Are There Gender-Related Influences on Corporate Sustainability? A Study of Women on Boards of Directors

By Galbreath, Jeremy | Journal of Management and Organization, January 2011 | Go to article overview
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Are There Gender-Related Influences on Corporate Sustainability? A Study of Women on Boards of Directors


Galbreath, Jeremy, Journal of Management and Organization


ABSTRACT

This study sought to investigate if there is a link between women on boards of directors and corporate sustainability. Using a sample of publicly listed firms from Australia, the results suggest some level of support that a link does exist. Boards that have a strong complement of gender diversity are expected to offer more effective monitoring of agents, as well as offer more stringent enforcement of ethical conduct, thereby minimizing affects of subversion of shareholder funds that can be detrimental to their returns. Accordingly, findings confirm a positive link between women on boards and economic growth. Because of their relational abilities, women on boards are more likely able to engage with multiple stakeholders and respond to their needs, resulting in an avenue for demonstrating social responsiveness, which is confirmed by the results. However, due to their backgrounds and work experiences, sex-based biases and stereotyping might exist in boardrooms with men directors discounting input from women directors on issues relating to environmental quality. The results of this study find that women directors are not significantly associated with environmental quality. Discussion is given to these findings along with paths for future research.

Keywords: corporate governance, corporate sustainability, board structure, gender diversity, women

Sustainability is perhaps one of the most important management paradigms strategic decision makers need to respond to in the pursuit of competitive success today (Bansal, 2005; Konrad, Steurer, Langer, & Martinuzzi, 2006; Steurer, Langer, Konrad, & Martinuzzi, 2005). Leading sustainability scholar Bansal (2001, p. 48) suggests that firms who do not respond to sustainability will 'almost certainly face extinction'. Similarly, others suggest that the ability to integrate sustainability into their corporate mission and into relationships with stakeholders will define which firms will succeed in the twenty-first century and which will fall (e.g., Bacon, 2007; Stranislaw, 2007). In light of these bold assertions, it is clear that understanding how firms respond to sustainability is an important area of enquiry.

To date, research has been particularly focused on understanding why firms commit to sustainability. Results suggest that stakeholder influence is an important factor that determines firms' sustainability practices. Sharma and Henriques (2005) find that stakeholders such as major customers, environmental groups, and employees have a positive influence on levels of sustainability practices. On the other hand, Bansal (2005) finds that international experience, media pressure, mimicry, and organizational size are positively related to corporate sustainability. Sharma and Henriques (2005), however, suggest that further study of internal drivers is needed, because studying such drivers could reveal how organizations develop an understanding of sustainability and begin to act on this understanding. Of particular interest is understanding if women on boards of directors are linked with sustainability.

Boards of directors are the ultimate decisionmaking group within corporations (Hendry & Kiel, 2004). As such, they wield substantial power and responsibility in overseeing firms, having significant influence on strategy that, in turn, affects subsequent performance (Fama & Jensen, 1983a, 1983b; Hillman, Keim, & Luce, 2001; Lynall, Golden, & Hillman, 2003). Therefore, determining the right composition of board members is of critical importance. In general, board composition that includes gender diversity has been one of the most significant governance issues facing modern corporations (Singh, Terjesen, & Vinnicombe, 2008). One reason for this is that gender diversity has been advocated as a means of improving organizational value and performance by inculcating boards with new insights, new information and new perspectives (Carter, Simkins, & Simpson, 2003; Miller & del Carmen Triana, 2009).

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