The more, the merrier? Women in top‐management teams and entrepreneurship in established firms

• DOI: http://doi.org/10.1002/smj.2510
• Date: 01 March 2017
• Published date: 01 March 2017

Strategic Management Journal

Strat. Mgmt. J.,38: 487–505 (2017)

Published online EarlyView 21 April 2016 in WileyOnline Library (wileyonlinelibrary.com) DOI: 10.1002/smj.2510

Received 4 September 2014;Final revision received17 January 2016

THE MORE, THE MERRIER? WOMEN IN

TOP-MANAGEMENT TEAMS AND

ENTREPRENEURSHIP IN ESTABLISHED FIRMS

JACOB LYNGSIE1*and NICOLAI J. FOSS1,2

1Department of Strategic Management and Globalization, Copenhagen Business

School, Frederiksberg, Denmark

2Department of Strategy and Management, Norwegian School of Economics and

Business Administration, Bergen, Norway

Research summary: We study the association between rms’ entrepreneurial outcomes and their

gender composition. Though highly topical, there is little solid empirical knowledge of this issue,

which calls for an inductive approach. We match a paired-respondent questionnaire survey with

population-wide employer-employee data, and nd evidence that the presence of female top

managers is positively relatedto entrepreneurial outcomes in established rms. Yet, this relationis

conditional on the proportion between male and female top managers. Another nding is that the

overall proportion of women in the rm’s workforce negatively moderates the relation between

female top managers and entrepreneurial outcomes. We discuss various mechanisms that can

explain these ndings, and argue that they arebest understood in terms of the dynamics of social

categorization.

Managerial summary: We investigate how companies benet from having more women on the

top-management team. We show that beyond a threshold level of female top managers, more

women are associated with more entrepreneurial outcomes (more products and services protably

launched). However, this positive effect is weakened in rms that have many women in the

workforce. These effects may be explained in terms of the ways employees mentally categorize

managers and how this inuences their work motivation. Wend evidence for such an explanation.

Copyright © 2016 John Wiley & Sons, Ltd.

INTRODUCTION

In spite of recent increases of female representation

in some dimensions of corporate leadership, women

remain underrepresented in rms’ upper echelons

(Heilman, 2012). Yet, rms that keep female repre-

sentation low in their upper echelons may be sacri-

cing valuable entrepreneurial initiative.

Keywords: female leadership advantage; gender compo-

sition; top-management teams; entrepreneurship; social

categorization

*Correspondence to: Jacob Lyngsie, Department of Strategic

Management and Globalization, Copenhagen Business School;

Kilevej 14, 2nd oor, 2000 Frederiksberg, Denmark. E-mail:

jl.smg@cbs.dk

Copyright © 2016 John Wiley & Sons, Ltd.

First, upper-echelons research (Hambrick,

2007; Hambrick and Mason, 1984) suggests that

the diversity associated with tenure, education,

functional backgrounds, and gender composition

at the top-management team (TMT) level (e.g.,

Carpenter, Geletkanycz, and Sanders, 2004; Dwyer,

Richard, and Chadwick, 2003) can promote the

out-of-the-box thinking that drives entrepreneurial

activity (Hunter, Cushenberey, and Friedrich,

2012). Increasing the diversity of the TMT by

bringing in more women may thus directly increase

entrepreneurship in rms. Second, top managers

also inuence the values, visions, and goals of

subordinate organizational members (Damanpour

and Schneider, 2008). As such, they may inspire

488 J. Lyngsie and N. J. Foss

and support entrepreneurial behaviors among

lower-level employees (Hornsby etal., 2009;

Kuratko, Ireland, and Hornsby, 2001). Research

associates female managers with leadership styles

that are characterized by high levels of inclusion,

communication, “communal values,” and knowl-

edge sharing (e.g., Eagly and Carli, 2003; Powell,

Buttereld, and Bartol, 2008; Scott and Brown,

2006). Such leadership styles can assist in building

internal environments that are conducive to the

recognition and exploitation of entrepreneurial

opportunities by facilitating high levels of com-

munication, knowledge sharing, and openness to

external environments (Cohen and Levinthal, 1990;

Foss, Laursen, and Pedersen, 2011).

However, the effect of gender composition is

very complex and extant research is silent about

some key aspects. Shifting the gender composition

in the TMT may not be linearly associated with

outcomes (e.g., because women need to obtain

critical mass in the TMT before any positive conse-

quences will manifest). Additionally, as Hambrick

and Pettigrew (2001): 39– 40) state, “Top managers

don’t just do things; they stand for things. They

are a highly visible embodiment of the organi-

zation, its strategic direction, values, credibility,

and staying power.” As such, employees form

expectations to the TMT (Sheppard and Aquino,

2013). For example, employees’ stereotyping and

prejudice may negatively inuence positive effects

of increasing female participation in TMTs.

Given that little is known theoretically and

empirically about the effects of female partic-

ipation in TMTs on rm-level entrepreneurial

outcomes, we adopt an inductive and exploratory

empirical research design in this study. However,

rather than adopting a small-N research design— as

is usually recommended in cases of exploratory

empirical research (Eisenhardt, 1989)— we exploit

privileged access to a number of large-scale

datasets, a research strategy endorsed by Helfat

(2007), and Bettis et al. (2014). This “approach is

appropriate when existing theory provides a useful

frame for a baseline argument but is not robust

enough for precise hypotheses” (Bettis et al., 2014:

950). Although inductive large-N research designs

are rare in the management literature (but see

Amore, Garofalo, and Minichilli, 2014; Birhanu,

Gambardella, and Valentini, 2015), they have often

been applied in economic and nance research

(e.g., Bandiera, Prat, and Sadun, 2013; Fryer and

Levitt, 2012; Jensen and Murphy, 1990).

Wematch a large-scale double-respondent survey

with unique, population-wide, employer-employee

data. After controlling for discrete rm- and TMT-

level characteristics, we nd evidence that female

top managers have a conditional positive inuence

on the rm’s number of successfully launched new

products/services. However,this effect is negatively

conditioned by the rm’s proportion of lower-level

female employees. Given the inductive nature of

these ndings, we examine their validity by employ-

ing a series of robustness tests.

We end by offering plausible explanations of our

ndings (c.f. Gelman and Imbens, 2013). We argue

that while increasing female representation in the

TMT may make the rm more entrepreneurial, this

effect depends on how female top managers are

perceived by lower levelemployees. We submit that

the dynamics of categorization processes in rms is

the most plausible explanatory mechanism at hand.

In sum, this study contributes to our knowledge of

gender-based antecedents of entrepreneurship, and

empirically identies a female management advan-

tage in the context of entrepreneurship. However,

this advantage depends on the overall gender com-

position of the rm.

DATA AND METHOD

Data collection

We used survey and register data to investigate the

inuence of female top managers on entrepreneurial

outcomes. The rst data source originated from a

paired questionnaire survey that targeted all private

Danish rms with more than 40 employees (3,392

rms) in 2009, and was administered by Statistics

Denmark. The survey consisted of two independent

questionnaires that were mailed to the CEO and the

executive HR manager of each rm. The CEO ques-

tionnaire featured questions related to rm-level

entrepreneurship (e.g., the number of new business

opportunities successfully realized by the rm). The

HR manager questionnaire focused on the rm’s

organizational design and HR practices.

Statistics Denmark conducted pretests with

CEOs and HR managers, but these did not motivate

any noteworthy changes to the questionnaires.

Subsequently, an e-mail containing an Internet link

and a personal password was sent directly to the

relevant respondents in each rm. Nonrespondents

received two e-mail reminders before they were

Copyright © 2016 John Wiley & Sons, Ltd. Strat. Mgmt. J.,38: 487–505 (2017)

DOI: 10.1002/smj