New research finds female directors improve employees’ workplace experience

The new study by Dr Jiarong Li, Lecturer in Real Estate Finance at Henley Business School, finds that female directors improved internal Corporate Social Responsibility (CSR), having a significant impact on company culture.

A new study titled Female directors and CSR- Does the presence of female directors affect CSR focus? published in the International Review of Financial Analysis has found that increased female representation on corporate boards is associated with heightened internal corporate social responsibility (CSR) initiatives.

The research analysed data from all Chinese A-share listed companies looking at 7,583 data samples from between 2007 and 2021 to compare the impact of female directors on different components of CSR—namely internal CSR targeting employees, and external CSR directed at communities, environment, etc.

On average, female directors only comprised 12% of the corporate boards that made up the sample. However, firms with above-average female representation demonstrated substantially better performance on aggregate and specifically internal CSR.

Co-author of the paper, Dr Jiarong Li, Lecturer in Real Estate Finance at Henley Business School, said:

“It’s vital parity between the genders is achieved in company director positions, which is reinforced by our findings. This research demonstrates a strong relationship between female directors and an enhancement in internal CSR engagement. This not only improves working conditions for employees, but could also have an impact on company productivity.”

Internal CSR involves activities like employee training, work-life balance, diversity programs and conflict resolution, and the study reveals female directors channel their leadership focus into initiatives that promote internal CSR.

On the other hand, no significant link was observed between female directors and external CSR initiatives such as philanthropy and environmental protection. The research suggests female directors may be more risk averse and so more focussed on internal initiatives with clearer, shorter-term impact.

Additionally, the positive impact on internal CSR intensified with the proportion of female directors till they constituted at least a third of the board. This critical mass gave females greater voice in steering strategy.