The Double-Edge Sword of a Female Political Leader: Diversity-Enhancing and Reducing Effect

Abstract

A firm’s ability to attract and sustain diverse employees with respect to gender is critical to a firm’s performance and long-term competitive advantage. Despite the potential influence of female political leadership on women’s representation in the workplace, surprisingly little research has considered the effects of outside-firm female leadership. In this study, we theorize that the election of a top female political leader is a double-edged sword, leading to two countervailing effects. On the one hand, electing a top female political leader will generate a diversity-enhancing effect, thereby leading to a higher representation of women in upper-level positions in organizations. On the other hand, electing a top female political leader can also generate a diversity-reducing effect, thereby leading to a disproportionate outflow of women from wage employment to entrepreneurship. Finally, the strength of the two effects, diversity-enhancing and diversity-reducing, will arise differently under different conditions depending on employment experience. We test our theoretical arguments using a plausibly exogenous election result (i.e., the election of the first female president in South Korea) and find broad support for our hypotheses. Our study contributes to a nuanced understanding of the relationship between women’s leadership and female representation in the workplace.