Is There a Female Leadership Style?
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Leadership Finance & Accounting Policy Sep 4, 2012

Is There a Female Leadership Style?

Data suggests the answer is “Yes”

Female leadership styles reduce the likelihood of worker layoffs.

Based on the research of

David A. Matsa

Amalia R. Miller

Listening: Interview with David Matsa on the Female Leadership

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In recent years, women have been making their way in ever-increasing numbers to the uppermost rungs of the corporate ladder, ascending to leadership positions once occupied almost exclusively by men. Women now hold more than 15 percent of corporate officer positions and board seats in Fortune 500 companies, up from about 9 percent of each 15 years ago, and 3 percent of CEO spots, up from one-fifth of one percent. With more and more women earning business degrees—over a third of MBAs awarded in the United States in 2010 went to women—that trend is likely not only to continue, but to accelerate.

All of this got David Mat­sa, an assis­tant pro­fes­sor of finance at the Kel­logg School of Man­age­ment, won­der­ing: will women at the top of the cor­po­rate world be dif­fer­ent sorts of lead­ers than men are? And will those dif­fer­ences have any impact on the busi­ness­es they run?

Ear­li­er work in social psy­chol­o­gy and man­age­ment had found that men and women do indeed have dis­parate man­age­ment styles, with women tend­ing to inter­act and com­mu­ni­cate with their sub­or­di­nates dif­fer­ent­ly than men. But, Mat­sa says, man­age­r­i­al style also has anoth­er mean­ing for econ­o­mists.” Rather than look at how female CEOs and board mem­bers might act day to day, he was inter­est­ed in what sort of larg­er strate­gic actions they might take and how those actions would shape their com­pa­nies. When he looked at pre­vi­ous work in eco­nom­ics, he again saw dif­fer­ences between the gen­ders, but lit­tle of the research exam­ined lead­er­ship. Many of the stud­ies were con­trolled exper­i­ments with the gen­er­al pop­u­la­tion rather than busi­ness­peo­ple, com­par­ing how male and female col­lege stu­dents com­plet­ed an eco­nom­ic game.

Will women at the top of the cor­po­rate world be dif­fer­ent sorts of lead­ers than men are?

For all the pat­terns seen in those stud­ies, it’s not clear if they’d be the same among peo­ple who rise to become cor­po­rate lead­ers, because cor­po­rate lead­er­ship is high­ly selec­tive,” Mat­sa says. A lot of the stereo­typ­i­cal lead­er­ship traits are traits that are asso­ci­at­ed with men.” In oth­er words, women who have made it to the top of the cor­po­rate world might behave dif­fer­ent­ly than under­grads in a lab.

Nor­we­gian Mandate

So Mat­sa and Amalia Miller, an asso­ciate pro­fes­sor at the Uni­ver­si­ty of Vir­ginia, looked to a real-world exam­ple. In 2006, Nor­way adopt­ed a quo­ta man­dat­ing that all pub­licly list­ed com­pa­nies in the coun­try had to hire more female board mem­bers; by two years lat­er, the com­pa­nies’ boards of direc­tors had to be 40 per­cent female.

Mat­sa and Miller exam­ined how this marked, sud­den increase in female lead­er­ship had impact­ed Norway’s list­ed cor­po­ra­tions. Using account­ing infor­ma­tion for Nordic com­pa­nies from 1999 to 2009, they found 104 Nor­we­gian firms affect­ed by the quo­ta and matched them to unlist­ed Nor­we­gian firms, as well as list­ed and unlist­ed firms in oth­er Nordic coun­tries, for com­par­i­son. These were com­pa­nies sim­i­lar in size, indus­try, prof­its, and so on, but untouched by the man­date to hire more female board members.

In most ways, Mat­sa and Miller found, the quo­ta had no effect on firms; rev­enues, most costs, and rates of merg­ers and acqui­si­tions all stayed about the same. The costs were high­er in one area, how­ev­er. We saw that labor costs were high­er,” Mat­sa says, but it didn’t seem like it was com­ing from high­er wages as much as it was com­ing from high­er rel­a­tive employ­ment.” Com­pa­nies impact­ed by the quo­ta were not lay­ing off work­ers as often as com­pa­nies unaf­fect­ed by the new law.

Since the law forced oth­er­wise sim­i­lar com­pa­nies to hire women in lead­er­ship roles at a giv­en point in time, it let the researchers do some­thing rare for an obser­va­tion­al study: draw a fair­ly strong line between cause and effect. It’s clear­er there that it’s not some­thing from the busi­ness envi­ron­ment that’s lead­ing them to have women in the lead­er­ship of the firm” and caus­ing the work­force dif­fer­ences as well, Mat­sa says. Instead, the quo­ta changed only one thing about the firms, the pro­por­tion of women on their boards — and that changed how often the firms laid off workers.

While the data can­not say defin­i­tive­ly why this is, Mat­sa and Miller sug­gest two pos­si­ble rea­sons. Female lead­ers may have dif­fer­ent val­ues relat­ing to the work­force com­pared with men in the same posi­tion. For exam­ple, an ear­li­er study of Swedish cor­po­rate board mem­bers found that women placed a high­er pre­mi­um on what are known as self-tran­scen­dent val­ues, things like benev­o­lence and uni­ver­sal­ism, and less on self-enhance­ment val­ues, like achieve­ment and pow­er, than their male col­leagues. These dif­fer­ences might make lead­ers more sen­si­tive to the needs of their work­ers, and less like­ly to lay them off even when demand is low.

On the oth­er hand, Mat­sa and Miller point out, female lead­ers may sim­ply be retain­ing their work­ers because it can be a sound long-term eco­nom­ic strat­e­gy. Lay­offs save mon­ey in the short run but can poten­tial­ly be cost­ly in the long run,” Mat­sa says. Hir­ing and train­ing a new work­force is a large expense that can be avoid­ed by keep­ing the work­force you already have.

Mat­sa and Miller also found that the dif­fer­ences in lay­off rates after the quo­ta was imple­ment­ed could not be explained by the rel­a­tive youth or inex­pe­ri­ence of the new female direc­tors. The aver­age age and expe­ri­ence of boards was sta­ble over­all fol­low­ing the quo­ta, and the rel­a­tive decline in lay­offs hap­pened at firms whose boards were more expe­ri­enced and old­er than average.

Gen­der in the Boardroom

In a fol­low-up study, Mat­sa and Miller looked at work­force reduc­tions in the Unit­ed States dur­ing the recent reces­sion. Instead of gaug­ing gen­der bal­ance in the board­room, as they had in Nor­way, the researchers looked at the gen­der of the major­i­ty own­er of pri­vate­ly held com­pa­nies. They inves­ti­gat­ed whether female-owned busi­ness­es in the Unit­ed States would, like busi­ness­es with more female board mem­bers in Nor­way, lay off few­er work­ers than their male-run counterparts.

Mat­sa and Miller com­pared 2006 – 2009 data for more than 2,000 pri­vate­ly owned, female-run Amer­i­can com­pa­nies and male-owned busi­ness­es that were sim­i­lar in indus­try, size, and prof­itabil­i­ty. Again, they found that com­pa­nies led by women were far less like­ly to reduce employ­ment, mak­ing 25 per­cent few­er lay­offs than firms run by men. The gen­der dif­fer­ence per­sist­ed even after account­ing for the firms’ finan­cial con­di­tions and the owners’ages, expe­ri­ence, edu­ca­tion, and finan­cial wealth.

This find­ing helps to con­firm that the Nor­way results don’t seem to be spe­cif­ic to the quo­ta,” but rather some­thing about how female lead­ers run their busi­ness­es, Mat­sa says. Even in a set­ting with­out a quo­ta, you still see a sim­i­lar pat­tern.” It is like­ly, he says, that the same pat­tern holds across a vari­ety of cor­po­rate settings.

About the Writer

Valerie Ross is a science and technology writer based in New York, New York.

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