FIU research finds entrepreneurial-oriented companies have fewer women on their boards.

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FIU research shows that more entrepreneurially oriented firms tend to have a proportion of female directors that is substantially below the average proportion in their respective countries. The study will be published in an upcoming issue of the Journal of Management Studies.

Even with increasing worldwide efforts to have more female representation on corporate boards, a considerable number of companies have fewer women on theirs when compared to other companies in their countries. The study shows that companies might make board gender decisions based in part on what they believe will maintain their entrepreneurial orientation.

Entrepreneurial orientation is defined as the extent of innovativeness, proactiveness, and risk taking. In the study, it was measured as a composite score based on research and development intensity, annual earnings reinvested within the company, and idiosyncratic risk in stock price.

“One driver is that traditionally, entrepreneurship has been associated with male traits, including risk-taking and innovativeness,” said Stav Fainshmidt, associate professor of international business and one of the researchers. “For that reason, companies whose competitive advantage is rooted in being entrepreneurial, are more likely to have corporate leaders who might think that having more female directors could damage that nature.”

However, the research revealed that such perceptions might be lessened in companies where there’s a history of exposure to and working with female leaders - female CEOs or in the top-tier management team.

“That might help gatekeepers see that women can be just as entrepreneurial as men and contribute to the entrepreneurial orientation,” Fainshmidt said.

The researchers analyzed data from 2012 to 2018 on the proportion of women holding seats on the boards of 2,433 publicly traded companies in 16 countries - Australia, Brazil, Canada, China, Finland, France, Germany, India, Japan, Mexico, the Netherlands, Norway, Sweden, Switzerland, the United Kingdom and the U.S. They found that more entrepreneurially oriented firms tended to have a proportion of female directors that was substantially below the average proportion in their country.

Women occupied a record 33.5% of the U.S. S&P 500 companies’ board seats at the end of 2023. In Japan only 18% of directors are women and the number reached 40% in Britain last year. Belgium, France and New Zealand stand close to 50%.

While the world is making progress toward better representation of women on corporate boards, a lot of companies and countries are still behind, Fainshmidt noted. But companies can take the lead to find solutions.

“Providing firms with incentives to develop leadership for female managers, accelerate exposure at the higher levels,” Fainshmidt said. “Training for directors on issues such as board composition, corporate governance, leadership, organizing a board; companies could take it as seriously as they take employee training.”

Fainshmidt conducted the research with Fatemeh Askarzadeha of the University of Houston-Downtown; Krista Lewellyn of Florida Southern College; and William Q. Judge of Old Dominion University.