Gender Diversity in the Board Room & Its Impacts: Is the Example of Norway a Way Forward?

29 Pages Posted: 12 Dec 2014 Last revised: 9 Oct 2015

See all articles by Beate Sjåfjell

Beate Sjåfjell

University of Oslo - Faculty of Law

Date Written: December 11, 2014

Abstract

It seems logical and obvious that limiting oneself to only men or only women in any corporate setting may diminish the potential for constructive and open-minded discussions that bring a company forward. Detrimental group-think is a risk in any very homogenous context. Conversely, the positive effects of diversity – gender, cultural and age – are well-known. Experienced business people will tell us that having a heterogeneous board is fruitful. So in the words of one of the male contributors at the gender diversity conference at Deakin University October 2014 where this paper was presented: “why don’t they get it”? Why the resistance, or formulated positively: the very slow progress, which underpins the discussion of whether to legislate to achieve change?

The example of Norway is striking here. Norway is one of the most egalitarian countries with a high level of gender equality and a high percentage of women at work. Nevertheless, as this article outlines, mandatory rules appeared necessary to bring about the desired change in the composition of the boards – business did not do this on its own, in spite of a long grace period. The explanation to why they don’t get it seems to be a combination of be path-dependency, power and money.

This article goes on in Section 2 to present the coup that got us this rule as the first country in the world and its innovative legislative approach. In Section 3, the Norwegian rule is elaborated on including its background as a corporate governance initiative rather than a gender equality one and the compliance by Norwegian companies. In Section 4, the article discusses the effect of the rule after first elaborating on the challenges and uncertainties connected with such an investigation. With these caveats, the corporate governance significance of gender diversity is discussed, drawing on empirical studies of the effect on the performance of the companies. This may be especially relevant for the discussion that the Norwegian rule has inspired in many jurisdictions around the world. The article also discusses the potentially broader impact of gender diversity in the board room, including the pressing question of whether gender diversity in the board room can help companies create sustainable value within the planetary boundaries.

Section 5 concludes with some reflections as to whether Norway indeed here is an example to follow.

Suggested Citation

Sjåfjell, Beate, Gender Diversity in the Board Room & Its Impacts: Is the Example of Norway a Way Forward? (December 11, 2014). Deakin Law Review, Vol 20, No 1 (2015), pp. 25-52; University of Oslo Faculty of Law Research Paper No. 2014-48; Nordic & European Company Law Working Paper No. 15-10. Available at SSRN: https://ssrn.com/abstract=2536777 or http://dx.doi.org/10.2139/ssrn.2536777

Beate Sjåfjell (Contact Author)

University of Oslo - Faculty of Law ( email )

PO Box 6706 St Olavsplass
Oslo, 0130
Norway

HOME PAGE: http://www.jus.uio.no/ifp/english/people/aca/beatesj/

Register to save articles to
your library

Register

Paper statistics

Downloads
230
Abstract Views
1,981
rank
135,709
PlumX Metrics