An Application of Berne’s Organizational Boundary Theory and a Quota for Women on Company Boards

Abstract

By implementing a mandatory quota for women on the executive committees of large companies, Germany effectively introduced gender specifications for leadership via a political decision. According to Berne’s group concept, this affects primarily the main inner boundary, that is, the line that divides those in leadership roles from others. However, it is also relevant for a secondary inner boundary that further differentiates subgroups of an organization, in this case, subgroups determined by gender. Those opposed to a quota on women on company boards argue that it means turning away from relying on performance as the main factor in determining board membership (the performance principle). This article considers whether and how women on boards affect the performance of organizations. The author presents an empirical study that analyzes the correlation between the numbers of women on executive (both supervisory and management) committees and economic performance indicators such as profit margin and number of employees.