Female bosses make companies more innovative

April 20, 2016 - 06:25

Companies launch more new innovative products if 30 per cent or more of their management team are female, shows new research.

Companies with women in leadership roles are on average more innovative and launch more products, shows new research. (Photo: Shutterstock)

More women in leadership roles can increase innovation, shows new research.

Companies are on average more innovative and produce more products when women fill top positions.

"We find that there is on average a positive effect of having more female managers. By hiring more female managers, companies can be more innovative," says co-author Jacob Lyngsie, from the Department of Strategic Management and Globalization, Copenhagen Business School, Denmark.

Women are not better managers than men and vice versa

The advantages of hiring more female managers often crops up in the intense debate on women executives and quotas. But the argument has so far rested on what Lyngsie calls "anecdotes and bad data.”

"We cannot say that women are better than men or that men or better than women. Our results suggest that we should simply have more women in senior management. But our results also show that it’s far more complex, and we have to talk [this complexity]," he says.

Lyngsie saw that benefits came from having many women in top management but he also saw a negative effect, when companies made their first female managerial appointment.

And the positive effect disappears if the company has lots of female employees.

The research has just been accepted for publication in the Strategic Management Journal.

Researchers had access to unique data

Lyngsie obtained the data from Statistics Denmark who recorded data on innovation and new products from 392 Danish companies in 2009 and from the Danish Integrated Database for Labour Market Research, which contains information on each individual employee-- wages, education, work experience, and gender.

While previous research has studied the impact of female leaders in monetary terms, the new project considers how leadership decisions influence the development and launch of new products to the market.

Few women in management has a negative effect

The researchers saw a clear trend: Companies with many women in top roles were more innovative. But only if there were enough women--just one female manager in a company was associated with reduced innovation.

"The first female manager will find it very difficult to [make herself heard among the others in top management. It’s like an old boys network that can perceive the first female leader as a far greater threat than subsequent women," says Lyngsie.

A management team of at least 30 per cent women had a positive effect on innovation. But Lyngsie stresses this should not necessarily be the absolute goal for companies.

“The positive effect begins long before women become the majority in management teams,” says Lyngsie.

"It’s related to what is called re-socialisation mechanisms, that is, the attempt to shift the focus from 'we're male and female senior managers' to 'we are just top executives'. The more women enter into top management, the less they will be seen as a new and unique threat and the easier it becomes to get rehabilitation mechanism to work," he says.

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Read the Danish version of this story on Videnskab.dk

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Translated by
Catherine Jex