BOARD GENDER DIVERSITY AND ORGANIZATIONAL PERFORMANCE: A POLEMICAL REVIEW

Abstract

This study reviews literature on board gender diversity and its impact on board’s and firm’s performance. The case for diversity is perceived based on equity and fairness and economic or business case. The normative case agues the proposition that women and ethnic minorities are worthy of equitable opportunities to be appointed on boards and on top management positions. Theories such as agency, stakeholder, and resource dependency theory suggest that increased diversity would allow for a broader perspective and improved fiduciary role of boards, thus improve firm performance. However, there are contradictory results from the empirical evidence. The debate is that, there is no perfect agreement in the literature as to whether increased levels gender diversity amongst the board of directors contributes to enhanced company performance. Review of 16 literature shows that 10 studies find a positive relationship between gender diversity on board and firm performance. On the other hand, 3 of the reviewed literature reveal a negative correlation between gender diversity and performance while, 3 others find no evidence of significant relationship between gender diversity and performance. Therefore, this study suggests considering the normative case to increase women representation on board because business case is controversial, and may lead to more discrimination against female.