Representation of women
The goal of affirmative action is to increase equality among specific groups. Although policy-makers often see equality as merely equal representation of each group, equality is multifaceted and can be measured along many parameters. In the specific case of investigating the use and effect of affirmative action on equality on boards of directors, we argue for the need to define our understanding of equality. For example, a key aim of the gender representation law was to increase the influence of women. Although representation is a first step towards influence, influence cannot be derived from representation. Following Kabanoff (1991), we argue that equality goes beyond representation, and understand equality as the ability to influence. In this context, we will look at three parameters of influence in addition to representation of women on corporate boards.
An interesting aspect is whether affirmative action is successful in creating equality where the affected companies moves beyond the minimum level towards a representation that reflects the wider society. An underlying motivation for the Norwegian Government in introducing the gender representation law was utility, which included the business case for diversity. Specifically, the Norwegian Government (2008) argued that competence to maintain a competitive position is homogenously distributed in the population, and thus, companies should draw on roughly the same number of men and women. Although a high number of women are in paid work and women are to a greater extent than men tertiary educated, a disproportionally high number of men compared to women were on public limited companies' boards. According to the utility argument, as the legislation brings more women onto boards, women will be seen as able for the task, and thus, companies will draw on women beyond the required representation.
The utility arguments have also been identified in gender research (for a review, see Skjeie and Teigen, 2005). The focus of the argument is on the organizational advantage gained by including women (Hernes 1987; Helgesen 1990). It states that women are an under-used pool of talent, have a distinct set of perspectives, a broader point of view, and extended legitimization bases. In addition, Helgesen (1990:xiii) illustrated the argument by stating: "working for a variety of companies over the years had convinced me that most organisations had absolutely no idea how to take advantage of the talent, skills, and ideas of the ever increasing number of women who were joining their ranks". She further argued that gender differences exist in management styles, attitudes, experiences, interests. Hence, a greater number of women in male-dominated companies will contribute to new thinking and ways of solving problems, which could result in higher productivity and a better working environment. In a board setting, Huse and Solberg (2006) found that women have the ability and do contribute positively to the company.
Given the focus on utility arguments for introducing the gender representation law in Norway, we would expect the proportion of women on boards to continue to rise after the end of the implementation period and increase above the minimum requirements. An interesting factor is therefore to investigate further whether the board or the election committee is persuaded of the business case for having women on boards. To investigate this question, we put forward the following hypothesis:
Hypothesis 1a: The proportion of women on boards will continue to rise after the end of the implementation period and increase above the minimum requirement.
Women and the role of chair
The chair of the board is often seen as the most influential director on a board by being responsible for managing the board, setting its agenda, and having a close relationship with the chief executive officer. Fiss (2006: 1015) pointed out that "the relationship between the CEO and the board chair has been identified as a linchpin of successful corporate governance" and that, while the chair runs the board, the CEO runs the company. Hence, both positions are extremely important for companies, yet none of the positions are affected by any gender representation laws.
Through legislating, a minimum level of representation within a group can be reached by quotas. Several studies point to the importance of having a balanced setting for group characteristics (such as sex stereotypes) to be eradicated (Kanter 1977). Kanter's (1977) seminal study emphasized the importance of numbers and how a roughly balanced setting will neutralize the group characteristics, expectations and stereotypes that are present in an unbalanced setting at the organizational level. Women are often considered simply token when there are less than 15 percent women in an organization. According to Kanter (1977), sex is still relevant in a tilted group (i.e., when women compose between 15 and 40 percent of the organization). Conversely, when each sex is represented with more than 40 percent, the organization could be considered balanced. In this case, as an absolute majority group does not exist, sex would not be a substantial group characteristic. In fact, groups are likely to be formed due to other characteristics.
As only one person can hold the chair-position on a board, legislation cannot be enacted to ensure a gender balance. Therefore, the proportion of women chairs across all companies is an ideal variable for studying whether the affirmative action aimed at the directors in general has removed barriers to entry for women in related positions of influence. As the legislation ensures that boards are balanced groups, gender should become irrelevant, even for the role of chair (Kanter 1977). Thus, we hypothesize the following:
Hypothesis 1b: Given that boards are balanced groups, we would expect that women have also increasingly occupied the role of chair.
We start by investigating the direct effects of the gender representation law. Specifically, we look at whether the proportion of women on boards has continued to rise above the minimum requirement after the end of the implementation period. Figure 1 shows the average proportion of women on boards. This proportion shows that representation of women on boards has increased greatly over the observation period. In particular, the highest increase occurred between mid-2005 and 2008, which is the period between the enforcement of the law being announced and coming into force. The most dramatic increase happened in 2007, the final year of the implementation period. Moreover, from January 2008 to August 2009, there has been little change in the proportion of women. This could signify that companies are simply complying with the law, and not moving towards further equality between the sexes. As the proportion of women on boards has not continued to rise after the end of the implementation period and not increased above the minimum requirement, hypothesis 1a is rejected.
Hypothesis 1b questioned whether the gender representation law had any effects on the sex of the individuals in the most senior positions. Although women have become better represented during the implementation period of the law, Figure 1 also shows that few boards are chaired by a woman. From the beginning of the implementation period to August 2009, the proportion of boards led by a woman has increased from 3.4 percent to 4.3 percent. This suggests that the law has had a marginal effect on the sex of the chair and the boards remain internally segregated. As women have not gained a substantial increase in access to the most influential position on the corporate boards in the period of the law, hypothesis 1b is not confirmed. The fact that both hypothesis 1a and 1b are rejected indicates that the private sector is unconvinced by the utility arguments for introducing more women. It is also possible that the time frame for utility arguments to be revealed is longer than the existing time window chosen for this study. If this is the case, then we would expect a similar study conducted after the lapse of five or ten years to show a greater number of women chairing these boards.The average proportion of women across the public limited companies' boards of directors, and the proportion of boards with a women chair.
Fiss, P. C. (2006). Social influence effects and managerial compensation evidence from Germany. Strategic Journal of Management, 27(11), 1013-1031.
Helgesen, S. (1990). The female advantage; women's way of leadership. New York: Doubleday.
Hernes, H. (1987). Welfare state and woman power: essays in state feminism. Oslo, Norway: Norwegian University Press.
Huse, M., & Solberg, A. G. (2006). Gender-related boardroom dynamics: how Scandinavian women make and can make contributions on corporate boards. Woman in Management Review, 21(2), 113-130.
Kabanoff, B. (1991). Equity, equality, power, and conflict. The Academy of Management Review, 16(2), 416-441.
Kanter, R. M. (1977). Men and women of the corporation. New York City, NY: Basic Books.
The Norwegian Government (2008). Representation of both sexes on company boards. http://www.regjeringen.no/en/dep/bld/Topics/Equality/rules-on-gender-representation-on-compan.html (accessed on August 5, 2009).
Skjeie, H., & Teigen, M. (2005). Political constructions of gender equality: travelling towards a gender balanced society? NORA Nordic Journal of Feminist and Gender Research, 13(3), 187-197.
To test our hypotheses, we collected a list of all the 384 public limited companies in Norway (Allmennaksjeselskap or ASA) that were available online through the Norwegian Business Register’s website on August 5, 2009. We chose these companies as they are the ones bound by the gender representation law. Based on the list of companies, we collected all official announcements made to the register that were online. These announcements contain changes to the composition of the boards of directors since November 1, 1999. Since all companies did not change their boards immediately after the Register started publishing the announcements online, our observation period only starts in May 2002, and extends to August 2009. The choice of starting the observation period in May 2002 is based on a trade-off between the inclusion of companies and the length of the observation window. Of the 384 companies, 196 were incorporated after November 1, 1999. These companies are included in our dataset on the first of the following month of their incorporation. The additional 188 companies (incorporated before November 1999) changed their boards at various times. We chose to start the observation period in May 2002 as 90 percent of these companies had at least changed their board once by that time. Thus, information on their board compositions was published online. The remaining 10 percent (19 companies) are included in the dataset as soon as they changed their boards’ compositions. Companies that filed for bankruptcy are removed from the sample in the month following such an announcement.
From the board compositions, we extracted a list with the names of all directors. From this list, we excluded employee representatives as the legislation does not affect them in the same way. Since mistakes could have occurred while entering the data and people may change their name, this list was manually cleaned by studying the compositions over time and comparing changes. For example, Alexandra Bech Gjørv was a director of Schibsted ASA from 2001 until 2007. However, in 2001 and 2002, her name was listed as simply Alexandra Bech. Without the manual cleaning, she would have been included as two separate people in the dataset.
To determine the sex of the directors in our dataset, we collected lists of all male and all female first names belonging to more than 200 people in Norway from Statistics Norway. We cross-referenced these two lists with the first names of the directors. However, some first names were not in either of the lists, and some first names were included in both lists. In an effort to avoid having missing data, we conducted a web search to determine the gender of directors with these names.
Note: The analysis provided does only consider the data from May 2002 to August 2009 (peer-reviewed).