What Really Changes after Women Enter Top Management Teams?
Women have long fought the good fight for equality in the workplace. When they find themselves victorious and entering leadership positions, however, things can go in different directions. Allow me to explain our research.
Our study is one of the first that changes the question from “What is the link between women at the top and firm performance?” to “How does the linkage occur?”
What do we find?
- After the appointment of women to a top management team (but not after the appointment of men), the team’s way of thinking shifts in two ways: it becomes both
- more oriented toward change and
- less risk-seeking.
- The appointment of female executives has a larger influence on the C-suite’s way of thinking when women can more readily assimilate into the top management team — specifically
- when they join a team that already has a female presence or
- when they are part of a smaller cohort of new C-suite appointees.
- The changes in thinking that occur after women join a top management team alter the path that firms later choose to renew their strategic innovation capabilities. After becoming more oriented to change and more risk-averse following the appointment of new female executives, firms:
- tone down their acquisition of innovation capabilities (that is: do fewer tech-based mergers and acquisitions) and
- build up their innovative capabilities internally (in other words: invest more in research and development)
What is going on?
We can’t tell, from the way we designed our study, why adding women causes these changes in the top management team’s thinking. But we think that a look at women’s path to executive positions might shed some light on the type of thinking they bring to the top management team.
To prove themselves worthy of promotions to the highest corporate levels, women need to walk a difficult tightrope. In order to counter stereotypes, they learn to stand out by promoting visionary and novel strategies. At the same time, they cannot afford to make any mistakes because of the high career-derailment price that comes with token-based hyper-visibility. And so, they learn to carefully weigh the risks of their innovative strategies. Evidently, their thinking sways the elite groups they join.
How useful are these findings and for whom?
For firms who are beginning to add women to their top management teams in the hopes of renewing their executive thinking, these findings show that just adding a woman to an all-male top management team is unlikely to produce any novelty. So, it’s important to avoid hiring women as solos on these sorts of teams.
If female solo status is unavoidable, the team leader and members should pay particular attention to ensuring their new female peer is well and quickly integrated into the team.
For firms wondering what adding women to top management teams may bring to a firm, this study provides an example of how it can widen the range of possibilities a firm might consider in its quest to create value and, ultimately, can change how a firm goes about achieving its strategic objectives.
How did we come up with these results?
Our findings came from an analysis of a sample of 163 multinational firms headquartered in 20 OECD (The Organisation for Economic Co-operation and Development) countries and representing multiple industries. All are actively involved in strategic innovation actions (e.g., technology-based mergers and acquisitions and firm research and development) during the observation period, 1998-2012.
Over that 13-year period, we observed what changed within firms after women joined the C-Suite. To analyze how the thinking of firms’ top management teams changes after female executives’ appointments, we analyzed changes in company language from year to year. Then, we determined whether the changes in thinking brought on by these appointments changed how executives address an important strategic challenge: the renewal of a firm’s innovation capabilities.
Post, Lokshin & Boone. Published Online Nov 2020. “What Changes After Women Enter Top Management Teams? A Gender-based Model of Strategic Renewal.” Academy of Management Journal. https://doi.org/10.5465/amj.2018.1039
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