The Strategist

Guoli Chen Says: Women On Boards Have Significant Implication In Business


04/04/2015 - 14:11



Guoli Chen offers insightful research contents to shed some more light in the women ratio in a corporate Board. He informs about the pros and cons of the need of women members in a business.



France- 01 April 2015- Guoli Chen who is an assistant professor of ‘Strategy’ in INSEAD, discusses about the need of women staff in a corporate board. According to him till present date, people talk a lot about increasing the ratio of women in any representative board but there has been little done to act on it. In order to bring in a faster change most Governments have followed Norway and issued quotas for both the gender in public companies. Though, this issue can be debatable on its meritocracy, yet no such consistent and satisfying data have been gathered to demonstrate the effect of gender equation in the performance level of a company. Sometimes during 1970’s there was an academic upheaval which set to explore the unequal gender distributions especially in the fields of leaderships. The studies sought to highlight whether both the gender would have something different to bring to the table as they differed in preferences, personalities, cognitions and characteristics. Consequently, there were suggestions of men demonstrating more leaning towards risk-taking behavioural patterns as compared to women. Yet, on the practical ground probably given the constant varying quotients this behavioural analysis depends from situation to situation. Coming back to question of what difference does a woman director make in a board decision, Guoli Chen says: “’In’ and ‘out’ groups prompt more thoughtful decisions”. In order to arrive at the answer, an attempt was made by stressing on the idea that the individualistic traits get coloured in a moment of collective decision process. The said theory emphasises on the a behavioural aspect that in a large group individuals tend to create various sub categories in their mind, the sub-group wherein the individual has put himself becomes a part of his own identity which is equivalent to a bigger “us”; whereas the rest becomes a “them”. In such situations, people tend to be more competitive rather than working in harmony and the “marginalised” group, maybe consisting women, tend to demonstrate their uniqueness. This trait assures that if there are women in a corporate board then mostly decisions will be taken after due considerations rather than jumping into a hurried conclusion. Moreover, a female director’s decisions will differ from a male director depending on their expose and experiences in their career-life. However, Guoli Chen along with an assistant professor of ‘Management’, Craig Crossland, in their research paper titled “Board Representation and Corporate Acquisition Intensity”, scrutinized the “gender characteristic influence” in a decision making process. Consequently what they observed was something interesting. The increased female influence led to slower and fewer finalizations of deals as compared to the situations wherein male influence was in majority. Moreover, the sizes of the acquisitions were also smaller in the case of the former. Yet, keeping the “bigger picture” in mind, one sees that, as Guoli Chen puts it: “...the issue of women on boards has substantial practical implications for firms. This isn’t necessarily because women are smarter, wiser or more diligent, although that may be true. It’s because diverse groups tend to make more thorough, more comprehensive decisions.” References: http://knowledge.insead.edu/women-in-business/why-do-corporate-boards-need-more-women-3728