Legislating a Woman's Seat on the Board: Institutional Factors Driving Gender Quotas for Boards of Directors

45 Pages Posted: 19 Sep 2013  

Siri A. Terjesen

Norwegian School of Economics (NHH); American University

Ruth V. Aguilera

Northeastern University - Department of International Business and Strategy

Ruth Lorenz

London School of Economics & Political Science (LSE)

Date Written: September 18, 2013

Abstract

Ten countries have established quotas for female representation on publicly traded corporate and/or state-owned enterprise boards of directors, ranging from 33-50%, with various sanctions. Fifteen other countries have introduced non-binding gender quotas in their corporate governance codes enforcing a "comply or explain" principle. Countless other countries’ leaders and policy groups are in the process of debating, developing, and approving legislation around gender quotas in boards. Taken together, gender quota legislation significantly impacts the composition of boards of directors and thus the strategic direction of these publicly traded and state-owned enterprises. This article outlines an integrated model of three institutional factors that explain the establishment of board of directors gender quota legislation based on the premise that the country’s institutional environment co-evolves with gender corporate policies. We argue that these three key institutional factors are female labor market and gendered welfare state provisions, left-leaning political government coalitions, and path dependent policy initiatives for gender equality, both in the public realm as well as in the corporate domain. We discuss implications of our conceptual model and empirical findings for theory, practice, policy, and future research. These include the adoption and penalty design of board diversity practices into corporate practices, bottom-up approaches from firm to country-level gender board initiatives, hard versus soft regulation, the leading role of Norway and its isomorphic effects, the likelihood of engaging in decoupling, the role of business leaders, and the transnational and international reaction to board diversity initiatives.

Keywords: Corporate Governance, Gender Equality, Board Gender Codes, Board Gender Quotas, Welfare State, Left-Leaning Political Coalitions, Path Dependency, Publicly-Traded Firms, State-Owned Enterprises

JEL Classification: G30, G34, J16, N30, N40

Suggested Citation

Terjesen, Siri A. and Aguilera, Ruth V. and Lorenz, Ruth, Legislating a Woman's Seat on the Board: Institutional Factors Driving Gender Quotas for Boards of Directors (September 18, 2013). Journal of Business Ethics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2327576

Siri A. Terjesen (Contact Author)

Norwegian School of Economics (NHH) ( email )

Helleveien 30
Bergen, NO-5045
Norway

American University ( email )

4400 Massachusetts Ave, NW
Washington, DC 20016
United States

Ruth V. Aguilera

Northeastern University - Department of International Business and Strategy ( email )

Boston, MA 02115
United States

Ruth Lorenz

London School of Economics & Political Science (LSE) ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

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