How important is the structure of links between companies in achieving better gender representation on corporate boards? In this new paper, Raddant and Karimi develop a model which – building on the influence of homophily on the selection of new board members – examines how long it takes for boards to achieve parity under various initial scenarios regarding women’s participation.
The results show that it is not only important to promote more women to all boards, but that the centrality of those companies that appoint women to their boards also plays a decisive role. Furthermore, the homophilic structural behaviour of the network can be specifically harnessed by encouraging larger companies to promote diversity. In other words: parity can be achieved more quickly if more central companies appoint women to their boards, rather than leaving this task predominantly to smaller, less connected companies.
Diversity in leadership positions, including on company boards, is a key aspect of gender equality. It is significant because it is the key to better decision-making and innovation and, above all, paves the way for future generations to play a part in shaping our society. Numerous studies emphasise the importance of visible role models and the effect that networking has on the success of minorities in leadership positions. However, the networking of companies, the dynamics of including minorities in leadership positions, and the long-term effects on group dynamics and visibility have so far been little researched.
In this paper, we present an empirically grounded model that illustrates these effects for appointment decisions on corporate boards. We demonstrate how biases in the initial placement of minorities, as well as homophily in the appointment of future board members, influence the visibility of minorities over time. We demonstrate that homophily – that is, the fact that the appointment of minorities is influenced by their presence on a board and in neighbouring firms – is a significant factor in the path towards greater equality. We also demonstrate how feedback loops arising from the visibility of minorities on boards influence these dynamics. Our findings show that the pace at which equality is achieved can be accelerated or slowed depending on the distribution of minorities in key companies. These findings have significant implications for policy measures aimed at promoting equality and diversity on corporate boards.