Women Improve Boards

But their presence is only effective in countries with gender equality

FIRMS WITH MORE women on their boards perform better, according to new research from three professors at NEOMA Business School, which has campuses in Reims, Rouen, and Paris, France. Samia Belaounia is an associate professor at the school, Ran Tao is an assistant professor of economics, and Hong Zhao is an assistant professor of finance.

The researchers found this correlation is even stronger in countries with greater gender equality, such as those in Scandinavia, where the presence of female board directors significantly improves board efficiency. “Female directors in more gender-equal societies possess greater skills and exert more influence due to better access to educational and professional opportunities and more amicable boardroom dynamics,” according to Belaounia, Tao, and Zhao.

By contrast, the researchers found that in countries with lower gender equality—such as China, India, and Japan—female directors have little real impact on firm performance. Women in these countries might lack the educational and professional backgrounds, as well as the social capital, that would make them effective in their board positions. For women to exert influence in male-dominated boardrooms, the authors say, their voices must be heard and considered seriously.

Belaounia, Tao, and Zhao note that, in recent years, several countries have undertaken legislative efforts to encourage female board representation through quota laws or recommendations in the codes of governance. These laws have provided women with more opportunities to participate in business activities, including board positions. However, the researchers argue that, to be effective, these laws should be accompanied by substantive measures aiming to provide women with equal access to education and socioeconomic opportunities.

The study considered close to 2,000 public firms from 24 countries or regions over the time period of 2007 to 2016. It was published in July 2020 in International Business Review.