Parent firm reputational risk and TMT gender diversity of foreign subsidiaries

Abstract

In this study, we fill an important gap in the literature by examining the impact of parent firms’ reputational risk on subsidiary top management team gender diversity (TMTGD). Drawing on signalling theory and framing TMTGD as a nonmarket social and political strategy, we hypothesize that foreign subsidiaries use gender diversity in their upper echelons in response to increased parent firms’ reputational risk to signal a commitment to gender equality causes and socio-economic development in host countries. Analyzing data from publicly traded Chinese foreign subsidiaries, we found support for our hypothesis. We also found that the impact of parent reputational risk on subsidiary TMTGD is contingent on subsidiary primary activity, host-country institutional gender parity, and home-host country institutional distance. This study makes important contributions to the international business corpus, especially to reputational risk and nonmarket strategy literature domains.