Abstract
Against the backdrop of spirited public and academic discourse about women’s low visibility in corporate leadership positions, we examine board gender diversity’s influence on strategic change in firms. Viewing gender as an institutionalized system of social beliefs, the article makes two related arguments. First, it contends that because of gender status difference and bias, more gender diversity will result in less strategic change as a board’s decisions begin to follow the stance of a smaller but relatively more influential ‘boy’s club’. Second, it contends that should a board have a female chair as opposed to a male chair, a recession in the shadow of gender stereotypes will reverse board gender diversity’s negative effect on strategic change. Instrumental variables analysis of data from Fortune 500 firms supports the theory. We discuss the study’s contributions and implications.
Highlights
[In meetings,] I often observed that at times women were invisible to men, who looked right through you as though you weren’t there
Our study examines whether board gender diversity, that is, variety in the gender composition of directors on the corporate board of a company, affects the company’s level of strategic change
Past research has often used the framework of resource dependence theory (RDT) to argue that board gender diversity ought to be of benefit since men and women bring different cognitive, experiential and relational resources to the firm (e.g. Hillman, Shropshire, & Cannella, 2007)
Summary
[In meetings,] I often observed that at times women were invisible to men, who looked right through you as though you weren’t there. Such work suggests that because male and female directors differ in bringing unique and complementary understandings, perspectives, temperaments and relational ties to the external world, board gender diversity should lead to more informed strategic decisions that keep a fit between the firm and its changing environment (Hillman, Cannella, & Harris, 2002; Miller & Triana, 2009). Because gender stereotypes and status difference can be expected to be especially salient at the higher management levels from which women have tended to be excluded (Eagly & Karau, 2002; Randel, 2002), theory that assumes male and female directors to be equals on boards and/or extends work-group level diversity research directly to the board level, may not find confirmation. We formally propose the following hypothesis: Hypothesis 2: The negative relationship between board gender diversity and strategic change is conditional on the board chair’s gender, such that the relationship will be moderated positively by a female board chair
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