M2 - U2 - Class 23 - Board Gender Diversity Flashcards
Why so few women on boards
Social identity/social categorization theory
Gatekeeping theory
Social identity/social categorization theory
> Individuals have a strong tendency to see themselves as belonging to i> > Identity groups based on categories (in-group vs. out-group)
Individuals tend to favor in-groups
Gatekeeping theory
> Once becoming powerful incumbents, individuals control others’ access to prestigious positions
Why do we want more diversity on boards? (utility vs justice)
The “utility” case (the “business case”):
Because it leads to better performance.
But how?
Do we have the evidence?
The “justice” case:
Because it’s the right thing to do.
But why?
McKinsey and Company
43% average profitability increase of companies with diverse boards
Do we have the evidence?
If X and Y move together, does it necessarily mean that X causes Y?
What type of evidence would demonstrate that X really causes Y?
Does diversity = productivity
Board gender quotas
If we agree that we want to increase board diversity, how do you achieve it?
How about we mandate it?
Do quotas really work
Short answer: Yes
What are some explanations for the lack of women on corporate boards?
Historically women were not able to hold positions of power and now it is very hard for women to be promoted to these roles due to discrimination, bias and prejudice.
What is the business case for board gender diversity?
We want board gender diversity because it leads to better performance for the company
Is there also the business case for racial diversity on boards?
yes
How do we know whether board gender quotas work? What would acceptable evidence look like?
We see through data collected from companies in the US and EU that binding quotes increase diversity in these roles exponentially and that soft quotas also help considerably.
Are board gender quotas ethically justifiable?
Under Nozicks, no.
Under, Rawls, yes.
Under Utilitarianism, yes.
Under Objectivism, yes.
