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Gender Diversity in the Boardroom and Firm Performance: What Exactly Constitutes a “Critical Mass?”

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  • Jasmin Joecks
  • Kerstin Pull
  • Karin Vetter

Abstract

The under-representation of women on boards is a heavily discussed topic—not only in Germany. Based on critical mass theory and with the help of a hand-collected panel dataset of 151 listed German firms for the years 2000–2005, we explore whether the link between gender diversity and firm performance follows a U-shape. Controlling for reversed causality, we find evidence for gender diversity to at first negatively affect firm performance and—only after a “critical mass” of about 30 % women has been reached—to be associated with higher firm performance than completely male boards. Given our sample firms, the critical mass of 30 % women translates into an absolute number of about three women on the board and hence supports recent studies on a corresponding “magic number” of women in the boardroom. Copyright Springer Science+Business Media Dordrecht 2013

Suggested Citation

  • Jasmin Joecks & Kerstin Pull & Karin Vetter, 2013. "Gender Diversity in the Boardroom and Firm Performance: What Exactly Constitutes a “Critical Mass?”," Journal of Business Ethics, Springer, vol. 118(1), pages 61-72, November.
    • Handle: RePEc:kap:jbuset:v:118:y:2013:i:1:p:61-72
    DOI: 10.1007/s10551-012-1553-6
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    More about this item

    Keywords

    Diversity; Gender; Supervisory board; Performance; G30; J16;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination

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