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

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  • María del Carmen Triana

    (Department of Management and Human Resources, Wisconsin School of Business, University of Wisconsin–Madison, Madison, Wisconsin 53706)

  • Toyah L. Miller

    (Department of Management and Entrepreneurship, Kelley School of Business, Indiana University Bloomington, Bloomington, Indiana 47405)

  • Tiffany M. Trzebiatowski

    (Department of Management and Human Resources, Wisconsin School of Business, University of Wisconsin–Madison, Madison, Wisconsin 53706)

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 as a result of low firm performance and women directors have greater 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 greater power, the relationship between board gender diversity and amount of strategic change is the most negative. Results suggest that diversity is double-edged because it can propel or impede strategic change depending on firm performance and the power of women directors.

Suggested Citation

  • María del Carmen Triana & Toyah L. Miller & Tiffany M. Trzebiatowski, 2014. "The Double-Edged Nature of Board Gender Diversity: Diversity, Firm Performance, and the Power of Women Directors as Predictors of Strategic Change," Organization Science, INFORMS, vol. 25(2), pages 609-632, April.
    • Handle: RePEc:inm:ororsc:v:25:y:2014:i:2:p:609-632
    DOI: 10.1287/orsc.2013.0842
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