March–April 2020
Article
Organization Science

An Institutional Approach to Gender Diversity and Firm Performance

Format:Print

Abstract

This study examines data from 35 countries and 24 industries to understand the relationship between gender diversity and firm performance. Previous studies report conflicting evidence: some find that gender-diverse firms experience more positive performance and others find the opposite. However, most research to date has focused on a single country or industry and has not accounted for possible variation across social contexts. This paper advances an institutional framework and predicts that gender diversity’s relationship with performance depends on both its normative and regulatory acceptance in the broader institutional environment. Using a unique longitudinal sample of 1,069 leading public firms around the world, I find that the relationship between gender diversity and firm performance varies significantly across countries and industries due to differences in institutional context. The more gender diversity has been normatively accepted in a country or industry, the more gender-diverse firms experience positive market valuation and increased revenue. These findings underscore the importance of the broader social context when considering the relationship between gender diversity and firm performance.