Beyond the Business Case: The Need for Both Utility and Justice Rationales for Increasing the Share of Women on Boards

• Author: Cathrine Seierstad
• Published date: 01 July 2016
• Date: 01 July 2016
• DOI: http://doi.org/10.1111/corg.12117

Beyond the Business Case: The Need for Both

Utility and Justice Rationales for Increasing the

Share of Women on Boards

Cathrine Seierstad*

ABSTRACT

Manuscript type: Empirical

Research Question: In the context of the recent introduction of gender representation regulations (quotas) for boards in public

limited companies(PLCs) in Norway,this article explores howgender quotas designed to increasethe share of women in senior

positionsare rationalized and/or justif‌iedby those who benef‌it, and asks: what argumentsdo the benef‌iciaries of quotas tend to

use when discussing their usefulness?

Research Findings/Insights: Drawing on qualitative interview data from 19 femalenon-executive board members, the article

illustrates how womendraw on utility, mainlythe “business case,”and individualjustice arguments both in support of quotas

and to justify their use in helping women attain board positions. Further, it highlights how issues of merit and of gender are

entangled with these arguments in often contradictory ways. In so doing, the article challenges and complicates some of the

key critiques of gender quotas often found in the public and academic debates.

Theoretical/Academic Implications: This article advancestheory around the intersectionof justice and utility argumentsin re-

lation to the use of quotas to increase diversity on boards. Moreover, this article provides empirical support by demonstrating

how “the f‌irstwave”of women affected by quotasare legitimizing their roleon boards in a context in whichtheir role is in ques-

tion. In addition, this article advances the literature regarding women on boards by demonstrating the need for a discourse

about political strategies, such as quotas on boards, that goes beyond the narrow understanding of the business case that has

until now dominatedpublic, political,and academic debates. In particular,this article argues for the needto build on both utility

and justice logic when making a case for increasing the share of women on boards.

Practical Implications: With thecurrent focus on how to increase diversity and the shareof women on boards, this study high-

lights the importance of regulationas well as the importance ofreframing the debate using utilityand justice lines of arguments

rationalized by merit arguments.

Keywords: Corporate Governance, Diversity, Gender, Quotas, Women on Boards

INTRODUCTION

The use of gender representation regulationsto increase di-

versity and the shareof women on boards (WoB)is highly

topical. This articlesets out to examine how aff‌irmative action

(AA) strategies

1

in the form of gender representation regula-

tions (quotas) designed to increase the share of women in se-

nior positions are rationalized and/or justif‌ied by their

benef‌iciaries. Previous research regarding AA has found

mixed results in terms of support from minority groups

(McMillan, Grubb, & Herdman, 2009). While some studies

(Konrad & Linnehan, 1995; Kravitz & Platania, 1993; Mor

Barak, Cherin, & Berkman, 1998) found some support from

women and ethnic minorities for AA, others point to negative

reactions from the groups it is intended to favor (Cockburn,

1989; Nacoste, 1987; Singer, 1993). In particular, research has

highlighted how women in general either reject AA, resisting

the notion that they should be seen as a “special case”

(Cockburn, 1989; Heilman, McCullough, & Gilbert, 1996), or

draw on utility (i.e.,“business case”), and justice (i.e.,“fair-

ness”) arguments to support the application of such policies.

Nevertheless, we know very little about the attitudes and ex-

periences of women in very senior positions who have

benef‌ited directly from theintroduction of gender representa-

tion regulationin the form of gender quotas. Most research to

date about WoB and the use of quotas has tended to focus on

the f‌irm level and corporate performance (Ahern & Dittmar,

2012; Bøhren & Staubo, 2014; Matsa & Miller, 2013) or differ-

ences between male and female directors (Heidenreich, 2010;

Seierstad & Opsahl, 2011), where research tends to either (re)-

produce or challenge the ideas of the “business case.”

*Address for correspondence: Cathrine Seierstad, Lecturer in International Human

Resource Management, School of Business,Management and Economics, University of

Sussex, BrightonBN1 9SL, UK. E-mail: c.seierstad@sussex.ac.uk

© 2015 JohnWiley & Sons Ltd

doi:10.1111/corg.12117

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Corporate Governance: An International Review, 2016, 24(4): 390–405

Nonetheless,as highlighted by Ferreira (2015:110), “[C]urrent

researchdoes not really support a businesscase for board gen-

der quotas. But it does not provide a case against quotas ei-

ther.”This article sets out to broaden the dialogue about

gender quotas on boards by focusing on the level of the indi-

viduals. In particular, the article looks at the case of Norway,

where gender representation regulations were recently intro-

duced for public limited companies’(PLCs) boards of direc-

tors and asks: what arguments do the benef‌iciaries of quotas

tend to use when discussing their usefulness?

The focus on women directors and their experiences of

quotas is of contemporary importance as the use of gender

quotas on boards is very much on the agenda globally.

Norway was the f‌irst countryto introduce a gender represen-

tation law. Despite the factthat the use of quotas on boards in

Norway was heavily discussed in areas of the private sector,

political sphere and the media (e.g.,Bernstein, 2006; Hegnar,

2005), the law wasadopted in 2003 and implementedfor state

and inter-municipal companies from 2004. For new PLCs, it

was implemented in 2006, while existing PLCs were given a

two-year implementation period. Consequently, the law re-

quired non-executive boards on all PLCs to have at least 40

percent representation of each sex by January 2008. Recently,

other countries, such as Spain, Iceland, France, Belgium,

Netherlands,Italy, and mostrecently Germany, have followed

similar paths, adopting some form of gender quotas on

boards. In addition, softer initiatives (e.g.,targets and recom-

mendations) have been introduced in a variety of countries

such as the UnitedKingdom, Sweden, Canada,and Australia,

highlighting the global focus on diversity on boards. More-

over, the EU is watching the gender balance on European

boards closely, threatening to introduce strategies/regulations

from the EU level if the share of women does not increase

(EU, 2012). In this regard, there are proposals to introduce

quotas on European corporate boards. As Norway is the only

country where gender quotas are now fully implemented,

valuable lessons can be learned from the case of Norway,

which can help form and shape political strategies and discus-

sions on a global scale.

It is apparent that vertical sex segregation and the lack of

women in decision-making roles on corporate boards have,

over the last decades, become a key issue for corporations,

policymakers and researchers (Adams, De Haan, Terjesen, &

van Ees, 2015; Bianco, Ciavarella, & Signoretti, 2015; EU,

2012; Huse, 2009; Teigen, 2003; Torchia, Calabrò, & Huse,

2011). In fact, lack of diversity and female representation has

been a particularconcern in the private sector, where equality

strategies of a radical nature, such as quotas, previously have

been avoided. In the wake of the f‌inancial crisis, widespread

media and political condemnation of this gender imbalance

has centered on the needfor a more diverse approach to busi-

ness. Further, the currentunstable economic environment has

renewed awareness to areas of corporate social responsibility

(CSR), corporategovernance, as well as the (gender) composi-

tion and the roles of boards of directors (Huse, Nielsen, &

Hagen, 2009). Consequently, gender representation is central

in contemporary debates.

Numerous authors (e.g.,Acker, 2006; Chang, 2000) propose

AA as a possible “solution”to the problem of the lack of

female representation at senior levels in organizations, yet ef-

forts to improve women’s situation in organizations through

AA often fail (Acker, 2006). In fact, there is often limited sup-

port, even from those who benef‌it, with many women

rejecting it as a way of reducing inequalities (Teigen, 2000).

The use of quotas to increase the share of women in positions

of power and inf‌luence, although controversial and debated,

is therefore a timely concern. This is supported by Terjesen,

Sealy and Singh (2009: 334), who argue that research into

WoB i s an “important tool, not only for making an academic

contribution, but also for providing the basis for change to a

more equitable gender representation at the decision-making

levels of the corporate world.”Moreover, as Terjesen et al.

(2009) postulate, the majority of WoB research to date relies

largely on publicly available information. Except for a small

number of important studies (e.g.,Huse & Solberg, 2006), re-

search is of a quantitative nature (Nielsen, 2009; Seierstad &

Opsahl, 2011; Wang & Kelan, 2013) and historically domi-

nated by a tradition of focusing on corporate f‌inancial perfor-

mance (Bøhren & Staubo, 2014; Zahra & Pearce, 1989).

Terjesen et al. (2009: 332)accordingly call for “truly innovative

research”that taps into female directors’experience. More-

over, McNulty, Zattoni, and Douglas (2013) and Zattoni,

Douglas and Judge (2013: 119) call for governance scholars

to use qualitative methods and thereby generate “fresh new

theoretical insights about corporate governance practices”to

supplement the research historically being dominated by

quantitative methods and agency theory.

Consistent with these calls, this paper seeks to understand

more about the experiences and views of women directors

by drawing on qualitative data from in-depthinterviews with

19 Norwegian women, most of whom became non-executive

directors on the boards of PLCs as a result of the law. In so

doing, it enriches the WoB and corporate governance litera-

ture, as well as challenging some of the key critiques of AA

often found in the public and academic debates. The study

focuses on the implementation of “radical”(as opposed to

“liberal”) strategies, characterized by the underrepresented

group being granted an employment opportunity as long as

members meet minimum qualif‌ications for the job (Taylor-

Carter, Doverspike, & Cook, 1995). In particular, the study

indicates that, although debated, quotas have become an

accepted and welcomed strategy on corporate boards in

Norway, with women drawing on both utility and individ-

ual justice lines of argument. Moreover, the study shows

how notions of merit, enshrined historically in Norway’s

equality agenda, are embedded in these arguments and

how meritocratic discourses are drawn on and mobilized

in often opposing manners.

Through this analysis, the article makes four key contribu-

tions. First, this article advances theory around the intersec-

tion of justice and utility arguments in relation to AA and

the use of quotas. In particular, the article illustrates how is-

sues of merit and of gender are entangled within these argu-

ments in often contradictory ways. By doing so, it challenges

and complicates some of the key critiques of AA often found

in public and academic debates. Second, it responds to calls

within both the WoB and corporate governance literature

highlighting the need for more qualitative research under-

standing the experience of women. Building on 19 semi-

structured in-depth interviews with women directors, this

study addressesthese research gaps and provides uniqueem-

pirical insightinto an under-researchedarea. Third, this article

391BEYOND THE BUSINESS CASE

© 2015 JohnWiley & Sons Ltd Volume 24 Number 4 July 2016