access to

resources and networks (Fray & Guillaume, 2007;

Milliken & Martins, 1996), create career incen-

tives through signaling and mentoring (Daily et

al., 2003; Sheridan, 1995), and enhance public

and investor relations and legitimacy (Baysinger

& Butler, 1985). Our study sheds light on the com-

plex relationship between gender diversity and

boardroom performance.

Our data are valuable, as it is hard to access

boardrooms. Studies on the topic tend to draw

on quantitative methods that use narrow proxies

for performance, such as nonattendance of board

meetings (Adams & Ferreira, 2009). In order to

overcome this challenge, researchers have resorted

to putative measures of board performance, that

is, board observable diversity issues such as race,

age, or gender (Milliken & Martins, 1996). Our