Review on Hillman, Amy J., Shropshire, Christine, Cannella Jr., Albert A.. 2007. Organizational predictors of women on corporate boards. Academy of Ma
Introduction:
The lack of uniformity of female presentation urged the questions of why some organizations have such representation while others do not? And what are the predictors of women on corporate boards? (Hillman et al, 2007)
Authors performed a study to answer previous questions. This Study plays an exploratory role identifying the predictors of female representation on boards of directors taking the first step in the research gap covering this issue as most of the previous studies were focusing on female as exogenous or examine individual methods of influence or advancement rather than organization-level predictors. (Hillman et al, 2007)
Assumptions:
According to Hillman et al. (2007) four hypotheses were put to reach the goal of the trial.
Hypothesis 1 derived from the fact that large firms are the most visible to the public (Salancik, 1979; Suchman, 1995) and are likely to be under the most scrutiny placing pressure on such organizations to increase female representation in their boards.
Hypothesis 2. Mentioned that having female presentation in the firm’s board give great legitimacy in the eyes of the current employees especially if this firm includes large female base employment.
Hypothesis 3. States that depending on the firm-level strategy every firm choose its strategy that determines the benefit from specific links that is affected by the level of diversification. Female representation in the boards depending on the firm’s strategy and level of diversification in the firm depending on market type. Workgroups studies recommend the need for diversity to improve the prospect of having fully debated issues (Cascio, 2004; Sonnenfeld, 2004).
Hypothesis 4. Assumed that firms have female representation on its board of directors will eventually links to other firms in the market having also females on their boards. And that will improve the communication and information between them.
Methods
After putting these assumptions together to answer the study questions, the authors used exploratory macro deductive quantitative methods. Using resource dependant theory a sample of 1000 firms of the largest sales between 1990 and 2003 in USA were taken and some measures were put to classify these data.
A- Female board representation: they checked women presence on boards of these companies through KLD Database, Press Report and gender specific names.
B- Organization Size: Using the logarithm of sales and number of employees they could measure organization size.
C- Industry Labor Force: Using Bureau of Labor Statistics data to identify the percentage of women between employees.
D- Diversification strategy: by using the palepu’s entropy to measure the diversification calculation.
E- Network Effect: by measuring females total number in boards in external firms linked to the main firm.
F- Control Variables: because that study’s data is 14 years; dummy variables were put to control for year fixed effect. That’s beside the board size and organizational age.
Analysis and Results
Gathering all the 14 years data with the previous measures cross sectional analysis was applied to these data. Population-averaged logistic regression models with firm as cross sectional model and year as the temporal unit. It wasn’t appropriate to apply firm-level fixed effect, as number of women in half of the fields didn’t vary. That’s leads to Adjusted generalized estimating equations used to find the correlation between independent variables and fixed effects. They conducted several analyses like multinomial logistic models to confirm the results they got from the analyses. From the analysis results the authors could comment on the practical implementation of changing the independent variables on the likelihood of having women on board.
The analysis of the collected data allowed the authors to provide us with answers to the previous hypothesizes.
1- Organization size was proved to be associated with female presentation and this already goes with mentioning Studies in U.S. pinpointing the firm size importance for women in the boardroom, with larger companies more likely to have at least one woman on the board (Catalyst, 2004; Corporate Women Directors International, 2004; Flynn and Adams, 2004)
2- Industries with high female employees were correlated with more female presentation on board confirmed by data analysis.
3- No data supported that diversification level is associated with female representation on the board and this confirmed by other studies as “Corporate strategic decisions regarding diversification are more likely to be made by management than boards of directors, and to be encouraged by interlocking directors with extra-industry ties. “(Chen et al, 2009)
4- External network effect was positively and significantly proved by the result of the study and that’s mean that the study relate the presence of women in the boards of field’s external links with the presence of women in the board of director of the field.
Limitations
These previous results allowed the authors to answer the questions they asked at the beginning however these results didn’t give the maximum benefit of the trial, as the questions from the beginning didn’t assess the causality. And it was better if the authors searched for causality so we can have data on the actual reasons of female presentations in board of directors of some companies that will help us in prediction the presence or absence of females in any board by collecting information about the firm.
Before going to the trial limitations we have to put in consideration that this trial is one of the first trials covering this point so lack of information and data were a great obstacle faced by the authors. At the same time it paved the road to future studies covering the missing points in this study and exploring additional predictors for female presentations in board of directors.
As mentioned before, not proving causality is a main concern as if it was proved it would be more beneficial. Another important point lacking external validity that limited trial generalization; the sample of the trial as the authors used data from biggest companies in U.S. How about the medium size and small companies? Will the data differ from the data of big companies? Many questions are missing because of the sample used. Also the sample is from U.S only so how about other regions? For example developing countries may have different obstacles to include women in boards “Women in all developing countries face a glass ceiling to advancement to senior management in medium and large organizations” (Burke, 1997). That’s beside that the trial didn’t involve in its measures the internal organizational predictors as promotion and hiring policies that didn’t give the trial full view of the predictors of female presentation.
From other side the authors used only one method missing the triangulation in their trial design that could help a lot in confirming the results of the trial.
References:
• Burke, R. J. (1997) Women in Corporate Management. Journal of Business Ethics; Jun97 Part 2, Vol. 16 Issue 9, p873-875, 3p
• Cascio, W. F. (2004) Board Governance: A Social Systems Perspective, Academy of Management Executive, 18, 97–100.
• Catalyst (2004) Study of 353 Fortune 500 Companies Connects Corporate Performance and Gender Diversity, News release, 26 January 2004 (available from http://www.catalystwomen.org/).
• Chen, R. Dyball, M.C., Wright, S. (2009) The Link Between Board Composition and Corporate Diversification in Australian Corporations. Corporate Governance: An International Review, Mar2009, Vol. 17 Issue 2, p208-223, 16p, 5 charts; DOI: 10.1111/j.1467-8683.2009.00734.x; (AN 36840036).
• Corporate Women Directors International (2004) Comparison Chart of Women Board Directors in Seven Countries (available from: http://www.globewomen.com/cwdi/cwdi.html).
• Flynn, P. M. and Adams, S. M. (2004) Corporate Governance: Changes Will Bring More Women to Boards, Financial Executive, March/April, 32–35.
• Hillman, A. J., Shropshire, C, JR. Cannella, A.A. (2007), ORGANIZATIONAL PREDICTORS OF WOMEN ON CORPORATE BOARDS, Academy of Management Journal 2007, Vol. 50, No. 4, 941–952.
• Salancik, G. R. (1979). Interorganizational dependence and responsiveness to affirmative action: The case of women and defense contractors. Academy of Management Journal, 22: 375.
• Sonnenfeld, J. A. (2004) Good Governance and the Misleading Myths of Bad Metrics, Academy of Management Executive, 18, 108–113.
• Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20: 571–610.
About the Author
Please note this article is part of assignment in Leicester University MBA programme
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