Women and Minority CEOs: Measuring the Effect of Board Diversity on Promotion and Success

• In Event: 389 - Regular Session. Workplace Diversity

Abstract

Previous research on the effects of leadership diversity on firm outcomes has produced inconsistent and inconclusive findings. While some scholars argue that diversity increases organizational equity and enhances performance, others argue that diversity increases conflict, reduces cooperation and harms performance. This study develops and tests a theory regarding the conditions under which the demographic composition of the board affects the advancement and mobility of women and minority executives and firm performance. Using a unique data set of all Chief Executive Officers (CEOs) and Board of Directors (BODs) in Fortune 500 companies over a ten-year period, we analyze the impact of board composition on the promotion and success of women and racial/ethnic minority CEOs. We find that there is a positive relationship between board diversity and the likelihood of a woman or racial/ethnic minority being appointed CEO. We further find that the proportion of women on the board positively influences the leadership success of women CEOs, and the leadership success of minority CEOs is positively influenced when the board consists of influential minority members. Our findings suggest that board diversity is critical for the success of non-traditional CEOs, and increasing board diversity should be central to any organizational diversity efforts.

Authors

• Alison Cook, Utah State University

• Christy M. Glass, Utah State University