To improve company performance, add women to the board
Global companies looking to reduce their impact on global warming and increase diversity should turn to an unexpected and abundant resource to ensure their success, says Valentina Maranoassociate professor of business at Northeastern—women.
In fact, according to Marano, just one woman on the board can improve a company’s ability to practice corporate social responsibility – or make positive changes in the world around it – by 2%, according to a new study recently published in the Journal of International Business Studies.
“It may not seem like much, but the change is noticeable, and it would likely be noticeable to the owners and other stakeholders of these companies,” says Marano, who conducted a study of 3,175 public companies in 38 countries.
Marano, along with researchers from the University of Illinois and the University of South Carolina, looked at published data from the companies between 2007 and 2015. The researchers used the annual reports provided by the companies to determine the number of women on the board of directors of each company, each year.
To measure changes in companies’ social performance – how they treat their employees, customers and society as a whole on issues such as employee training, human rights and community development – the researchers used the reports of Thomson Reutersa source of news and financial information. Thomson Reuters also measures a company’s efficient use of resources, reduction of harmful emissions and efforts to create more environmentally friendly products.
“We found that as the number of female directors in these companies increased, the social presence of the company increased,” says Marano.
Research indicates that women bring specific skills that cannot be replicated with an all-male leadership team: female directors, says Marano, tend to be more receptive to codes of ethics and ethical issues, more experience in philanthropic and community service activities. , and are more likely to hold advanced degrees, which increases their concern for social and environmental issues.
“This research means that women are increasingly seen as very important strategic resources for businesses,” says Marano. “It is recognized that they can make a big difference to the success of the organizations they work for.”
This perspective was not common 20 or even 10 years ago, adds Marano.
“We’ve come a long way,” says Marano, and according to the research, “companies are missing out if they don’t leverage the talents of what is becoming a growing proportion of the workforce.”
The research comes as social justice reform and climate change mitigation strategies have become more important to businesses around the world. Companies like Amazon have sought to make major changes consumption of fossil fuels while raising awareness of support for movements like Black Lives Matter.
“As concerns about the impacts of business on society grow, corporate boards
play an increasingly important role in shaping the social and environmental agenda of companies,” says Marano.
The researchers also found that other factors, including the location of the company’s headquarters, influenced the extent of change that women were able to make overall.
“We found that the ability of female directors to positively impact the social and environmental impacts of their businesses was stronger in companies that emphasize planning and investing for the future,” said Marano, citing Thailand as an example.
Australia promotes a more assertive style in the workplace, which increases the chances of new and different voices having an impact, while Switzerland’s emphasis on goal-oriented behavior and innovation has also enhanced the influence of female directors, according to the study.
Business leaders are “increasingly thinking about the strategic role women can bring to their organization because of their differences from their male counterparts,” says Marano.
“There’s still a long way to go,” Marano says of the role and number of women on boards. “But I think our research makes the case for women, not as a problem, but as an important resource.”
For media inquiries, please contact Marirose Sarretto at [email protected].