The Right Mix? Gender Diversity in Top Management Teams and Financial Performance

AuthorAnders R. Villadsen,Niels Opstrup
Date01 March 2015
Published date01 March 2015
Niels Opstrup is assistant professor in
the Department of Political Science and
Public Management at the University of
Southern Denmark. His research focuses
on the management and organization of
public organizations and, specif‌i cally, on the
governance of universities and management
of academics. He has also investigated
developments in the backgrounds and
career paths of top civil servants.
Anders R. Villadsen is associ-
ate professor at Aarhus University,
Denmark. His research interests include
public management and diversity in
public organizations. He has published
in journals such as Journal of Public
Administrative Research and Theory,
Public Administrative Review, and
International Public Management
The Right Mix? Gender Diversity in Top Management Teams and Financial Performance 291
Public Administration Review,
Vol. 75, Iss. 2, pp. 291–301. © 2014 by
The American Society for Public Administration.
DOI: 10.1111/puar.12310.
Niels Opstrup
University of Southern Denmark, Denmark
Anders R. Villadsen
Aarhus University, Denmark
Abstract: Recent research has illustrated that demographic diversity inf‌l uences the outcomes of public sector organiza-
tions. Most studies have focused on workforce diversity; by comparison, little is known about how managerial diversity
af‌f ects organizational outcomes.  is article focuses on gender diversity in the top management teams of public organi-
zations and its relationship to f‌i nancial performance.  eory suggests that management diversity can be a positive asset
for organizations, allowing for the use of more diverse knowledge and human skill sets. Results of this study, however,
suggest that organizations may only be able to leverage these advantages if they have a supporting management
structure. In a longitudinal study of top management teams in Danish municipalities, the authors f‌i nd that gender
diversity in top management teams is associated with higher f‌i nancial performance, but only in municipalities with a
management structure that supports cross-functional team work.  ese results are interpreted in light of existing theory,
and implications are suggested.
Practitioner Points
Little is known about how the composition of the top management team in public organizations matters for
organizational outcomes.
Greater gender diversity has the potential to lead to superior organizational outcomes but does not automati-
cally do so.
To reap the benef‌i ts of diverse top management teams, the organizational structure must facilitate behavioral
integration between members of the top management team.
Gender diversity in the top management team is related to better f‌i nancial outcomes when organizational
structures promote integration and discretion of the top management team.
Gender diversity in top management positions has no ef‌f ect in traditional hierarchical organizations.
contracting (Hefetz and Warner 2004, 2012),
and performance-information use (Moynihan and
Ingraham 2004; Moynihan and Pandey 2010).  is
substantial line of research has provided valuable
insights about how managers can af‌f ect the outcomes
of public organizations. Much less research has been
devoted to the composition of management teams and
the dynamics among individuals occupying manage-
rial roles in organizations.  is is a critical gap in our
understanding of public management. Top manage-
ment is composed of individuals who apply their
knowledge, perspectives, and worldviews to contribute
to decision making as well as the overall direction of
organizations (Hambrick, Cho, and Chen 1996).
In this article, we explore how gender diversity in
top management teams (TMTs) af‌f ects f‌i nancial
performance in public organizations. Research
focusing on private f‌i rms indicates that managerial
gender diversity is related to positive performance
outcomes (Auh and Menguc 2006; Carter, Simkins,
e Right Mix? Gender Diversity in Top Management
Teams and Financial Performance
Recent research has explored how characteris-
tics such as tenure (Juenke 2005), race (Pitts
2005), experience (Villadsen 2012), and
gender (Meier, O’Toole Jr, and Goerdel 2006) inf‌l u-
ence the actions of public managers.  is research,
however, generally fails to allow for the fact that
management is rarely an individual endeavor; while a
single person may top the hierarchy and serve as the
public face of an organization, actual top management
is often better described as a team ef‌f ort (Finkelstein
and Hambrick 1990). In this article, we move the
focus from the individual manager to the top manage-
ment team and examine how its composition af‌f ects
organizational outcomes.
A considerable amount of research has investigated
how various management practices af‌f ect public
organizations.  ese practices include leadership
(Fernandez 2005; Van Wart 2013), managerial net-
working (Meier and O’Toole 2003), organizational
strategies (Andrews, Boyne, and Walker 2006),

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