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In the Club? How Categorization and Contact Impact the Board Gender Diversity-Firm Performance Relationship

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Abstract

Meta-analytic results show that board gender diversity is modestly associated with firm performance, but there is notable heterogeneity among findings. Board gender diversity allows access to women’s perspectives, potentially helping boards, but diversity can also trigger biases that exclude women directors, such that boards do not integrate meaningful perspectives. Addressing this problem, we leverage the categorization-elaboration model, contact theory, and critical mass theory to build new theory as to how men directors can serve as allies to women directors to better leverage diverse perspectives. We empirically test how considerations that reduce out-group categorization and bias against women moderate the board gender diversity-firm performance relationship. Our results show that gender diverse boards perform better with more formal contact among men and women director colleagues, and that gender diverse boards with more men directors who only have prior experience working with token-women, perform worse. Our work helps explain how and why board gender diversity can improve or detract from firm performance. This extends the literature by illustrating the important consequences that occur when firms do (or do not) have men directors who are likely to be allies of gender diversity.

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  1. Darla Moore School of Business, University of South Carolina, 1014 Greene St., Columbia, SC, 29208, USA

    Andre Havrylyshyn, Donald J. Schepker & Anthony J. Nyberg

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  1. Andre Havrylyshyn
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Appendix: Detailed Description of Instrumental Variable Information

Appendix: Detailed Description of Instrumental Variable Information

Instrumental variable (IV)

Associated variable in model

Why latter would covary with former

Why IV would not impact firm performance

F statistic; Sargan

Industry average women directors (tally)

Women directors

Being in industry with more women directors may pressure focal firm to do the same

IV does not capture degree women are on focal board

40.16; 0.28

Industry average portion of board who are women

Women directors

Being in industry with more women directors may pressure focal firm to do the same

IV does not capture degree focal board is comprised of women

40.16; 0.28

Audit committee seats

Formal board gender contact intensity

More seats on an essential committee should mean more men-women contact

Large committee has pros and cons: more human capital, but also less efficient.1

45.20; 0.49

Compensation committee seats

Formal board gender contact intensity

More seats on an essential committee should mean more men-women contact

Large committee has pros and cons: more human capital, but also less efficient.1

45.20; 0.49

Women’s appointments to critical mass boards (year prior)

Men directors’ critical mass gender contact history

IV should be greater if focal board has had critical mass of women historically

Evidence only shows men improve skills from serving on critical mass board.2

25.75; 0.30

Women’s appointments to critical mass boards (3 years prior)

Men directors’ critical mass gender contact history

IV should be greater if focal board has had critical mass of women historically

Evidence only shows men improve skills from serving on critical mass board.2

25.75; 0.30

  1. Source (1) Goodstein et al. (1994) and Kolev et al. (2019), (2) Konrad et al. (2008)

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Havrylyshyn, A., Schepker, D.J. & Nyberg, A.J. In the Club? How Categorization and Contact Impact the Board Gender Diversity-Firm Performance Relationship. J Bus Ethics 184, 353–374 (2023). https://doi.org/10.1007/s10551-022-05168-0

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