Although women have increasingly achieved equality in some domains, there are vast differences in their participation at the highest echelons of the corporate world: boards of directors. In the EU, women hold 17.8 percent of board directorships; in the US, they represent 19.2 percent of S&P 500 board directors. Recently, several countries have taken proactive steps to introduce quotas (hard law) that stipulate the gender representation on corporate boards, while other countries have enacted voluntary ‘comply or explain’ legislation (soft law) requiring firms to document their consideration of gender in the director selection process.
The first quota was introduced in Norway in November 2002, which mandated 40 percent representation from any gender. Subsequently, 14 countries have introduced quotas, and 16 added comply-or-explain legislation. The list of countries is as follows (updated from our research published in the Journal of Business Ethics):
|Countries with gender quotas
(PTF = publicly traded firm; SOE = state-owned enterprise)
|Country||Quotas||PTFs||SOEs||Passage date||Compliance date||Sanctions|
|Norway||40%||Yes||Yes||December 19, 2003||2006: SOEs; 2008: PTFs (40%)||Refuse to register board; dissolve company; fines until compliance|
|Spain||40%||Yes||No||March 22, 2007||March 1, 2015; PTFs (40%) with 250+ employees||Lack of gender diversity will impact consideration for public subsidies and state contracts|
|Finland||40%||Yes||Yes||April 15, 2005||June 1, 2005||None|
|Quebec (Canada)||50%||No||Yes||December 1, 2006||December 14, 2011||None|
|Israel||50%/1FBD||Yes||Yes||March 11, 2007; SOEs; April 19, 1999; PTFs||2010: SOEs; None for PTFs||None|
|Iceland||40%||Yes||Yes||March 4, 2010||September 1, 2013; 40% for firms with 50+ employees||None|
|Kenya||33%||No||Yes||August 28, 2010||August 28, 2010||None|
|France||40%||Yes||No||January 13, 2011||January 1, 2017: 500+ employees or €50m revenues||Fees will not be paid to directors|
|Italy||33%||Yes||No||June 28, 2011||Interim 20% by 2012||Fines; directors lose office|
|Belgium||33%||Yes||Yes||June 30, 2011||2011-2: SOEs; 2017-8: PTFs||Void the appointment of any directors who do not conform to board quota targets; suspend director benefits|
|India||1FBD*||Yes||Yes||August, 2013||August 1, 2015||Fines|
|UAE||1FBD||Yes||Yes||December, 2012||Not specified||None|
|Germany||30%**||Yes||December, 2014||2016||Director seat must be left vacant|
This table is updated from our paper. * At least one woman director is required to be on the board for publicly traded and every other public company (August 2013); ** Applies to supervisory boards only. Countries with ‘comply or explain’ legislation for certain sets of firms include Sweden, Ireland, Luxembourg, Malawi, Netherlands, Nigeria, Malaysia, South Africa, Denmark, Austria, the United Kingdom, Germany, Poland, Australia, and the United States.
As can be seen, the quotas are not uniform: they range from 33 to 50 percent gender representation, and include vastly different periods of implementation (usually three to five years) as well as penalties for non-compliance. Many other countries’ leaders and policy groups are debating, developing, and approving legislation around gender quotas in boards, for example in Ireland, Slovenia, Sweden, the United Kingdom, and the United States.
There is a large literature on women on boards (see review) which indicates that women board members take active roles on boards, challenging issues and asking difficult questions, and bring a deep understanding of markets and consumers. A recent meta-analysis of women board members and performance suggests that female board representation is positively related to profitability in certain country contexts.
Scholars are beginning to examine the phenomenon of gender quotas for corporate boards and comply-or-explain legislation. Early research by Morten Huse, Maria González Menèndez, and others on the impact of quotas in Spain and Norway indicates that post-quota female directors are usually younger than their pre-quota counterparts, have less CEO experience, are less likely to be owners/partners or self-employed, are more likely to have backgrounds in finance and economics and have higher levels of education, especially in law or general Masters qualifications. Post-quota female directors’ social capital increases at almost twice as much as men – indicating that female directors occupy an important role as knowledge brokers across firms. The research on the immediate impact of the quotas on firm performance is mixed across studies, and so far inconclusive. There is a need for greater research on the outcomes, at individual, board, firm, industry, and country levels, on the quota and comply-or-explain legislation.
Note: This article gives the views of the author, and not the position of LSE Business Review or the London School of Economics.
Siri Terjesen is an Assistant Professor of Management & Entrepreneurship at Indiana University, a Visiting Professor at the Norwegian School of Economics, and a Visiting Scholar at Catalyst. Previously, Siri has taught at the London School of Economics and other universities. Siri’s research has been published in leading journals. She is co-author (with Anne Huff, Steve Floyd and Hugh Sherman) of the textbook, Strategic Management: Thought and Action. Her research has been profiled in several media outlets in the US, UK and Europe. Siri received her PhD at Cranfield University in the UK (2006). She was a post-doctoral fellow at the Queensland University of Technology in Brisbane, Australia (2006-7). Prior to starting her academic career, she was a consultant with Accenture.