The Benefits of Women Leaders in Family Firms

David Ransburg
David Ransburg

Recently, the “Management Science” journal published a research paper about the impact of female leadership on the performance of family firms. Specifically, this article — “Gender Interactions Within the Family Firm” by Amore, Garofalo, and Minichilli – examined (1) the impact of replacing a male CEO with a female CEO and (2) the impact of increasing the percentage of female directors on a company’s Board.

According to the authors, replacing a male CEO with a female CEO slightly improves a family firm’s performance, and this slight improvement is magnified when the proportion of females on a company’s Board increases as well. They caution, though, that this magnification is less pronounced when (1) the firm is larger in size and (2) when the firm is located in geographic areas characterized by gender prejudices.

The authors suggest that the significant positive impact comes from the interaction between multiple females in prominent leadership positions of the same firm.

So, for those family businesses that are smaller in size and located in geographic areas that are free of gender prejudices, keep this in mind the next time you are making a change of CEO: a female candidate might lead your company to better performance than would a male…. especially if that female CEO is supported with some female Board members.

What do you think about this research? Is it consistent with your own personal experiences?

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