Skip to main content

Explanatory factors of the relationship between gender diversity and corporate performance

Abstract

In recent years a growing interest in gender diversity has arisen in the business context, and a significant number of research studies have analysed its effect on corporate performance. Nonetheless, these studies have not led to conclusive results, perhaps owing to the complexity of the relationship. The present work focuses on analysing two possible justifications of the contradictory effects of gender diversity on company performance: the business context and the optimum size of the female presence in decision-making bodies. The results obtained show that when working conditions and academic background are similar, women achieve better performance in sectors traditionally dominated by men. Moreover, to take the best advantage of gender diversity it is recommended that boards of directors should be balanced or have a slightly higher female presence.

This is a preview of subscription content, access via your institution.

Notes

  1. 1.

    We thank an anonymous referee for this comment.

References

  1. Adams, R. B., & Ferreira, D. (2004). Gender diversity in the boardroom. ECGI Working Paper Series in Finance, 58.

  2. Adler, R. D. (2001). Women in the executive suite. Correlate to high profits. Working Paper, European Project on Equal Pay. Pepperdine University.

  3. Andrés, P., Azofra, V., & López, F. (2005). Corporate boards in OECD countries: Size, composition, functioning and effectiveness. Corporate Governance: An International Review, 13(2), 197–210.

    Article  Google Scholar 

  4. Appold, S. J., Siengthai, S., & Kasarda, J. D. (1998). The employment of women managers and professionals in an emerging economy: Gender inequality as an organizational practice. Administrative Science Quarterly, 43(3), 538–565.

    Article  Google Scholar 

  5. Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17, 99–120.

    Article  Google Scholar 

  6. Böhren, O., & Ström, R. (2005). The value-creating board: Theory and evidence, Research Report 8/2005. Department of Financial Economics: Norwegian School of Management.

  7. Bozec, R., & Dia, M. (2007). Board structure and firm technical efficiency: Evidence from Canadian state-owned enterprises. European Journal of Operational Research, 177, 1734–1750.

    Article  Google Scholar 

  8. Brewer, M. B. (1991). The social self: On being the same and different at the same time. Personality and Social Psychology Bulletin, 17, 475–482.

    Article  Google Scholar 

  9. Campbell, K., & Mínguez-Vera, A. (2008). The influence of gender on Spanish Boards of Directors: An empirical analysis. WP-EC 20072008. Instituto Valenciano de Investigaciones Económicas.

  10. Carter, D. A., Simkins, B. J., D’Souza, F., & Simpson, W. G. (2007). The Diversity of corporate board committees and financial performance. SSRN, September 20, pp 1–30.

  11. Carter, D. A., Simkins, B. J., & Simpson, W. G. (2003). Corporate governance, board diversity and firm value. The Financial Review, 38, 33–53.

    Article  Google Scholar 

  12. Drazin, R., & Van de Ven, A. (1985). Alternative forms of fit in contingency theory. Administrative Science Quarterly, 30(4), 514–539.

    Article  Google Scholar 

  13. Du Rietz, A., & Henrekson, M. (2000). Testing the female underperformance hypothesis. Small Business Economics, 1, 1–10.

    Article  Google Scholar 

  14. Ellis, K. M., & Keys, P. Y. (2003). Stock returns and the promotion of workforce diversity. Working Paper. University of Delaware.

  15. Erhardt, L. N., Werbel, J. D., & Shrader, Ch. B. (2003). Board of director diversity and firm financial performance. Corporate Governance: An International Review, 11(2), 102–110.

    Article  Google Scholar 

  16. Farrell, K. A., & Hersch, P. L. (2005). Additions to corporate boards: Does gender matter? Journal of Corporate Finance, 11, 85–206.

    Article  Google Scholar 

  17. Fenwick, G. D., & Neal, D. J. (2001). Effect of gender composition on group performance. Gender, Work and Organization, 8(2), 205–225.

    Article  Google Scholar 

  18. Frink, D. D., Robinson, R. K., Reithel, B., Arthur, M. M., Ammeter, A. P., Ferris, G. R., et al. (2003). Gender demography and organization performance. A two-study investigation with convergence. Group and Organization Management, 28(1), 127–147.

    Article  Google Scholar 

  19. Gabrielsson, J., & Winlund, H. (2000). Boards of directors in small and medium-sized industrial firms: Examining of the board’s working style on board task performance. Entrepreneurship & Regional Development, 12(4), 311–330.

    Article  Google Scholar 

  20. Gallego-Álvarez, I., García-Sánchez, I. M., & Rodríguez-Domínguez, L. (2008). Voluntary and compulsory information disclosed online: Effect of industry concentration and other explanatory factors. Online Information Review, 32(5), 596–622.

    Article  Google Scholar 

  21. Gallego-Álvarez, I., García-Sánchez, I. M., & Rodríguez-Domínguez, L. (2009). La eficacia del gobierno corporativo y la divulgación de información en Internet. Investigaciones Europeas de Dirección y Economía de la Empresa, 15(1), 109–135.

    Article  Google Scholar 

  22. Gallego-Álvarez, I., García Sánchez, I. M., & Rodríguez-Domínguez, L. (2010). The influence of gender diversity on corporate performance. Spanish Accounting ReviewRevista de Contabilidad, 13(1) (forthcoming).

  23. García Sánchez, I. M. (2010a). The effectiveness of corporate governance: Board structure and business technical efficiency in Spain. Central European Journal of Operations Research. doi:10.1007/s10100-009-0112-4.

  24. García Sánchez, I. M. (2010b). Factores Determinantes de la presencia de un FEFC en el Comité de Auditoría. Revista Europea de Dirección y Economía de la Empresa (forthcoming).

  25. García Sánchez, I. M., Rodríguez Domínguez, L., & Gallego Álvarez, I. (2008). La influencia del consejo de administración en la adopción de un código ético. Revista de Contabilidad, 11(2), 93–120.

    Google Scholar 

  26. Gilligan, C. (1982). In a different voice. Cambridge, MA: Harvard University Press.

    Google Scholar 

  27. Graham, M. E., & Hotchkiss, J. L. (2003). Which Industries are the best employers for women? An application of a new equal opportunity index, Working Paper. Federal Reserve Bank of Atlanta.

  28. Hambrick, D. C., & Mason, P. A. (1984). Upper echelons: The organization as a reflection of its top managers. Academy Management Review, 9, 195–206.

    Google Scholar 

  29. Hoffman, L., & Maier, N. (1961). Quality and acceptance of problem solutions by members of homogeneous and heterogeneous groups. Journal of Abnormal and Social Psychology, 62, 401–407.

    Article  Google Scholar 

  30. Jimeno de la Maza, F. J., & Redondo Cristóbal, M. (2007). Diversidad de género en el consejo de administración y características económico-financieras de las empresas. Paper presented at XIV Congreso de la Asociación Española de Contabilidad y Administración de Empresas, September 19–21, Valencia.

  31. Johnson, J. L., Daily, C. M., & Ellstrand, A. E. (1996). Board of directors: A review and research agenda. Journal of Management, 22(3), 409–438.

    Article  Google Scholar 

  32. Jurkus, A. F., Park, J. Ch., & Woodard, L. S. (2008). Gender diversity, firm performance, and environment. Working Paper. http://ssrn.com/abstract=1085109.

  33. Kanter, R. M. (1977). Some effects of proportions on group life: Skewed sex ratios and responses to token women. American Journal of Sociology, 82, 965–990.

    Article  Google Scholar 

  34. Kochan, Th., Bezrukova, K., Ely, R., Jackson, S., Joshi, A., Jehn, K., et al. (2003). The effects of diversity on business performance: Report of the diversity research network. Human Resource Management, 42(1), 3–21.

    Article  Google Scholar 

  35. Krishnan, H. A., Miller, A., & Judge, W. Q. (1997). Diversification and top management team complementary: Is performance improved by merging similar or dissimilar teams? Strategic Management Journal, 18, 361–374.

    Article  Google Scholar 

  36. Krishnan, H., & Park, D. (2005). A few good women-on-top management teams. Journal of Business Research, 58(12), 1712–1720.

    Article  Google Scholar 

  37. Litz, R. A., & Folker, C. A. (2002). When he and she sell seashells: Exploring the relationship between management team, gender-balance and small firm performance. Journal of Developmental Entrepreneurship, 7(4), 341–359.

    Google Scholar 

  38. Norburn, D. (1986). GOGOs, YOYOs, and DODOs: Company directors and industry performance. Strategic Management Journal, 7, 101–118.

    Article  Google Scholar 

  39. Norburn, D., & Birley, S. (1988). The top management team and corporate performance. Strategic Management Journal, 9, 225–237.

    Article  Google Scholar 

  40. Pearce, J. (1983). The relationship of internal versus external orientations to financial measures of strategic performance. Strategic Management Journal, 4(4), 297–306.

    Article  Google Scholar 

  41. Pearce, J., & Zahra, S. (1992). Board composition from a strategic contingency perspective. Journal of Management Studies, 29(4), 411–438.

    Article  Google Scholar 

  42. Prado, J. M., Gallego, I., & García, I. M. (2009a). Stakeholder reengagement and corporate social responsibility reporting: The ownership structure effect. Corporate Social Responsibility and Environmental Management, 16, 94–107.

    Article  Google Scholar 

  43. Prado, J. M., García, I. M., & Gallego, I. (2009b). Características del consejo de administración e información en materia de responsabilidad social corporativa. Revista Española de Financiación y Contabilidad, 38(141), 107–135.

    Google Scholar 

  44. Randöy, T., Thomsen, S., & Oxelheim, L. (2006). A Nordic perspective on corporate board diversity. Norway: Nordic Innovation Centre.

    Google Scholar 

  45. Richard, O. C. (2000). Racial diversity, business strategy and firm performance: A resource-based view. Academy of Management Journal, 43(2), 164–177.

    Article  Google Scholar 

  46. Robinson, G., & Dechant, K. (1997). Building a business case for diversity. The Academy of Management Executive, 11(3), 21–31.

    Article  Google Scholar 

  47. Rodríguez-Domínguez, L., Gallego-Álvarez, I., & García-Sánchez, I. M. (2009). Corporate governance and codes of ethics. Journal of Business Ethics, 90(2), 187–202. doi:10.1007/s10551-009-0035-y.

    Article  Google Scholar 

  48. Rodríguez-Domínguez, L., Gallego-Álvarez, I., & García-Sánchez, I. M. (2010). Determinantes de la divulgación voluntaria de información estratégica en Internet: un estudio de las empresas españolas cotizadas. Revista Europea de Dirección y Economía de la Empresa, 19(1), 9–25.

    Google Scholar 

  49. Rose, C. (2004). Stakeholder orientation vs shareholder value—A matter of contractual failures. European Journal of Law and Economics, 18, 77–79.

    Article  Google Scholar 

  50. Rose, C. (2007). Does female board representation influence firm performance? The Danish evidence. Corporate Governance: An International Review, 15(2), 404–413.

    Article  Google Scholar 

  51. Shrader, Ch. B., Blackburn, V. B., & Iles, P. (1997). Women in management and firm financial performance: An exploratory study. Journal of Managerial Issues, 9(3), 355–372.

    Google Scholar 

  52. Smith, N., Smith, V., & Verner, M. (2006). Do women in top management affect firm performance? A panel study of 2, 500 Danish firms. International Journal of Performance Management, 55(7), 569–593.

    Article  Google Scholar 

  53. Stiles, P. (2001). The impact of boards on strategy. Journal of Management Studies, 38(5), 627–650.

    Article  Google Scholar 

  54. Tosi, H., & Slocum, J. (1984). Contingency theory: Some suggested directions. Journal of Management, 19(1), 9–26.

    Article  Google Scholar 

  55. Vafeas, N. (1999). Board meeting frequency and firm performance—An empirical analysis. Journal of Financial Economics, 53(1), 113–142.

    Article  Google Scholar 

  56. Vance, S. C. (1983). Corporate leadership: Boards, directors, and strategy. New York: McGraw Hill.

    Google Scholar 

  57. Watson, W. E., Kumar, K., & Michaelsen, L. K. (1993). Cultural diversity’s impact on interaction process and performance: Comparing homogeneous and diverse task groups. Academy of Management Journal, 36, 590–602.

    Article  Google Scholar 

  58. Welbourne, T. M., Cycyota, C. S., & Ferrante, C. J. (2007). Wall street reaction to women in IPOs: An examination of gender diversity in top management teams. Group and Organization Management, 32(5), 524–547.

    Article  Google Scholar 

  59. Wharton, A. S., & Baron, J. (1987). So happy together? The impact of gender segregation on men at work. American Sociological Review, 52, 574–587.

    Article  Google Scholar 

  60. Wood, W. (1987). Meta-analytic review of sex differences in group performance. Psychological Bulletin, 102, 53–71.

    Article  Google Scholar 

  61. Yermack, D. (1996). Higher valuation of companies with a small board of directors. Journal of Financial Economics, 40, 185–212.

    Article  Google Scholar 

Download references

Author information

Affiliations

Authors

Corresponding author

Correspondence to Luis Rodríguez-Domínguez.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Rodríguez-Domínguez, L., García-Sánchez, IM. & Gallego-Álvarez, I. Explanatory factors of the relationship between gender diversity and corporate performance. Eur J Law Econ 33, 603–620 (2012). https://doi.org/10.1007/s10657-010-9144-4

Download citation

Keywords

  • Gender diversity
  • Business profitability
  • Panel data
  • Academic background
  • Corporate performance

JEL classification

  • J16
  • K30
  • M14
  • M51