Are female leaders more efficient in family firms than in non-family firms?

• DOI: https://doi.org/10.1108/CG-01-2017-0017
• Pages: 185-205
• Published date: 03 April 2018
• Date: 03 April 2018
• Author: Per-Olof Bjuggren,Louise Nordström,Johanna Palmberg
• Subject Matter: Strategy,Corporate governance

Are female leaders more efficient in family

firms than in non-family firms?

Per-Olof Bjuggren, Louise Nordström and Johanna Palmberg

Abstract

Purpose –The aim of this studyis to investigate whether female leaders are moreefficient in family firms

than in non-familyfirms.

Design/methodology/approach –This paper uses a uniquedatabase of ownership and leadership in

private Swedish firms that makes it possible to analyze differences in firm performance due to female

leadership in family and non-family firms. The analysis is based on surveydata merged with micro-level

data on Swedish firms. Only firms with fiveor more employees are includedin the analysis. The sample

containsmore than 1,000 firms.

Findings –The descriptive statistics show that there are many more male than female corporate

leaders. However, the regression analysis indicates that female leadership has a much more

positive impact on the performance of family firms than on thatfor non-family firms, where the effect

is ambiguous.

Originality/value –Comparative studies examining the impact of female leadership on firm-level

performance in family and non-family firms are rare, and those tha t exist are most often either

qualitative or focused on large, listed firms. By investigating the role of female directors in family and

non-family firms, the study adds to the literature on management,corporate governance and family

firms.

Keywords Gender, Family firms, Corporate governance, Company performance,

Financial performance

Paper type Research paper

1. Introduction

Traditionally, women in family firms have roles that are closely linked to the family, i.e.

spouse, mother or in-law, instead of a prominent and formal business-related position, such

as CEO or CFO. These roles have traditionally been more closely associated with male

family members (Arjis, 2013). However,the literature on family firms indicates that the role of

women in these firms is changing. Women have become more visible and more

incorporated into family businesses. A more positive vibe surrounds women’s opportunities

and the possibilities offered to them by a family firm in terms of career opportunities,

management positions and leadership(Gupta and Levenburg, 2013;Jimenez, 2009).

Empirical studies on female corporateleadership exist, but the results are unclear and need

more investigation. For example, Adams and Ferreira (2009) find an ambiguous effect of

female directors on firm performance, and Dezso

¨and Ross (2012) report that female

leadership is beneficial in some contexts. Most previous studies investigate large listed

firms, with very few examining smaller non-listed firms. Systematic empirical research on

women in family firms is even scarcer and requires further analysis[1]. One area that has

been examined is how female leaders function in family firms and what their obstacles are

(Danes and Olson, 2003;Gnan and Songini, 2013;Jimenez, 2009). However, studies that

link female ownership with leadershippositions are missing.

Per-Olof Bjuggren is

Professor at Centre for

Family Enterprise and

Ownership, Jo

¨nko

¨ping

International Business

School, Jo

¨nko

¨ping

University, Jo

¨nko

¨ping,

Sweden and The Ratio

Institute, Stockholm,

Sweden. Louise Nordstro

¨m

is Associated with

Department of Economics,

Jo

¨nko

¨ping University,

Jo

¨nko

¨ping, Sweden.

Johanna Palmberg is

Associate Professor,

Research Director and

Senior Lecturer at Swedish

Entrepreneurship Forum,

Stockholm, Sweden and

Department of Economics,

So

¨derto

¨rn University,

Huddinge, Sweden.

Received 27 January 2017

Revised 20 June 2017

Accepted 18 August 2017

DOI 10.1108/CG-01-2017-0017 VOL. 18 NO. 2, 2018, pp. 185-205, © Emerald Publishing Limited, ISSN 1472-0701 jCORPORATE GOVERNANCE jPAGE 185

To fill this gap and to extend our knowledge on women in family firms, this paper

investigates the effects of women in managerial positions, as members of the board of

directors and as owners of the firm on firm-level profitability. A special focus is on family-

owned enterprises. The following research question addresses the issue of female

governance on firm performance:

RQ1. Is the effect of female governance different in family firms compared with that in

non-family firms?

This study relates to recent researchon female leadership in family firms. A study by Amore

et al. (2014) appears to resemble our study the most. They have adopted a similar

approach to ours, but it differsin important aspects: they study only family firms, theydo not

compare family with non-family firms and they do not consider female ownership. Their

hypotheses are grounded in a theoretical framework that posits that female directors and

leaders function better in cooperation with the same sex. By contrast, we also stress

discrimination as an important explanation.

The paper makes empirical and practical contributions to the literature on family firms and

to the corporate governance literature in general. Our main empirical contribution is our

investigation of the effect of female corporate leaders on firm performance and our

comparison of this effect between family and non-family firms. The empirical analysis is

based on survey data with firms in all size classes and at least five employees, i.e. listed

and non-listed firms are included. Firm owners were asked for the names of the five largest

owners and for their respective cash flows and voting rights; they were also asked whether

they considered themselves to be a family firm or a non-family firm. In total, 1,041 firms

completed the survey, which corresponds to a response rate of 42 per cent. The survey

data are matched with firm-level data from Bureau van Dijk’s Amadeus database and with

information on female leaders from officialsources.

The regression analysis shows that female executives generate higher profitability in family

firms than they do in non-family firms. Our results indicate that promoting women to leading

positions is good for firms. That is, the results suggest that family firms can improve their

profitability by supporting and mentoring female family members to take leading positions.

The creation of regional and national networks is onepolicy suggestion that not only aims to

further support female leaders but also couldenhance firm performance.

The remainder of the paper is organized as follows. The next section presents the

theoretical framework, an overview of the previous literature and the tested hypotheses.

The third section discusses the methodology and the data and variables. Section 4

presents the relevant descriptive statistics and the regression analysis. The final

section summarizes and concludes the paper.

2. Female leadership –literature review and research questions

Research on gender issues is relatively new within the corporate governance/finance

literature (Huang and Kisgen, 2013). No coherent theoretical framework captures all

aspects of gender and the ways in which it can affect firm performance. Instead, one must

rely on a mixture of theories about behavioral differences related to gender, discrimination

and the principal–agent relationship as well as to the proposed advantages of gender

diversity on the board. After reviewing this literature, we claim that the difference between

family firms and non-family firms must be acknowledged when considering the effects of

gender on firm performance.

2.1 Gender differences in top management

Jensen and Meckling (1976) provide a corporate governance framework based on a

principal–agent view. The central message in their article is that corporate leaders (those

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