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GENDER DIVERSITY IN THE BOARDROOM: A GLOBAL OVERVIEW (By-Siddharth Kanojia)
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Authors: Siddharth Kanojia
Registration ID: 101022 | Published Paper ID: IJLRA1022
Year : August-2022 | Volume: 2 | Issue: 7
Approved ISSN : 2582-6433 | Country : Delhi, India
Approved ISSN : 2582-6433 | Country : Delhi, India
Email Id: siddharthkanojia.fol@gmail.com
Page No : 10 | No of times Downloads: 0042
Article Details
GENDER DIVERSITY IN THE BOARDROOM: A GLOBAL OVERVIEW
Authored By-Siddharth
Kanojia
“Without
women’s full inclusion at decision making table, We cannot have healthy decision making that is
good for men & women alike”
-Zainab
Salbi
Founder
& former Chief Executive Officer of Washington based Women for Women
International
The area of
corporate governance has realized massive applied significance from last two
decades. There are several reasons contributing to this ever increasing
importance. Namely, the competence of prevailing governance mechanisms in the
market of developed nations. Secondly, the relative efficacy of the corporate
governance systems in the United States of America, Germany, United Kingdom and
Japan (exemplified by added concentrated shareholdings and a protuberant role
for banking institutions).[1]
Lastly, the gradual importance been given to the diversity in the boardroom in
order to increase the efficiency and the outlook of the company. The
effectiveness of monitoring function of the board is often determined by its
size, independence, and composition. The enormous amount of the information on
boardroom gender diversity is pragmatic in nature and foundations its
theoretical reinforcements from management literature. Management theories
cited in preceding studies on boardroom gender diversity are at 3 echelons;
individual, board and consequently, the firm. The often-cited
theories include human capital theory, social identity theory, social network
and social cohesion theory, resource dependency theory, and agency theory.
Human capital theory (Becker, 1985) scrutinizes the influence of an
individual’s cumulative repository of skills, tutelage, and
knowledge in developing productive and cognitive capabilities,
which successively benefit the individual and his/her
organization. among the context of company governance, numerous and distinctive
human capital of a company board is viewed as a key resource for the
firm. Turner and Tajfel (1986) social identity theory inspects the role
of cluster membership in teams, like masculinity, race,
class and profession on an individual’s identity. These identities produce cluster boundaries and
will provide higher evaluations of
in- cluster members, more reinforcing higher entry barriers
for out-group members. for instance, a male-dominated
board might strengthen cluster boundaries and
exclude ladies from board situation. Pfeffer and Salancik (2003)
use the resource dependence theory perspective to contend that board
linkages give counsel, legitimacy and communication
channels. AN extension of resource dependence theory suggests
that numerous administrators give numerous helpful resources
to the firm. Agency theory studies the role of data irregularity and
divergent objectives on the relation between principals and agents. Given
the placement of objectives between managers (agents) and shareholders
(principals), managers might not pursue the outcomes that are within
the interest of shareholders (Eisenhardt, 1989; Johannes Vilhelm
Jensen & Meckling, 1976). Given the organization structure
is geared
toward obtaining
and utilizing resources via contracts (Berle & means that, 1932), the
resource dependency theory and agency theory are the foremost common
quoted management theories within the literature on room gender
diversity.
Considering the theoretical aspect of composition, Its
often been said that a corporate board
of directors is generally anticipated to have four(4) areas of
responsibilities: (i) monitoring and controlling managers; (ii) providing
information and council to managers; (iii) monitoring compliance with
applicable laws and regulations; as well as (iv) connecting the corporation to
the external environment (Carter et al., 2010). The emphasis has been given to
the composition of the board affects how these functions are performed, and
thus, partly determines financial performance. With the purpose to explain the
complexity of diversity in the board room the Terjesen et al. (2008), Carter et
al. (2010) and Mateos de Cabo et al. (2011) have all used the four
sub-theories: (i) Resource Dependence Theory; (ii) Human Capital Theory; (iii)
Agency Theory; and (iv) Social Psychological Theory.
Agency Theory
advocates that a definite board unremarkably upsurges board
independence, that successively intensifies the board’s
ability to observe the management. However, even
supposing additional effectual observation of management may
need associate degree affirmative impact on
firm monetary performance, on the contrary to resource dependence
theory and human capital theory, agency theory provides no clear association
between board diversity and firm monetary performance. Taking
it additional, The Human Capital Theory enhances a number
of the notions derived from resource dependence theory because
it discourses however the education, expertise and
skills of the human capital will profit the organizations.
Further, the resource dependence theory plays an
important role once exploring
the affiliation between the variety of the
company boards and also the monetary performance. in
turn, as ethnic and gender diversity delivers a
broader info set out there for management within
the higher cognitive process; thence, board
diversity will play a vital half within
the company’s monetary performance. On the other hand, Social
psychological theory ponders the group crescendos inside boardrooms, and
forecasts that people who have a majority position have the potential to wield
a inconsistent amount of influence on the group. Therefore, according to the
social psychological theory, the minorities of a diverse set of board members
may not influence the decisions board. Considering the various hypothesis and
outcomes, it is pertinent to analyses the practical situations in various
nations who recently inculcated the provisions for mandatory participation of
women in the boardroom.
In 1983, based on the ten(10)-year growth rate of the
grades of women directors, Elgart (1983) forecast that it could take about 200
years for women to accomplish equivalent representation in top corporate board-
rooms. He probed the reason for the under-representation of women in Fortune
500 corporations and finds that 43% of the companies that did not have even a
single women director on their boards claimed “already filled with qualified
candidates” as a reason. Such an argument is not convincing enough considering
the regular director term and the number of director resignations.
Kesner (1988) in her broader study on directors’
characteristics examines 250 Fortune 500 boards covering 27 different
industries and concludes that extensive experience is required to serve on a
board’s influential committees. The author specifically attributes lack of
experience as the reason for the under-representation of women directors in
corporate boards. However, Bilimoria and Piderit (1994) challenge Kesner’s
(1988) work in several ways; detailed examination of differences in men’s and
women’s experience expanded the range of director characteristics and a
larger set of influential board committees. The authors
study 300 Fortune 500 companies to find evidence for systematic sex-based bias
against women director membership
The participation
of women in the workforce has ever been conventionally inadequate to spheres
like imparting education, handling administration, pursuing hospitality &
nursing which requisites less vigorous activities and sanctioned women the
twofold alternative of being both an auxiliary source of generating an income
and an imperative role of care-giver while preserving the key domestic errands.
Societal pressures and gender stereotyping over the eras ensured that
ladies were restricted to jobs that legitimate them additional flexibility however less medium
of exchange edges, with associate degree conjecture that
ladies either failed to have the capabilities to
accomplish different occupations in male dominated spheres or
just failed to possess interest in them (Hodson and Sullivan 2008).
A study by the ILO Bureau of statistics for ‘Economically
active population from 1950- 2010’, highlights that frugally active women in
the workforce during 1950 were merely 32.4 percent in the age group 15-64
years, forecasting an increase to about 41.2 percent by 2010 with major
intensification happening in the developed nations and mainly across the
agronomic and services segment than manufacturing segment. The ILO report on
Global employment trends for Women 2009, details that there has been an
increase in women involvement in the labour force from 52.40% in 1998 to around
52.60% in 2008, aggregating slightly to 52.70% by the end of year 20091. ILO
study portrays share of women in workforce going up to 40.50% in the year 2008 from
39.90 % in the year 1998. It further portrays an average increase of female
engagement ratio by 1.2% for Adult employment-to-population ratio across
nations, with noteworthy increase happening in Latin America (almost 8.40%);
the only exception being South-East Asia and the Pacific decreasing by 1.10%.
The ILO Global Employment Trends report 2011 details an overall increase in
Female employment-to-population ratio across the world from 48.20% in the year
2000, to 49.20% in the year 2006 with a slight increase in 2010 to 49.40%.2
There
is inordinateness of analysis that has been
shepherded within the last decade particularization women
participation as administrators on company’s Boardrooms. However,
most of the academicians have used totally
different issues for pursuit this information, some
considering solely regular administrator positions across
Fortune five hundred corporations whereas others
have enclosed non-executive director
positions alongside a thought for
smaller corporations with feminine relations acting as
representatives on company’s boardrooms. It thus becomes challenging to
precisely state the percentage of meticulous representation by women on
corporate boards in a global context, nonetheless, for the purpose of this
paper the researcher has contemplated statistical data availed by Governance
Metrics International (GMI) which has conducting surveys annually and
unfailingly tracking progression of women director on boards globally3. The
data pertaining to global survey conducted in the year 2009 and in the year 2010
clearly depicts the Scandinavian countries leading in terms of average women
percentage representation on company boards. For the year 2010, Norway
(34.25%), Sweden (23.89%), and Finland (23.41%) lead across European nations
with countries like Austria (7.73%), Belgium(6.75%), France (9.47%), Germany
(10.46%), Greece (8.53%) showing disparities in terms of progression of women
at boardroom levels. Italy astonishingly notches quite a lower percentage
(3.42%) amongst the European nations, known for its developed economies and
well-structured policies and practices in Corporate Governance. The condition
doesn’t improve across other developed nations like USA (12.21%), United
Kingdom (8.46%), and Australia (8.28%) with Japan having the lowest statistics
at just 0.89%.
Developing
countries, purposely the BRIC nations too do not underline a positive picture
towards women presence in the boardrooms. Whereas, China leads the table with
7.19% representation followed narrowly by Russia (5.21%), India (4.79%) and Brazil
(4.61%) respectively.
Gender Diversity in United States &
neighboring countries
Considering the diversity in the United
States, only 14 percent of board seats are held by women. The percent of female
board chairs has not progressed, remaining at just under four percent. On
the other hand, the boardroom gender diversity in Canada grew to 18 percent, a
5 percentage point increase since 2015. Whereas, only 7 percent of board seats
are held by women and 2 percent of board chairs are women.[2]
EMEA Region
·
In United Kingdom there are no quotas
in place for women on boards, but 20 percent of board seats and 3 percent of
board chair positions are held by women. Contrary to this, Norway became
the first country to introduce a gender quota, has the highest percentage of
board seats held by women (42 percent). Similarly, the percentage of board
seats held by women has increased to 28 percent in Italy.[3]
Australian Continent
Unlike Norway, Australia does not have the quotas for
women on boards; however the numbers continue to improve. The percentage of
board seats held by women is currently 20 percent. Similar to Italy, New
Zealand achieved the strongest growth since 2015, with the number of board
seats held by women increasing to 28 percent.[4]
Asia- Pacific
If compare to other parts of the world the gender
diversity in some of Asia’s leading economies is the lowest.[5] According to the study conducted by Credit Suisse Research Institute in
year 2012, the presence of women in board has sharply increased in countries
like Hong-Kong and Singapore.[6]
Situation in India
India has customarily been a matrilineal society from
ancient (Vedic) times, Women in ‘Hinduism’ have always been considered as
creators of life and caretakers of the family. There is a certain distinction
between how ‘women’ are viewed by the Western and Indian society. While the
Western culture believes, women to be lacking power and ability for assuming
higher roles
and undertaking vigorous work; the Indian philosophy
centered on Hinduism believes that women represent ‘Shakti’ or energy that
needs to be tamed and routed for creation of life (Srinivas et al 1999).
Klostermaier (1994) through his work actually upholds the revered status of
Indian women from ancient times. He reiterates that ancient scriptures from
Vedic era have always portrayed ‘feminine power’ as the ultimate source of life
and giver of energy to the masculine entity (a concept truly depicted as
ardhanarishvara, the representation of God as being half man and half woman).
Indian history speaks of many heroic women with strong will power, viz Sita
from Ramayana, Draupadi and Kunti from Mahabharata. Rig Veda (V. 28) also
depicts women having held high status as “Brahmana’ during those ages with
equal command over scriptures and knowledge as their male counterparts.
However the country gradually transformed in to a
patriarchal society with the advent of Aryans around 1500 B.C. and diminishing
of female power (Liddle and Joshi 1986). This pattern of society was only
reinforced with advent of Muslim rulers, wherein the women started practicing
‘Purdah’ (veil covering head and face) both as part of tradition by Muslim
women; and to escape the wrath ( or bad intentions) of scrupulous Muslim
commanders by Hindu women.
India over the evolving centuries, belittling its
glorious ancient history became essentially a male dominated society. This
gradual progression and patriarchal dominance is today aptly visible with the
country offering diminutive importance to women in terms of acquiring
supremacy, prestige, enviable position or fiscal growth. The very concept of
imparting equivalent education to the female sex alongside their male
counterparts has thereby been criticized and marginalized, with the Indian
government. struggling to restore equivalent rights of education and
progression across other genders.
The recently amended Companies Act 2013 exasperated to
indoctrinate the involvement of women in the leadership positions.
Consequently, the provision appended in Section 149 (1) read with the Companies
(Appointment and Qualification of Directors) Rules, 2014 obligated the specific
class of companies to appoint at least one women director.[7] According to report presented by Prime Database, 76% of the companies
listed on National Stock Exchange have complied with a said provision and
appointed the women director on the board. However, the question arises that
whether the appointment of “at least one” women director will have an impact in
fulfilling the purpose of the amendment & overall functioning of the
company?
With intent to understand an impact of presence of women
director in the boardroom, we should go back in times and figure out the role
played by the women in influencing the culture and values of an organization.
Until late 1970s and early 1980s, the role played by women in corporation
perhaps in business was marginal. However, post 1980 there has been an evident
increase in the number of women tycoons globally, besides, instantaneously, an
upsurge in connected research.[8] Consequently, the presence of women in corporate setup set a pathway
for budding researchers to collect, analyze, study, interpret and conclude the
impact of presence of women in organizations. These researches have revealed
that the female workforce tends to exhibit greater attention to ecological
behaviors and to climate variations and has further
The situation in India does not portray a picture
different to its counterparts in the BRIC nations or its Asia-Pacific cousins.
Women though revered in Indian culture as ’Devi’ or ‘Shakti’, and the identical
standing being accorded in the work domain which tends to be more male
dominated, specifically in regions with patriarchal society composition.
Regions with tradition based matriarchal leanings too exhibit women empowerment
through advancement in education or snowballing contribution at entry and
middle management level positions, nevertheless, the decisional roles at the
top slots still persistently subjugated by the dominant gender. The
interrogation whether cultural factors linked to gender bias plays a impending
role in dejecting the competencies of women administrators has been explored
time and again by many researchers through attitudinal and perceptual studies
(Kundu, 2003, Budhwar et al, 2005), the concept of glass-ceiling effect and
organizational assessments, still put an prominence on factors that may
contribute to bringing about change in the position through organizational and
societal ascendancies has been occasionally explored.
Article Information
GENDER DIVERSITY IN THE BOARDROOM: A GLOBAL OVERVIEW (By-Siddharth Kanojia)
Authors: Siddharth Kanojia
- Journal IJLRA
- ISSN 2582-6433
- Published 2022/08/23
- Volume 2
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- AbbreviationIJLRA
- ISSN2582-6433
- AccessOpen Access
- LicenseCC 4.0
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