Abstract
Board diversity is often perceived to relate to the ratio of women to men on boards (Harrison et al., 1998; Ararat et al., 2015; Rao et al., 2016). Two justifications for higher gender diversity on boards are put forth by scholars/popular literature (Erhardt et al., 2003; Kim et al., 2013) – improved board/firm performance and better gender justice in leadership. Academic studies in Anglo-American corporate governance regimes often emphasise the business case in order to persuade the corporate sector to proactively promote the proportion of female directors on their boards (Ferreira, 2010; the Financial Reporting Council, 2016). An overwhelmingly large section of research argues that there are benefits to higher gender diversity on boards/firm performance; however, a number of studies find inconclusive results from such a board composition and a very few even suggest a negative impact on firm performance (Kumar and Zattoni, 2016). The inconclusiveness/equivocalness of results is attributed to the mode of research – conducted with the help of secondary data, ignoring the voice of the actors (board members) and the context, and using statistical analysis to explore a distant relationship between board composition and firm performance (Huse, 2005; Daily et al., 2003).
Hence, we conducted a qualitative study in boards of listed companies in the UK, interviewing 42 directors to assess the impact of higher gender diversity on boards’ role-performance. We also explored whether recommendatory/voluntary targets without any penal action is an effective method of increasing gender diversity for the UK corporate governance regime. Our research is guided by Strategic Leadership theory (Finkelstein et al., 2009).
Our findings indicate that board diversity research needs to go beyond the binaries of ‘Women on Board or not’, ‘progress or social justice’, and ‘quota or voluntary targets’. Moreover, the relevant issue in board diversity research is not of choosing between better performance and higher gender diversity. The value of board diversity lies in changing the culture in the organisation to promote the diversity of perspective (DoP), rather than any single demographic attribute of board members.
Women on boards make a significant contribution when boards are composed with the objective of promoting the diversity of perspective and not any specific gender ratio. Composing boards with individuals who think and act differently, and hence contribute differently, ensures that progress/performance is not compromised for the cosmetic appearance of board composition. This approach does not dilute the current emphasis on increasing gender diversity on boards, but it strengthens the efforts made by regulatory agencies and top FTSE companies to promote gender balance in boards and provide a better rationale for the same. It also counters the sceptics who question the wisdom of increasing gender diversity and assuages their fears of increased gender diversity leading to stalled progress.
This study contributes significantly to the conclusion of the debate on board diversity on the issues of approaches, rationales, and attributes. It presents the evidence of the benefits of gender diversity in catalysing progress and suggests that the real value of enhanced gender diversity on boards lies in increasing the diversity of perspective. Thus the paper may enable companies to channel their efforts in board diversity more objectively. The study also has potential relevance for policymakers who are currently struggling with the promotion of individual diversity attributes, with little success. Strategic Leadership theory (SLT) supports exploring the impact of deeper characteristics of board members but has been applied in a very limited manner in empirical studies on board diversity. This paper thus contributes significantly towards the application of SLT.
Hence, we conducted a qualitative study in boards of listed companies in the UK, interviewing 42 directors to assess the impact of higher gender diversity on boards’ role-performance. We also explored whether recommendatory/voluntary targets without any penal action is an effective method of increasing gender diversity for the UK corporate governance regime. Our research is guided by Strategic Leadership theory (Finkelstein et al., 2009).
Our findings indicate that board diversity research needs to go beyond the binaries of ‘Women on Board or not’, ‘progress or social justice’, and ‘quota or voluntary targets’. Moreover, the relevant issue in board diversity research is not of choosing between better performance and higher gender diversity. The value of board diversity lies in changing the culture in the organisation to promote the diversity of perspective (DoP), rather than any single demographic attribute of board members.
Women on boards make a significant contribution when boards are composed with the objective of promoting the diversity of perspective and not any specific gender ratio. Composing boards with individuals who think and act differently, and hence contribute differently, ensures that progress/performance is not compromised for the cosmetic appearance of board composition. This approach does not dilute the current emphasis on increasing gender diversity on boards, but it strengthens the efforts made by regulatory agencies and top FTSE companies to promote gender balance in boards and provide a better rationale for the same. It also counters the sceptics who question the wisdom of increasing gender diversity and assuages their fears of increased gender diversity leading to stalled progress.
This study contributes significantly to the conclusion of the debate on board diversity on the issues of approaches, rationales, and attributes. It presents the evidence of the benefits of gender diversity in catalysing progress and suggests that the real value of enhanced gender diversity on boards lies in increasing the diversity of perspective. Thus the paper may enable companies to channel their efforts in board diversity more objectively. The study also has potential relevance for policymakers who are currently struggling with the promotion of individual diversity attributes, with little success. Strategic Leadership theory (SLT) supports exploring the impact of deeper characteristics of board members but has been applied in a very limited manner in empirical studies on board diversity. This paper thus contributes significantly towards the application of SLT.
Original language | English |
---|---|
Publication status | Accepted/In press - 13 Jun 2018 |
Event | Gender, Work & Organization Conference (GWO) 2018 - MACQUARIE University, Sydney, Australia Duration: 13 Jun 2018 → 16 Jun 2018 Conference number: 2018 |
Conference
Conference | Gender, Work & Organization Conference (GWO) 2018 |
---|---|
Abbreviated title | GWO |
Country/Territory | Australia |
City | Sydney |
Period | 13/06/18 → 16/06/18 |
Keywords
- Board diversity a Business case
- Board diversity
- Approached to Diversity
- Gender Diversity
- FTSE Boards