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Is Gender Diversity Profitable? Evidence from a Global Survey

Peterson Institute For International Economics

2016

Global

Report/Paper

Workplace Gender Equality

Gender diversity Gender equality Workplace Gender Equality Influencing gender norms

Is Gender Diversity Profitable? Evidence from a Global Survey

Is Gender Diversity Profitable? Evidence from a Global Survey

The Is Gender Diversity Profitable? Evidence from a Global Survey paper from the Peterson Institute of International Economics examines the impact of gender diversity on corporate performance. It uses a global dataset of firms to analyse this correlation.

The paper addresses the relative absence of women on corporate executive boards and at the upper levels of management globally. It is based on a 2014 sample of 21,980 firms headquartered in 91 countries. Nearly 60 percent of these firms have no female board members, just over half have no female “C-suite” executives (a firm’s most senior executives and members of corporate boards), and less than 5 percent have a female chief executive officer (CEO).

Highlights

  • The results suggest that the presence of women in corporate leadership positions may improve firm performance and that the magnitudes of the correlations are not small. The largest gains are for the proportion of female executives, followed by the proportion of female board members; the presence of female CEOs has no noticeable effect on firm performance. This pattern underscores the importance of creating a pipeline of female managers and not simply getting lone women to the top.
  • The positive correlation between the proportion of women in corporate leadership and firm profitability could reflect the existence of discrimination against women executives (which gives non-discriminating firms an edge) or the fact that the presence of women contributes to skill diversity (to the benefit of the firm). There is no evidence that the female board quotas enacted by some countries have had an impact, for good or ill, though the statistical analysis may be too crude to detect such effects.
  • Both the female share of board members and the share of women in C-level positions are positively correlated with the share of women doing professional work (countries with more women in the professional/technical workforce have more female executives). Overall, women in the professional workforce are not in short supply, although female labour force participation remains an issue for some countries in the sample. The gap in male versus female participation in the labour force is almost three times as great in the 10 least gender-balanced countries in the sample as it is in the 10 most gender-balanced countries.
  • Women’s presence in corporate leadership is positively correlated with firm characteristics such as size, as well as national characteristics such as girls’ math scores, the absence of discriminatory attitudes toward female executives, and the availability of paternal leave.
  • In South East Asia, out of 1,973 firms studied, women make up the following:
    • 8% of board members;
    • 5% of board chairs;
    • 25% of executives (the highest out of all regions); and
    • 8% of CEOs or the equivalent.

Contents

  • Abstract
  • Gender balance in corporate leadership
  • Does gender balance affect firm performance?
  • Women’s presence in corporate leadership
  • Conclusion
  • Appendices
  • References
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