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Diversity benefits and a female angle to creating a sustainable competitive advantage in business

Here’s proof of what we’ve always known…. ¬†females exhibit a distinctive and particularly effective managerial style. Yet, less than a third of the largest U.S. corporations have a single female senior executive, raising the question of whether women are in fact effective as senior managers, and, if so, under what circumstances.
A study by the Social Science Research Centre examined the relationship between female participation in senior management and firm performance as measured by Tobin’s Q, and found a positive association between firm performance and female participation below the CEO level, even when controlling for unobservable firm heterogeneity. ¬†Interestingly there were no positive effects identified from having a female CEO.
The study also revealed that the positive results for female participation are entirely driven by firms pursuing an “innovation intensive” strategy, where creativity and collaboration may be especially important and thus evidence for a “female management style” that enhances firm performance by facilitating teamwork and innovation but is rendered less effective by the leadership attributes of the CEO position.
Given these results, the fact that not all firms have women in senior positions also suggests that an ability to identify, attract, and develop female managerial talent may be a source of competitive advantage.
Click here to access the full article.

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