Women at the Top Spur Innovation. But You Can Get Too Much of a Good Thing

Corporate survival makes it necessary that companies engage in innovation and entrepreneurship. This is not controversial: In a dynamic world companies have to innovate to track changing technology and changing preferences - and to gain, renew or maintain competitive advantages. It is also widely accepted that companies need to increase the proportion of women in their upper echelons. Female representation in top management teams has increased somewhat over the past decades, but women are still very underrepresented here. For some, this is an equality issue that does not require further justification. But from a business as well as research point of view, we are interested in knowing what having more women in management may mean for corporate performance.

One relevant question in this regard is: What does it mean for corporate innovation to have women in management? Some may react by thinking more women in senior management will inhibit innovation. This can be defended by pointing to the fact that women on average have a higher degree of risk aversion than men (although recent research shows that this depends to a certain extent on the type of activity involved). Innovation implies that you start a journey in unknown and insecure waters. It may not be a journey for the timid and risk-averse.

On the other hand, it is also fairly evidence-based that women lead in different ways than men do. Women are typically more engaging, less hierarchical and more trusting in their management style. These are leadership qualities that can be highly beneficial in the innovation process. Here we need to share knowledge and we need to make room for mistakes. A female management style can promote this.

So, there are pros and cons – what do the data say? With a Danish colleague, Jacob Lyngsie, of Southern Denmark University, I recently published in the Strategic Management Journal an article called The More, the Merrier? Omen in Top-Management Teams and Entrepreneurship in Established Firms. The article looks empirically at the relationship between women and innovation. We analyze register and survey data, and we find that there is in fact a significant positive relationship between women in top management and company innovation.

We also find that it is not sufficient to have just a single woman in the top management teams. It seems that the positive impact on innovation from the female management style and from increased diversity only happens where there is a critical mass of women in senior management.

Interestingly, and perhaps surprisingly, we also find that the link between women in top management and innovation is weaker if there are relatively many women among the company's employees! So more women in top management seem to be good for innovation - but not so much in companies where there are already many women.
Overall, our findings are good news for those who like to see more women in corporate leadership. But there is a proviso: Women seem to be less effective in corporate leadership when there are already many women in the company.