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Female Directors: More Benevolent, Less Power Oriented, Less Risk Averse

By Melissa J. Anderson

Gender differences are discernable at the director level, according to a new study published in the journal Management Science.

The authors, Renée B. Adams, Australian School of Business, University of New South Wales, and Patricia Funk, Universitat Pompeu Fabra and Barcelona Graduate School of Economics, surveyed almost 1,800 directors and CEOs of Swedish publicly traded firms. They found that the values of female directors differed from male directors – and women in the population at large.

Women who have reached the director level are more benevolent than their male peers and less power oriented – and both of these results were anticipated. What surprised the researchers is that female directors were more willing to take risks than their male peers – which runs contrary to the risk aversion of women in the general population.

They write: “Despite being in the same position as male directors, female directors in our sample are not indistinguishable from male directors in their priorities.”

Power and Risk

The study “Beyond the Glass Ceiling: Does Gender Matter?” suggests that gender diversity does indeed impact the values of a board of directors. They surveyed directors on values, risk aversion, and boardroom participation. First of all, the research showed, female directors are more benevolent and less power hungry than male directors. Adams and Funk write:

“Male directors care more about achievement and power than female directors, and less about universalism and benevolence. This is consistent with prior literature (e.g., Schwartz and Rubel 2005) that has found that across cultures men consissently attribute more importance to self-enhancement values (achievement and power), whereas women emphasize self-transcendence values (universalism and benevolence).”

This was not surprising to the researchers. But what they found next was more interesting.

“However, in contrast to the broad patterns documented for different cultures, female directors are less security and tradition oriented and care more about stimulation than male directors. Surprisingly, but in line with our finding that women in the boardroom care less about security than men, female directors are also slightly more risk loving than their male colleagues.”

Adams and Funk assert that even though this data is based on Swedish respondents, it likely holds true for other countries as well – they point out that, even though Sweden is generally considered more gender equal than most other countries, the observable data on directors is similar internationally. In fact, they say, female directors in Sweden are remarkably similar to those in the United States – even down to the pay gap.

Reasons for Gender Differences

The researchers consider three potential reasons for the gender differences in values, risk, and performance at the director level.

First of all, because of perceived gender differences, they suggest that it’s possible that firms choose female directors who “exhibit a more extreme focus on certain values than their male colleagues.” Second, they suggest, it’s possible that women who pursue a career that will lead them to board service likely posses different values than those who choose other career paths. And finally, the researchers suggest, that it could be the other way around. They explain:

“However, it is even more likely that the costs of choosing a career path lead female director candidates to be different from male candidates in unobservable characteristics such as values. … To the extent that career costs lead female director candidates to differ significantly in their values from both the population and male director candidates, gender gaps in values will appear in the boardroom.”

Figuring out potential reasons for the gender differences will require further research. But, they suggest, companies looking to gain more diverse points of view, and avoid the so-called “group-think” that many people believe led to the recent economic meltdown, can benefit by hiring more female board directors – regardless of the underlying reasons, the addition of diverse values will create more robust boardroom discussion and oversight.

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