Research: Adding Women to the C-Suite Changes How Companies Think

Literally, ALL the reasons companies are more successful when women are at the helm (with the data to prove) via
@HarvardBiz

Corinne Post,
Boris Lokshin,
Christophe Boone

April 06, 2021

We Know that Women in Executive Positions improve Corporate Performance, but HOW does it happen?

Summary:

“It’s well known that firms with greater gender diversity among senior leadership perform better. But what’s less clear is why exactly that is. What are the specific mechanisms that drive the positive business outcomes associated with increasing the number of women in the C-suite? In this piece, the authors share new research that explores exactly how the addition of female executives shifts companies’ strategic approach to innovation. Based on an analysis of more than 150 companies, the authors find that after women join the top management team, firms become more open to change and less open to risk, and they tend to shift from an M&A-focused strategy to more investment into internal R&D. In other words, when women join the C-suite, they don’t just bring new perspectives — they actually shift how the C-suite thinks about innovation, ultimately enabling these firms to consider a wider variety of strategies for creating value.

Intro:

Research has shown that firms with more women in senior positions are more profitable, more socially responsible, and provide safer, higher-quality customer experiences — among many other benefits. And of course, there is a clear moral argument for increasing diversity among top management teams (TMTs). But when it comes to explaining why having more female executives is associated with better business outcomes, and what specific mechanisms cause those positive changes, existing research is much more limited.We set out to explore these questions by examining exactly how firms changed their strategic approach to innovation after appointing female executives. We tracked appointments of male and female executives and analyzed R&D expenses, merger and acquisition (M&A) rates, and the content of letters to shareholders for 163 multinational companies over 13 years to determine how these firms’ long-term strategies shifted after women joined their TMTs.”

 

Read the article at Harvard Business Review