Firms lead by women are more profitable

This report, witten by Annu Kotiranta, Anne Kovalainen, Petri Rouvinen has been published by the Finnish Business and Policy Forum. This should inspire our shareholders when they chose a CEO…


 

the summary of the report states that less than a tenth of the CEOs of Finnish firms and less than a fourth of the corporate board members are women. From a social standpoint more women are desired in top management, but should firms’ owners  be concerned with women’s role in top management? Since hard facts have been in short supply, study seeks to an answer the question by applying scientific research methods.

Surprisingly results indicate that a company led by a female CEO is on average slightly more than a percentage point – in practice about ten per cent – more profitable than a corresponding company led by a male CEO. This observation holds even after taking into account size differences and a number other factors possibly affecting profit ability. The share of female board members also has a similar positive impact.

If and when Finland seeks to increase the share of women in top management, these endeavours should not be hindered because of concerns about private firms’ profitability – quite the contrary, in fact.

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4 thoughts on “Firms lead by women are more profitable

  1. I don’t like prejudices about women in the work, like women tend to place family demands above work considerations or that are unsuitable for top management because they are too emotional and have lack of aggressiveness. For me the attributes and way of leadership are important, no matter if it is man or woman.
    The true is that men are more likely than women to choose career that is oriented more to top management position because of their desire of power and ambition to lead the team. Women, because of their nature, may be more likely than men placed in less critical and stressful position. Hovewer, it is not the rule.
    Studies have shown that those women who attained top position have founded equilibrium between too feminine and too masculine, or similarity, too weak or too powerful.
    In conclusion, those who demonstrate assertiveness, dominance and directiveness may be suitable for top management.

    Reply
  2. I think it is important to emphasize that these result are based on correlations and therefore one cannot be sure of the existence of a causal relationship – that the firms are more profitable because their CEO-s are women. Nevertheless, the findings are interesting.
    The first question that came to my mind when I read this post was: “What is the reason for this higher profitability among firms with a female CEO?” The article gave four possible explanations: 1) women are better leaders; 2) upon advancing top-management, women may be faced with more harsh selection making them a more exclusive; 3) women may seek management positions in (may be selected to lead) more profitable businesses; 4) both female leadership and profitability could be connected to some third unobserved factor.
    All in all, these are very intriguing results; therefore there is also a great danger of these results being used out of context. I believe that when a similar study were conducted in some other country, the results could as well be proving the opposite…

    Reply
  3. I made my thesis about women in leading positions of a company, and I have read so many studies about the natural and genetical features that makes women more succesful than a man. There are so many evidence on the business sphere that the enterprises leaded by women are going better.

    In addition, there are many in interviews with male directors who prefer the women majority in the management because of their ‘different’ abilities.

    Reply
  4. A also think that more women in leading positions will result in higher profitability.

    From my point of view, they could take decisions much more rational and elaborated. As mentioned in one of my articles it is time that the economy also realizes this fact and treats women 100% equally to men.

    Reply

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