What is the Impact of the Gender Diversity on Firm Performance?

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What is the Impact of the Gender Diversity on Firm Performance? Submitted to: Submitted by: Contents Chapter 1: Introduction Background of the study Corporate governance Gender representation on corporate boards Aims and objectives of this research Structure of this research Ethical considerations Limitations References:

Chapter 1: Introduction

Background of the study

In the corporate World, certain combativeness surrounds everything, be it the stacks of money or just the signature stationery. All of the objectives need to be defined, all of the facts drawn up, and all of the necessary measures taken so that everything is as close to perfection as achievable. The market is as competitive as ever, and it is a race for the first price. It is understandable then that why most every firm wants to avoid additional pressure in the case of a bad judgment or error (Tricker, 2012). Monks and Minow (2011) have discussed that there are several factors that rule the progress of such a firm, the employees, and the balance in the gender representation, the performance, the revenue, the management and the corporate governance. The inefficiency in even one of these aspects can bring a whole structure down to earth. Their relationship has been a heavy topic of discussion, and facts and figures are drawn up from the workings of virtually every firm so that the patterns can be studied and worked upon. Since all of these factors are relatives, gender equality also tends to lead to a better performance. It brings a pool of fresh talent, and secures the dedication of the trustworthy employees. The company is always innovative, owing to the different people, of diverse races and gender, voicing arguments and working together. All of this leads to a better working environment, that is rich in its resources but stern in its goals (Larcker and Tayan, 2013). By close observation of these patterns, it can be deduced that a good corporate policy that skims over all the social enigmas, is elementary in introducing gender diversity, which in turn proceeds to a secure and efficient teamwork. And only then can a prosperous enterprise value be foreseen (Tricker, 2012). In today’s society, it is not sufficient merely to progress, and to have a profitable expanse. To have a positive outcome in all your doings, your PR and reputation tends to matter more than even the investments sometimes. Corporate governance factors in outlining the objectives of a company, and the rules and regulations it works by. It keeps all the proceedings in check, and hence lays a foundation upon which the organization is based. Only when all these processes are controlled, can a company think of running smoothly and efficiently (Teigen, 2012). The issue of gender equality has garnered great limelight in the recent present, with huge focus upon the rights of women. And the evolution of media has also led to a revolution in our World. Gender diversity in the workplace is now a worldwide issue, so that countries like the United Kingdom, New Zealand and Australia to name a few, have introduced reforms throughout legal bindings. And in the case of incompliance with these legal terms, firms have to face a penalty. All this is being done of that a pressing social need is satisfied, and both sexes are awarded with the same rights and respect (Kim et al, 2009).

Corporate governance

Corporate governance is the basic set of requisites that a company functions upon but it is much more than that. It focuses on everything, from the initial planning to the carefully studied outcome. Its outline is not permanent, for like everything, it adapts to the changes consciously and efficiently. Gender equality and diversity are also under its focus. It gives out the fine print that clarifies the needs and the essentials. If all of these goals are satisfied, then the performance of the company is studied closely and hairs are pulled out in rectifying the mistakes and making amendments wherever they’re called for (Teigen, 2012). The value of a firm is a varying objective; it can never be defined with just one thing. Even if the profits are skyrocketing, that is no guarantee of a secure or high value. There are several reasons behind everything. And even here, a good repute is significant, be it by an effective HR, or increased dedication to all the legal bindings like the regional gender board diversity quota. And when all of these efforts are employed, can a company claim full security of its reputation and stakes. And even then, it can sometimes be a gamble (Tricker, 2012). A major misconception is that gender equality is an issue for the female sex only. But while women often have to earn less, and are treated to inferior jobs, men might face difficulty in procuring a flexible schedule, especially if they’re single dads. If the terms for these firms and organizations need to be redefined, they need to be redefined for both men and women. They should be awarded equal opportunities, along with a balanced representation in the board of directors (Larcker and Tayan, 2013). Women have proved time and time again that they excel in most fields; in several their success exceeds the stronger sex. And any racial or social discrimination is aptly insulting to their intelligence. Firms, whether voluntarily or until government pressure, have started picking up on gender diversity whilst appointing the board members. And it has lead to innovation and creativity, as in some matters, a woman can be much more insightful and can introduce efficient reforms. And together with the men, they both can work together, as two members of the team, and bring about a difference in the work on the whole (Monks and Minow, 2011). A company that regards gender equality highly is reputable, and attracts talent due to its popularity amongst the general public. Not only that but there are increased chances of employees staying if the company is fair and judicial in its dealings. It has also been witnessed that in some cases, gender diversity in the work place can lead to a bigger gain and hence a good revenue. Hence, keeping up with all the demands, and socio-economical pressures, it is elementary that board gender diversity be kept in one of the main objectives. And special data is drawn up to keep up with all the aspects, hence rooting for a better and balanced World (Kim et al, 2009).

Gender representation on corporate boards

Long gone are the days, when the female sex was referred to as inferior or ‘weak’. In the last 150 years, we have seen a revolutionized perception throughout the World regarding women rights. And women have appeared a strong power in the work industry, even at executive level positions. But that progress wasn’t a fast paced one. For the female sex was treated to every kind of demeaning, inferior job before the voice of protest grew to such an intensity that now the situation in the work sector is much better and we see gender diversity as a national and international quota (Monks and Minow, 2011). According to Tricker (2011) the impact of board gender diversity upon the firm performance has been the object of a plethora of research papers, articles and books. And for every country, the charts drawn up represent conflicting information. But some general psychological factors remain the same for all. The major reason why the consideration of a woman director and the designation of a female to a high standing post is evaded, is that women tend to be family oriented. They are devoted to their family after marriage, and hence work isn’t one of their high standing priorities. But that doesn’t mean the entire female sex belongs to the same value. Now a day we find women who are equally passionate about their career as their male peers. For in most every field, the female sex when indulged thoroughly has proven to be more capable and sometimes successful than the male sex. The close competition between firms and a penalty for noncompliance with the government issued laws, has led on to a greater awareness of gender diversity. So now a dedicated woman is an important an asset as any man. Studying the patterns, we see that increased gender diversity may lead to bad performance after two years as the issues like sexual harassment may complicate the management. But a positive aspect is that it could lead to a more affirmative image of the firm, because firms choose to establish it themselves, owing to the demands of the society (Kim et al, 2009). Yet while gender diversity leads to innovation and creativity owing to a better understanding of the markets involved, studies show that the improvement may have been present had no efforts for diversity had been made. Especially legal actions such as laws have been seen to have an adverse effect on the performance of a company on the whole, for this negative effect was witnessed even when the boards were changed voluntarily so it may be bigger if the action is ‘forced’ (Teigen, 2009). Hence while the propagation of gender diversity leads to a balanced workplace, it often tends to complicate the environment as new issues arise. So it doesn’t necessarily have a positive impact on the firm performance. That is why research and studies in this aspect need to continue so that the problems arising from a diverse board can be waived off without compromising on gender equality and the related (Larcker and Tayan, 2013).

Aims and objectives of this research

The proposed research will investigate the relationship between the Firm Performance, Value and Corporate Governance and Gender Board Diversity. This research will also focus on the fact that if there is an Impact of Gender Diversity in the boardroom on the Firm Value and the Corporate Governance. The following research questions will be discussed in this research:
  1. How many women are there on the corporate boards of the organizations under study?
  2. Has there been a trend of increase in women representation in these boards in recent years?
  3. What are the characteristics or factors that lead firms to appoint more women to their board of directors or top management team?
  4. What is the impact of increased female representation on a firm’s financial results?
  5. Is there any impact of gender diversity in these corporate boards or not?

Structure of this research

This research is organized in 5 chapters. A brief overview of the chapters is presented below. Chapter 1: Introduction This chapter will introduce the research. Background of the study is presented as well as an introduction to the topics which will be studied. This chapter also presents the aims and objectives of the research. Chapter 2: Literature Review In this chapter, the literature already existing about the topic under study will be reviewed. A conceptual framework from the literature review will be developed. Chapter 3: Research Methodology In this chapter methodology pertaining to this research will be discussed. Along with that this chapter will also present why this methodology has been chosen. Other options available to chose from for preparing research design will also be presented. Chapter 4: Results and Analysis Results obtained from the research will be discussed in this chapter. Not only the results will be presented in this chapter but the analysis and outcomes of the research will also be included in this chapter. Chapter 5: Conclusion Research will be concluded in this chapter. This chapter will provide conclusive evidence about the findings of this research.

Ethical considerations

All data used in this research is either obtained through an officially published source, or is used with the permission of relevant person/organization. It has been ensured that no data used in this research is used without proper reference. The data which has been collected for this research is kept safe, and it has been ensured that no misuse of that data remains possible.

Limitations

This research is limited in the sense that not all aspects pertaining to corporate governance, governing boards and gender representation on corporate board can be studied in this research. Along with that, although the sample of firms studied for this research has been carefully chosen, the research does not include an exhaustive list of organizations. With the use of proper research methodology, effort has been made to draw conclusions which can be generalized and used for other set of organizations too.

References:

Kim, K. Nofsinger, J. and Mohr, D. (2009) Corporate Governance. Prentice Hall. Larcker, D. and Tayan, B. (2013) A real look at real world corporate governance. Larcker-Tayan Publication. Monks, R. and Minow, N. (2011) Corporate governance. 5th Edition. Wiley. Teigen, M. (2012) Firms, boards and Gender Quotas: Comparative perspective. Emerald group publishing limited. Tricker, B. (2012) Corporate Governance: Principles, Policies, Practices. Oxford University Press.
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