Gender diversity and firm performance: when diversity at middle management and staff levels matter

Abstract

The social construction of gender has led to differences in beliefs, knowledge, experiences, or networks between women and men. Some argue that mixed gender teams can show perform better. However, empirical research at the firm level has provided mixed evidence. Moreover, these studies mainly focus on the board of directors or top management teams. Few have examined how middle management and staff levels affect firm performance. These levels form the operational layers that execute the business strategy and run daily operations. Using a unique dataset of 159 large French firms, we find that gender diversity at the two organisational levels positively impacts a firm’s economic performance and contributes to its competitiveness. Gender diversity at these levels is a strategic resource that provides a sustainable competitive advantage by creating value and cannot be easily imitated by competitors quickly. We also find a nonlinear relationship due to a threshold effect related to a critical mass condition, and a hat-shaped relationship (two flat borders around the top) between gender diversity and firm performance. Specifically, firms with balanced diversity (between 40 and 60% women as employees) at the middle management and staff levels tend to be more profitable. Finally, predominantly male firms have similar performance to predominantly female firms, and that balanced-gender diversity is the real contributing factor to firm performance.