Beyond the Business Case: The Need for Both Utility and Justice Rationales for Increasing the Share of Women on Boards

Abstract

Manuscript type: EmpiricalResearch Question: In the context of the recent introduction of gender representation regulations (quotas) for boards in public limited companies (PLCs) in Norway, this article explores how gender quotas designed to increase the share of women in senior positions are rationalized and/or justified by those who benefit, and asks: what arguments do the beneficiaries of quotas tend to use when discussing their usefulness? Research Findings/Insights: Drawing on qualitative interview data from 19 female non-executive board members, the article illustrates how women draw on utility, mainly the "business case," and individual justice arguments both in support of quotas and to justify their use in helping women attain board positions. Further, it highlights how issues of merit and of gender are entangled with these arguments in often contradictory ways. In so doing, the article challenges and complicates some of the key critiques of gender quotas often found in the public and academic debates. Theoretical/Academic Implications: This article advances theory around the intersection of justice and utility arguments in relation to the use of quotas to increase diversity on boards. Moreover, this article provides empirical support by demonstrating how "the first wave" of women affected by quotas are legitimizing their role on boards in a context in which their role is in question. In addition, this article advances the literature regarding women on boards by demonstrating the need for a discourse about political strategies, such as quotas on boards, that goes beyond the narrow understanding of the business case that has until now dominated public, political, and academic debates. In particular, this article argues for the need to build on both utility and justice logic when making a case for increasing the share of women on boards. Practical Implications: With the current focus on how to increase diversity and the share of women on boards, this study highlights the importance of regulation as well as the importance of reframing the debate using utility and justice lines of arguments rationalized by merit arguments.

Trickle‐down effect: The impact of female board members on executive gender diversity

“…Legislative quotas have been described as “motors of change” (European Commission, , p. 1) and appear to be working, with Norway having achieved a female representation of approximately 42% on the boards of listed organizations (Terjesen et al, ). However, when quotas were first introduced in Norway, private‐sector managers, politicians, and the media were quick to openly voice their opposition, including assertions that quotas would ruin the Norwegian economy (Huse & Seierstad, ; Seierstad, ). Norway is now seen as a success story, with women appointed to boards under the Norwegian quota system recognized as highly qualified and competent individuals who are replacing mediocre men (Huse & Seierstad, ; Seierstad, ).…”

“…However, when quotas were first introduced in Norway, private‐sector managers, politicians, and the media were quick to openly voice their opposition, including assertions that quotas would ruin the Norwegian economy (Huse & Seierstad, ; Seierstad, ). Norway is now seen as a success story, with women appointed to boards under the Norwegian quota system recognized as highly qualified and competent individuals who are replacing mediocre men (Huse & Seierstad, ; Seierstad, ).…”

Mechanisms to promote board gender diversity in South Africa

“…They are therefore more open to diverse opinions, more willing to ask controversial questions and less likely to resort to 'group thinking' (Natesan 2013 Gul, Hutchinson and Lai (2013) found that gender diverse boards reported financial performance in a more transparent and accurate manner than male-dominated boards. A positive business case for board gender diversity (also referred to as the utility argument) was observed by several authors (Adams & Ferreira 2009;Seierstad 2016;Simpson, Carter & D'Souza 2010). In addition to financial benefits, gender diverse boards are associated with proactive social and environmental policies, practices and reporting (Bernardi & Threadgill 2010;Glass, Cook & Ingersoll 2015).…”

“…Arguments for enhanced female board representation range from a moral imperative claiming that it is the 'right thing to do' (Robinson & Dechant 1997) to reasoning that it is the 'bright thing to do' (Terjesen, Sealy & Singh 2009). The former claim centres on the notions of social justice, fairness and equality, while the latter is based on the strategic and financial benefits of board gender diversity (Farrell & Hersch 2005;Seierstad 2016). …”

“…Although initially debated (Bertrand et al 2014;Terjesen & Sealy 2016), mandatory board gender quotas have since been successfully implemented in Norway (Seierstad 2016 Some critics of gender-based legislation contend that gender diversity should rather be encouraged through 'softer' reforms such as voluntary targets (Seierstad 2016). …”