Communications of the ACM
Management Gender Diversity More Valuable During Adversity
A study by an international team of researchers suggests that gender-balanced management teams help businesses, and their impact is more significant when companies face adverse conditions.
"When Does Gender Diversity Matter the Most?" was led by the Wo+Men's Leadership Centre at the University of Cambridge Judge Business School.
The study was intended to address confusion over the value of gender diversity in executive teams by looking at gender balance in top management teams in China.
"While some reports have shown that having more women on corporate boards improves company performance including sales, profits, and company value, academic research has, so far, not examined gender balance in top management teams, which are more visible day-to-day leaders of businesses," says author Stephen Zhang with the University of Adelaide.
The study examines 387 senior executive team members running 122 Chinese high-tech small and medium-sized enterprises (SMEs) that were at least six years old and had between 10 and 500 employees.
China is amongst the countries with the highest percentages of females in senior leadership roles, particularly in small and medium sized enterprises. The number of women involved in science, technology, and entrepreneurship has increased sharply in the last few years. In 2013, the number of middle-ranking and senior female professional and technical personnel reached 44.1 percent.
"The fuller spectrum of gender ratios in top management teams in China allows us to test the effect of gender balance in senior business leaders," Zhang says. "In contrast, the number of companies with women in their top management teams in other parts of the world was way less than 50 percent and too low to test the effect of varying gender ratios."
Other authors are Sucheta Nadkarni and Shi Tang at the University of Cambridge Judge Business School, and
Liqun Wei at Hong Kong Baptist University.
"We found that gender-balanced teams carry benefits in terms of psychological safety," Zhang says. "Psychological safety is an environment in which staff feel comfortable enough to speak openly and freely in discussions affecting the company.
"When a company has high psychological safety, the employees feel that they are safe to speak up and are less concerned about the possible consequences of raising issues and problems in the company," Zhang says.
Businesses whose employees are more likely to speak up are able to address issues and improve their performance, Zhang says.
"We found that the benefit of gender balance to be greater in firms that face greater adversity; a pertinent point now as many businesses are facing troubles due to the ongoing pandemic," he says. "This is one of the first studies to reveal the effect of gender balanced senior executive teams."
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