Academic journal article Journal of Managerial Issues

The Relationship between Organizational/board Characteristics and the Extent of Female Representation on Corporate Boards

Academic journal article Journal of Managerial Issues

The Relationship between Organizational/board Characteristics and the Extent of Female Representation on Corporate Boards

Article excerpt

Existing research suggests that women are significantly underrepresented in executive positions (Dreher et al., 2011) and in the boardroom of public firms. As noted by Hillman et al. (2007), women made up 37 percent of the U.S. workforce in 2005 but only accounted for 14.7 percent of the board seats in Fortune 500 firms. Moreover, in the U.S. women hold half of the managerial and professional positions (Helms et al., 2008). This situation exists in spite of many calls for increased diversity in corporate boards (Blackman, 2004; Singh, 2005) and research suggesting gender diversity is linked to increases in financial performance (Carter et al., 2003).

The rationale for more female representation on corporate boards can be looked at from two major perspectives: ethical and financial (Campbell and Minguez-Vera, 2008). From an ethical perspective, it is viewed as immoral for women to be excluded from boards and thus organizations should increase female representation to create a more equitable situation between men and women. From a financial perspective, it can be argued that firms increasing diversity could increase performance (Orlitzky and Benjamin, 2003) and prior studies have found a positive relationship between the presence of female directors and firm performance (Campbell and Minguez-Vera, 2008; Erhardt et al., 2003). As such, those lacking in gender diversity may remain so to the detriment of financial performance.

Currently, little research has focused on gender diversity in large corporate boards. While there is some breadth of research in this area, gender diversity lacks the depth present in other areas of governance research. Thus, there is much to learn in this understudied area of the literature. For example, prior studies have examined female representation on boards over time (Daily et al., 1999a), female membership on board committees (Bilimoria and Piderit, 1994), as well as how demographics differ between male and female directors (Hillman et al., 2002). More recent research has examined organizational factors that impact the likelihood of female membership on boards (Hillman et al., 2007), the relationship between female representation on boards and firm performance (Campbell and Minguez-Vera, 2008; Francoeur et al., 2008), as well as the role of equality perception in female directors' contributions on boards (Nielsen and Huse, 2010). However, the literature is sparse in any of the above areas and more research is needed to extend or validate prior findings.

The current study seeks to build upon the work of Hillman et al. (2007) by examining organizational factors that impact female representation on large corporate boards. However, while Hillman et al. (2007) examined factors that influence the presence of one or more women on a board from a dichotomous perspective, the current study utilizes a dependent variable that measures the percentage representation of women on a given board. This allows for a different perspective and provides a richer source of data. Thus, this study provides multiple contributions to the current literature. First, an important contribution is the examination of not only female board representation, but also the level of female board representation. This is an important distinction as it allows for the examination of whether board and organizational characteristics impact not just the existence of a sole "token" board member, but also the existence of more inclusive representation involving multiple diverse members (Shore et al., 2011). Also, the study expands the literature by examining the impact of organizational size, outside board representation, board size, board member representation on other boards, and older board representation on the level of female representation on a given board.

In the following paragraphs, the variables expected to impact female representation on boards and the associated theory are explored. Formal hypotheses are then developed concerning the relationship between organizational/board characteristics and female board representation. …

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