Women on Corporate Boards

An International Perspective

Maria Aluchna, Güler Aras

• Publisher: Routledge
• Year: 2018
• ISBN:
  9781351728935
• Edition: 1
• Topic: Business
• Subtopic: Women in Business
• Index: Business

Female presence and involvement on boards improves firm performance, transforms corporate governance and leads to the transition towards more responsible business.

Corporate boards are essential bodies for governance and management and their efficiency determines a company's performance. The board is a crucial element of the corporate governance structure and its efficiency and performance determines the success of the operation and monitoring of the company. The board is viewed as the liaison between providers of capital (shareholders) and managers who use this capital to create value. The board role is to represent, formulate and fulfill the interests and expectations of shareholders as the owners of the companies. The discussion surrounding female participation in business inevitably needs to refer to their presence on corporate boards. It is also a reliable indicator of a gender equality policy and advancement, adopted by countries and companies.

The book traces the logic behind the decision patterns of female involvement in governance and management. In particular, it identifies the patterns of women's presence on corporate boards, with respect to theoretical and conceptual argumentation, policy and regulatory implication, as well as practical adaptation. The phenomenon of women on corporate boards is analyzed in the context of different political, cultural and institutional environments addressing challenges in both developed and emerging economies. The role of female directors is viewed as one of the crucial aspects in corporate governance, adding to the quality of control and management.

Part I
Overview

Introduction

Maria Aluchna and Güler Aras

Corporate board is the crucial element of the corporate governance structure and its efficiency and performance. The quality of board work, specifically monitoring and oversight over executives determines the company performance. The board functions as the liaison between shareholders, the providers of the capital and managers who use this capital to create firm value. It is also an influential, powerful and prestigious body at the top of organizational hierarchy which bears the ultimate responsibility for company operation. Due to the strategic role of the board the issues of its work, composition and structure are placed among the most dynamically developing research topics in management and corporate governance. Today the board evolved to engage more independent directors, reveal increased transparency and have more diverse composition. This results in the increased representation of women in the boardroom. Board diversity is also a reliable indicator of gender equality advancement and policy adopted by countries and companies.

We address the ongoing debate on corporate governance reforms and company reaction to stakeholder expectations and trace the patterns of women’s involvement in governance and management. In this book we intend to outline theoretical and conceptual frameworks and discuss policy and regulatory arguments and the practical implication of women on boards.

Adopting the interdisciplinary approach and international perspective the book traces the logic behind the decision patterns of female representation in governance and management. Specifically, the publication aims at the identification of patterns for women’s presence on corporate boards with respect to theoretical and conceptual framework, policy and regulatory implication and the practical adaptation. The phenomenon of women on corporate boards is analyzed in the context of different political, cultural and institutional environments addressing challenges in both developed and emerging economies. The role of female directors is viewed as one of the crucial aspects in corporate governance adding to the quality of control and management.

The book is divided into three main parts, preceded by an overview. The chapters in Part II discuss concepts and policies on female representation on corporate boards. Part III covers institutional and socio-economic perspectives of gender diversity. The chapters in Part IV present studies and analysis on mechanisms which explain female representation on boards in the organizational context. Final remarks are provided in the conclusion.

Part II focuses on concepts and policies of gender diversity in the boardroom. In

Chapter 1, “Women on corporate boards: backgrounds, drivers and mechanisms”, Maria Aluchna and Tomasz Szapiro provide an overview of the existing literature summarizing key findings. Specifically, they address the background of gender diversity in management and governance, identify main drivers for its development and enumerate five mechanisms referring to the labour market, regulation efficiency, the role of the institutional context and business practice. In the final part they outline directions for further research offer a starting point for the discussion provided in the following chapters.

Chapter 2, “Gender diversity on boards in Norway and the UK: a different approach to governance or a case of path dependency?”, is written by a team of Rita Goyal, Nada Kakabadse, Filipe Morais and Andrew Kakabadse. They investigate the cases of Norway and the UK to identify possible reasons for adopting different strategies to achieve gender diversity in boards of these countries. They offer a possible explanation of partial failure of adopted strategies in the UK and Norway in achieving the objective. In their analysis the authors refer to the concept of the path dependency pointing at the prevailing legal systems, corporate philosophies, political orientation and socio-cultural practices which contribute to the adoption of different strategies for boards’ gender diversity.

In Chapter 3, “Regulation of the gender composition of company boards in Europe: experience and prospects”, Kevin Campbell and Leszek Bohdanowicz offer the review of the enforcement approach proposed by the European Commission pointing at its successes and failures. They discuss the evidence on the mandatory quota system in Norway drawing on factors that contribute to the success of quotas, such as the nature of the sanctions against non-compliant companies, and their enforcement. Kevin Campbell and Leszek Bohdanowicz also evaluate the UK voluntary approach for listed companies included in the FTSE 100 and 250 indices confronting the success of this policy with initiatives in other European countries. Finally, they address the question on the efficiency of hard versus soft law approaches for the increase of the representation of women on boards.

Part III addresses the topic of gender diversity in boardrooms viewed from institutional and socio-economic perspectives. This part starts with the fourth chapter written by JF Corkery, Madeline Elizabeth Taylor and Melanie Hayden titled “Gender balance in Australian boardrooms: the business case for quotas” which explores the importance of improving corporate culture to be more inclusive of women in leadership positions. The authors examine the current Australian policy which follows the soft regulatory intervention supporting the increase of women on boards and assesses the potential benefits of enacting mandatory gender quota legislation. This chapter concludes with arguing that despite the increase of gender diversity in Australia, there is a need for a long-term plan due to the slow progress of the soft policy for female representation on Australian boards.

Chapter 5 was written by Marta Pachocka, Aleksandra Szczerba-Zawada and Diana Eerma and provides the comparison of “Women on corporate boards in Poland and Estonia in the context of the EU gender equality policy”. Aiming to analyze the women’s presence in decision-making positions the authors discuss the cases of Estonia and Poland referring to a broader background of the EU gender equality policy. The chapter emphasizes the lack of the EU legislation on women’s representation on corporate boards. This results in significant divergence or the absence of such regulation at national level in the EU Member States and hinders the achievement of gender equality in this area. The authors offer the analysis of acts of law and official documents at the EU and national levels, the content analysis, the case study approach and the comparative perspective. This study is supplemented with the analysis of quantitative data.

In Chapter 6, “Socio-economic perspective on women on boards: an African perspective”, Justina Mutale and Anna Masłoń-Oracz carry out analyses on female representation on boards on the company and regional levels. They provide the overview of the literature, source materials and program documents as well as deliver a comparative and descriptive study on the policies and business practice of female representation on corporate boards in selected African countries. They document both regional and sectorial differences identifying significant constrains to increase the percentage of female directors.

Helena Desivilya Syna, Michal Palgi and Maha Karkabi-Sabbah focus on the mechanisms underlying women’s limited involvement in strategic decision-making in their chapter “Women’s experiences in Top Management Teams (TMTs): the case of Israeli national majority and national minority women”. They intend to widen the research scope to not only examine the presence of women on boards but also to understand the roles played by women in these forums. For the purpose of the analysis they address the phenomena such as gendered construction of power relations, gender stereotyping in decision-making processes and networking patterns is deemed important. The study aims to diminish the research gaps of what actually happens in top forums shedding light and comparing Jewish and Arab women’s experiences at upper echelon forums.

The chapters in Part IV study and identify mechanisms explaining female participation on boards in the organizational context.

In Chapter 8, “Female entrepreneurship and boardroom diversity: the case of Russia”, Irina Tkachenko and Irina Pervukhina present the study results on the role of women in corporate governance. Specifically, they examine the presence of women on boards of directors of Russian companies with state involvement in the ownership structure. They analyze the effect of female participation on the board for economic and financial performance. They intend to address the question on whether women on the corporate boards contribute to firm growth and development whether their appointment is viewed just as a tribute to ‘breaking the glass ceiling’ trend.

In Chapter 9 Gunnar Rimmel, Petra Inwinkl, Anna Lindstrand and Ida Ohlsson present a study of “Female representation on Swedish corporate boards” addressing the role of the women-friendly regulatory and social climate. Using the data from company annual reports they reveal the current state and the dynamics of women’s participation on Swedish corporate boards. In their analysis they link the appointment of female board members with a number of factors such as board size, ownership structure and educational level.

The evolution of female participation in the economic sphere and in decision-making positions in France is discussed by Nabyla Daidj in Chapter 10, “Females on corporate boards: French perspectives: towards more diversity?”. She provides an analysis of a wide set of documents and data to document the effectiveness of legislative actions for the progress of gender equality policies in France. The author notes that despite undertaken measures the percentage of women’s representation on French boards remains still below the objective set by the law. Chapter 11, entitled “The 2017 New Zealand stock exchange directors’ network analysis and the effect of ‘soft’ reporting regimes on board diversity” is written by Rosanne Hawarden. It delivers the first research to assess the effectiveness of the ‘soft’ initiative of the diversity reporting regime with limited sanctions for non-compliance introduced on the New Zealand Stock Exchange in 2013. The chapter is based on two studies – a census and a network analysis motivated by the methodology of crowd science. The network of the 122 diversity reporting companies was constructed using a ‘crowd research’ methodology. The analyses document an increase to 14.8% of women directors, with an increase of 1% per annum since the introduction of the reporting regime. This finding remains similar but less marked than the effect noted in Norway of ‘hard’ legislated quotas.

In the final chapter, Chapter 12, “Women on board: perspectives from BRIC and Turkey”, Güler Aras and Ozlem Kutlu Furtuna discuss the gender diversity on boards in the context of Turkish listed companies. The authors deliver statistical data which document the dynamics of percentage of females in top management, female chairperson, percentage of independent female members in board of directors, female CEO-general manager for firms listed on BIST (Borsa Istanbul). While the regression analysis linking the percentage of female members and firm performance emphasize the positive effect of gender diversity, the authors conclude with the observation that the involvement of women on the board remains insufficient in BRIC firms.

Final remarks are presented in the conclusion.

We believe that the international group of authors who contribute to this book add to the understanding of the process, mechanisms and effects of increasing gender diversity in the boardroom. Offering studies about the presence of women on corporate boards across the globe, they examine internal mechanisms and organizational specificities in companies as well as external determinants which impact the presence of women on corporate boards. The authors carry out their analysis in the context of different political, cultural and institutional environments addressing challenges for increasing female representation on boards in both developed and emerging economies. The book elaborates on the consequences of having women on corporate boards indicating the qualitative changes in governing a corporation.

Part II
Concepts and models

1
Women on corporate boards

Backgrounds, drivers and mechanisms

Maria Aluchna and Tomasz Szapiro

Introduction

Research on the presence of women on corporate boards addresses female participation in management and governance. The inclusion of women on boards has over the years evolved to be one of the most intensively investigated and debated issues of – both – academia and corporate practice (Singh et al., 2008; Terjesen et al., 2009; Dalton and Dalton, 2009; Kakabadse et al., 2015; Seierstad et al., 2017). It is confirmed in the growing number of empirical and theoretical studies as well as in the formulation of codes of conduct and the sets of guidelines adopted among companies and public administration. The topic has also turned to be a political issue triggering implementations of regulations and recommendations in various spheres of economic and social lives.

With the growing number of studies, regulations formulated and adopted in the organizational context the topic of women on boards unveils its complexity. The dynamics of organizational reactions and the role of institutional contexts indicate the complexity, multidimensionality and interdependencies of gender diversity in the boardroom leaving questions not addressed. Numerous analyses (Ibrahim and Angelidis, 1994; Sheridan, 2001; McKinsey & Co., 2009, 2010; Davidson and Burke, 2004; Hillman et al., 2007; Dalton and Dalton, 2010) show that active participation of women in enterprises is constrained by structural hindrances which women face while pursuing their careers to reach the board level. This is caused by a number of reasons. First, structural obstacles refer to socio-economic sphere resulting from the unequal dedication to household work and responsibilities (McKinsey & Co., 2016). Second, in the organizational context a corporate career model requires significant geographical mobility and time availability standing in conflict with plans for starting a family and...

Table of contents

• Cover
• Title
• Copyright
• Contents
• List of figures
• List of tables
• List of contributors
• PART I Overview
• PART II Concepts and models
• PART III Regulation and compliance
• PART IV Business practice
• PART V Conclusion
• Index