Female-friendly boards in family firms

Abstract

How do female directors fare in family firms? Can women gain influence on family boards? Research on board informal hierarchy indicates that female directors, due to perceived role incongruity, may wield less influence than male directors. We posit that the gender-induced informal hierarchy is less salient on family boards. That is because family firms, characterized by their socioemotional wealth—a non-economic goal centered on compassion and relationships, redefine directorship roles to become more congruent with the gender role prescribed for women. In turn, female directors gain influence on family boards. We additionally explore contingencies that further mitigate the gender-induced informal hierarchy, nurturing female-friendly boards. We hypothesize that such boards can unlock the potential of gender diversity by improving firm performance. The analysis of 43,947 directors in publicly listed Chinese firms supports our hypotheses. Overall, we contribute to the literature at the intersection of family business, female leadership, and corporate governance.