WOMEN ON CORPORATE BOARDS: KEY INFLUENCERS OR TOKENS?

1. WOMEN ON CORPORATE BOARDS: KEY INFLUENCERS OR TOKENS? Gro Ladegard Associate Professor, Norwegian University of Life Sciences Beate Elstad Associate Professor, Oslo University College

2. Norway: an extreme experiment • The quota rule: Announced on 7th of March 2002; deadline for implementing 40% women ratio in the boardrooms was set to beginning of 2006. Punishment: threat tof • In 2007, the companies listed on OSE had 37% women, public limited liability companies had on average 40%. • Arguments against the law: • ”There are not sufficient amounts of qualified women to fill all the positions” • ”Firms will recruit women friends or companions to fill the quota” • ”Women who are ”quota recruited” will be less respected and have less influence in the boardroom”

3. Investigating effects: Behaviours in the boardroom • We assumed that if there was a lack of qualified women, the present women directors on PLCs should be less qualified, be judged as such, and probably • Have less influence on decisions in the boardroom • Be less included in informal social interaction outside the board meetings • Be less included in information sharing among board members • Behave conformally, and refrain from expressing disagreements in board meetings

4. Method Sample: • Respondents recruited from two databases of women directors. - Web-based questionnaire N=1260), we received 524 completed questionnaires (48,5%), and we excluded respondents with no present board position (66) ): final sample = 458. - PLC: Public liability companies (”quota boards”), OLC: Ordinary limited companies, Other = voluntary, NGOs etc. • Women ratio ranging from 0.11 to 1.00, mean = 0.44. No significant differences of women ratio between the three types of firms. The sample is individual women, not boards.

5. Measures • Ratio: the ratio of women to the total number of board members (employee elected members excluded) • All variables were measured by a Likert response format, ranging from 1-5. • Influence: 3 items : Alpha=.77 • (e.g.: My propositions are approved when decisions are made) • Social interaction: 4 items, Alpha=.84 • (e.g.: I socialise with other board members outside the boardroom) • Information access: 4 items, Alpha=.77 • (e.g.: in my opinion, the other board members share all relevant information with me) • Self-censorship: 2 items (removed a reversed item), Alpha=.62 • (e.g. do you ever refrain from expressing your true opinion, to avoid discussion?

6. Results (all scales 1: low, 5: high) • Preliminary conclusions: • The women directors do not censor their opinions • They perceive to a large degree that all information is shared with them, and that they have large influence on decisions. • They do to some degree interact with the other board members. • ): It appears that they are perceived, and perceive themselves, as qualified and competent.

7. How important is women ratio? • Tokenism theory (Kanter 1977): In a skewed group with a minority of 15% or less, in this case women directors, certain mechanisms will act to suppress the minority. Kanter suggested three mechanisms to be in play in such groups: • Polarization (the majority increase their commonalities and exaggerate their differences towards the minoriy, because they feel uncomfortable or threatened by the minority) • Visibility (the minority feel they are too visible and may perceive performance pressures in the group. One reaction to this may be to keep a low profile and not argue against the majority) • Assimilation (the minority are forced into stereotypical roles by the majority as a condition for integration)

8. Ratio or numbers? How large ratio? • Ratio: Tokenism theory suggests that 15% is a significant limit • Social identity theory: In-groups and out-groups: creates exclusion, polarization and perceived difference. The size of the minority is not specifically addressed in the theory • ”Critical mass” theory: one woman is a token, two are regarded as different, three is ”main-stream” We created hypotheses to test the effects of different ratios on four dependent variables

9. Hypotheses Self-censorship H1 Information sharing H2 Women ratio Informal social interaction H3 Individual influence H4

10. Analysis • Three measures of women ratio: • Dummy of token/non-token: Boards with 17% women or less (no respondent belonged to a 15% ratio). In 98% of the boards, the ”token woman” is also a lone woman. • Minority dummy: 25% or less, i.e. two women • Continuous variable of ratio (from .11 to 1.00) • Control variables: • Board size • Individual age, education level and years of board experience • Dummy of type of firm (PLC/”quota firm” or not)

11. Multiple regression results * p<=.05 ** p<=.01

12. Some conclusions • No difference between “quota boards” and other, on any of the variables • Despite that the women directors in general are • Low on self-censorship • High on information sharing and social interaction • High on perceived influence • Ratio does have an impact on • Informal social interaction between the meetings • Perceived influence • But not on self-censorship and only slightly on information sharing

13. Implications • The effects of ratio on social interaction and influence are valid for all three measures of ratio • This indicates that any increase of women ratio will improve the womens’ positions and reduce social barriers on the board • It also indicated that although ”critical mass” may be an important mechanism, being more than one woman also significantly increases social inclusion and influence • The quota rule does not seem to have any of the effects that was predicted in the discussion of the law • There are social barriers to women’s influence on corporate boards, and some of these may be alleviated through a quota rule