The Double-Edged Nature of Board Gender Diversity: Diversity, Firm Performance, and the Power of Women Directors as Predictors of Strategic Change

56 Pages Posted: 8 Jul 2015 Last revised: 20 Jul 2015

See all articles by Maria Triana

Maria Triana

University of Wisconsin - Madison

Toyah Miller

Indiana University - Kelley School of Business - Management & Entrepreneurship

Tiffany Trzebiatowski

University of Wisconsin - Madison - Department of Management and Human Resources

Date Written: July 7, 2015

Abstract

Diverse boards have been seen as providing impetus for initiating change. However, diversity may introduce conflict and impede decision-making, which could hinder the ability of the firm to make strategic change, especially in times when firm performance is low. Integrating threat-rigidity theory and team diversity research, we examine how board gender diversity, firm performance, and the power of women directors interact to influence the amount of strategic change. Results support a three-way interaction, indicating that when the board is not experiencing a threat due to low firm performance and women directors have high power, the relationship between board gender diversity and amount of strategic change is the most positive. However, when the board is threatened by low firm performance and women directors have high power, the relationship between board gender diversity and amount of strategic change is the most negative. Results suggest that diversity is double-edged in nature because it can propel or impede strategic change depending on firm performance and the power of women directors.

Keywords: diversity, boards, board of directors, gender diversity, power, governance, strategic change

Suggested Citation

Triana, Maria and Miller, Toyah and Trzebiatowski, Tiffany, The Double-Edged Nature of Board Gender Diversity: Diversity, Firm Performance, and the Power of Women Directors as Predictors of Strategic Change (July 7, 2015). Kelley School of Business Research Paper No. 15-53, Available at SSRN: https://ssrn.com/abstract=2627729 or http://dx.doi.org/10.2139/ssrn.2627729

Maria Triana (Contact Author)

University of Wisconsin - Madison ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

Toyah Miller

Indiana University - Kelley School of Business - Management & Entrepreneurship ( email )

Bloomington, IN 47405
United States

Tiffany Trzebiatowski

University of Wisconsin - Madison - Department of Management and Human Resources ( email )

Madison, WI
United States

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