Top management team task performance
A firm's behavior and performance are to a large extent a function of its top management team, which makes most of the firm's important strategic and organizational decisions (Hambrick and Mason, 1984; Carpenter et al., 2004). Anything that improves the task performance of the top management team should, accordingly, improve firm performance.
As shown in Figure 1, top management teams are overwhelmingly composed of men. Accordingly, when a woman joins a firm's top management team, the team becomes more diverse, both in terms of social categorization and information (Van Knippenberg, De Dreu, and Homan, 2004). There are a number of distinct but related reasons why this diversity should improve the information processing and decision making of the team. Clearly, women add to the diversity of life experiences among a top management team's members. Women may, thus, have additional insight into important strategic questions, especially those that relate to female consumers, employees, and trading partners (Daily et al., 1999). In general, more heterogeneous groups have different points of view and knowledge, consider a more comprehensive set of solutions, and debate one another's viewpoints more vigorously, leading to higher quality decisions (Hoffman and Maier, 1961; Wiersema and Bantel, 1992), especially where, as with top management team decision making, the group task has a high information processing component (Van Knippenberg et al., 2004).
Moreover, gender is salient and readily accessible for social categorization (Tsui, Egan, and O'Reilly, 1991; Westphal and Milton, 2000). Such surface-level diversity can trigger expectations that informational differences may be present and legitimize the expression of divergent perspectives among the male majority even if the surface-level diversity is not, in fact, associated with greater information diversity (Phillips, Liljenquist, and Neale, 2009; Phillips and Loyd, 2006). It follows that even the presence of a woman with congruent information may stimulate a broader and richer discussion of alternatives and, thus, improve decision making within the top management team.
While diversity may become excessive and cause problems with communication (Wiersema and Bantel, 1992), this concern is unlikely to be empirically relevant for most top management teams, because the number of teams with more than a small minority of women is vanishingly small. Diversity may also negatively impact social cohesion and, thus, employee satisfaction (Tsui et al., 1991). However, affective discomfort does not necessarily imply inferior performance; indeed, research suggests that the affective discomfort associated with diversity is intimately related to the superior decision making to which diversity can give rise (e.g., Phillips et al., 2009). Intuitively, some level of conflict, dissent, and cognitive cost may often accompany the full elaboration of alternative perspectives that leads to better decision making in diverse groups (Van Knippenberg et al., 2004). Researchers have argued that because of the nonroutine nature of the problems faced by corporate boards, the benefits of gender diversity outweigh the costs (Hillman et al., 2007). These arguments should, if anything, be more applicable to top management teams whose remit is, by definition, more specifically tied to managerial problem solving than corporate boards, which primarily act as monitors and sources of information (Hillman and Dalziel, 2003).
Finally, a large body of field and laboratory work suggests that there may be gender-based differences in managerial behavioral tendencies. Based on surveys and interviews with female leaders, Rosener (1995) finds that women exhibit an interactive leadership style that emphasizes inclusion. Specifically, women are said to encourage participation by soliciting input from others, share power and information by keeping open communication channels with their subordinates, and bolster their subordinates' sense of self-worth. Using similar methods, other authors find women to be less hierarchical and more cooperative and collaborative than men (Book, 2000; Helgesen, 1990). Likewise, meta-analytic investigations reveal that in organizational settings, women tend to manage in a more democratic and participatory way (Eagly and Johnson, 1990). These behaviors, which we collectively call the ‘feminine management style,’ are conveyed colloquially by Michael Landel, CEO of Sodexo: ‘Women like power, but they like to share it. They like to be more collaborative’ (Womenomics, 2009). Such managerial behaviors promote the sharing of task-relevant information (Daily and Dalton, 2003), a key process underlying the positive effects of diversity (Van Knippenberg et al., 2004).
We accordingly expect gender diversity, especially in the form of adding a woman to an otherwise all-male top management team, to improve the team's task performance. Better task performance by the top management team, in turn, leads directly to better firm performance.
Middle management task performance
We also expect female representation in top management to have positive reverberations throughout a firm's management hierarchy for a number of reasons. Career progression through a firm's managerial ranks may be likened to a succession of competitions, each of which has implications for a manager's subsequent upward mobility (Rosenbaum, 1979). Appropriate mentoring relationships and other social contacts are important in this process. Social relationships are heavily influenced and constrained by similarity on social attributes, which notably include gender. The paucity of women in the upper echelons of management thus creates a significant barrier to managerial advancement by women (Ibarra, 1993; Noe, 1988), reducing their opportunity to acquire the experience that is important for their own advancement, for example, by working in management trainee programs (Sheridan et al., 1990) or in corporate office positions, which may be especially valuable for women (Hurley and Sonnenfeld, 1998). Conversely, where women do occupy senior managerial positions, they have been found to focus more than men on the development and mentoring of their subordinates, encouraging them to reach their full potential and rewarding them for good performance (Eagly, Johannesen-Schmidt, and van Engen, 2003).
Thus, a woman has good reason to believe that the presence of women in top management positions is a critical factor for her likely success at the firm and adjust her commitment and motivation accordingly. Indeed, researchers have argued that the presence of a woman on the corporate board indicates that, whatever barriers to advancement by women may exist in society, the culture of the firm is friendly to women and committed to the advancement of women at all levels (Bilimoria, 2000, 2006; Daily and Dalton, 2003), enhancing the motivation and organizational commitment of women in lower-level managerial positions. Given that the members of the top management team are more likely than board members to have been recruited from within the firm, we would expect the positive impact of female representation in top management on the motivation of lower-level women managers to be stronger than the effect of female board representation. It follows that female representation in top management should engender greater motivation and organizational commitment in lower-level women managers, leading them to improve their individual performance and contributions to the managerial groups to which they belong.
In addition, women managers may face a problem of incongruity between expectations about the actual and ideal behavior of women and men on the one hand, and the attributes typically associated with successful leaders on the other (Ely and Meyerson, 2000). Specifically, based on the descriptive aspect of the female gender role, women are deemed to possess inferior leadership abilities; when women fail to perform well on masculine aspects of competence, their failures are interpreted as confirming these stereotypes. Meanwhile, based on the injunctive aspect of the female gender role, women are evaluated less favorably or even denigrated when their behavior fulfills the prescriptions of the leadership role, because this violates the female gender role.
However, empirical evidence suggests that women experience this role conflict less and have a more positive view of their own gender in firms with greater gender integration at senior levels of the management hierarchy (Ely, 1994, 1995). In addition, women (and possibly men) in gender-integrated firms are more apt to enact masculine or feminine behaviors according to the demands of the task, rather than in conformity with historical gender norms (Ely, 1995).2 It follows that women (and possibly men) in lower-level managerial positions may regard the presence of a woman on the firm's top management team as a signal that the managerial behaviors associated with the feminine management style described above are valued by the organization, effectively legitimizing the adoption of these behaviors by women (and possibly men) when doing so would improve individual and group task performance.
We accordingly expect that female representation in top management will not only improve the task performance of the top management team itself but also increase the motivation and commitment of women at lower managerial levels as well as encourage the adoption of behaviors associated with the feminine management style, as and when appropriate. Each of these effects should, in turn, improve individual and group task performance throughout the firm and thereby improve firm performance itself. We accordingly propose:
Hypothesis 1: Female representation in top management has a positive effect on firm performance.
Strategic context and the benefits of gender diversity
We expect the benefits of diversity to be context specific (Klein and Harrison, 2007). Gender diversity, by leading to more thorough information processing and consideration of divergent views, should be particularly valuable for tasks requiring creative solutions (Van Knippenberg et al., 2004), such as the process of innovation, which relies on the insightful and unique recombination and reapplication of existing resources (Penrose, 1959; Schumpeter, 1934). Diversity has in general been associated with high levels of creativity and innovation (Wiersema and Bantel, 1992), and Hoffman and Maier (1961) find that gender diversity in particular facilitates creativity. It follows that female representation in top management should be especially beneficial for firms for which innovation is important to strategy and thus is more relevant to the activities of managers throughout the firm (Ginsberg, 1994).
Differences in managerial behavior may also provide context specific benefits. In general, innovation leaves managers more latitude to make decisions, thereby amplifying the importance of managerial effectiveness for firm performance (Castanias and Helfat, 2001). Motivation is also a key contributor to creativity (Oldham and Cummings, 1996). The positive implications of female representation in top management for the motivation and organizational commitment of women managers at lower levels in the hierarchy should accordingly be particularly beneficial where these women managers are more heavily engaged in innovation-related tasks.
Supervisory behavior is another important influence on employee motivation. For example, ‘informational verbal rewards’ have been found to increase intrinsic motivation while ‘controlling verbal rewards’ do not (Pittman et al., 1980; Ryan, Mims, and Koestner, 1983). ‘Supportive’ managerial behaviors have been found to bolster feelings of self-determination and personal initiative and thereby increase intrinsic motivation, whereas controlling supervisory behaviors undermine in-trinsic motivation (Oldham and Cummings, 1996). Research also finds that intrinsic motivation is bolstered by autonomy support, which leads to better conceptual learning, itself a contributor to creativity (Deci and Ryan, 1987). Lastly, empowering and participatory leadership styles have been linked to intrinsic motivation and creativity (Zhang and Bartol, 2010), as well as to more sharing of information in group discussions (Larson, Foster-Fishman, and Franz, 1998), which should lead to the generation of more ideas. It follows that innovation success is a product of ‘bargaining and negotiation’ to ‘accumulate information’ and ‘coalition building,’ not ‘domination of others’ (Kanter, 1983: 157, 1988).3
Intriguingly, these more cooperative, nurturing, and collaborative managerial behaviors overlap considerably with the feminine management style as described above. To the extent that female representation in top management promotes such managerial behaviors, either as directly manifested by the women on the top management team or as a response by women (and possibly men) at lower levels of the firm's hierarchy to a less male-dominated work environment, we would expect female representation in top management to be particularly beneficial for firms for which innovation is important to strategy. These various arguments all imply the following hypothesis:
Hypothesis 2: The effect of female representation in top management on firm performance is positively moderated by innovation intensity.