Italian firms led by female CEOs have more women on average in the top management team than those led by men, according to a new study from the Stockholm School of Economics in Sweden and the Free University of Bozen-Bolzano in Italy. The association weakens if the CEO lacks sufficient decision-making power or if she works for a family-owned company.
“While we cannot prove causality, our findings suggest that female CEOs may be more inclined than their male counterparts to bring other women into top executive roles,” says study author Marco Mismetti, assistant professor at the House of Innovation at the Stockholm School of Economics. “Plausible explanations may be that people tend to hire others like themselves or that the presence of female executives encourages other women to pursue leadership roles, but more research is needed to understand these mechanisms.”
The researchers analyzed survey data collected from CEOs at 153 Italian firms, of which 17 were led by a woman, largely reflecting the current gender disparity in corporate firms. The findings showed that the percentage of women in the top management team (TMT) was on average 21 percent higher in firms with a female CEO, according to the paper published in the Journal of Business Research.
The researchers note the study does not prove that women hire more female managers, only that there is an observed link between having a female CEO and a greater proportion of women in the top management team.
More gender diversity with increased decision power
To understand the conditions that may influence this relationship, the authors examined a range of variables, including the CEO’s decision-making authority and whether the firm was family-owned or not.
The authors found that the board must delegate at least 58 percent of strategic decisions to the female CEO to have a positive effect on the share of women in the top executive team. Below that threshold, the association was no longer statistically significant. The researchers assessed decision-making authority by asking who in the company makes key strategic decisions and then calculating the percentage of those decisions the CEO controls or can delegate.
The findings also highlight a special challenge for family firms, which made up 79 firms in the sample and were defined as companies where relatives owned at least 50 percent of the capital. In family firms, the presence of a female CEO was not linked to more women in the management team, even when the CEO had high levels of decision authority.
“These findings suggest that it isn’t enough for a woman to have the CEO title,” says Paola Rovelli, associate professor at the Faculty of Economics and Management at the Free University of Bozen-Bolzano. “What really makes a difference is whether she has the authority to shape the top management team and make strategic decisions. Family firms seem to represent a particular challenge for women and may need support in recognizing the influence of family dynamics on leadership appointments.”
The companies in the survey had at least 20 employees and were active in the manufacturing or service industry. The study included Italian companies only, meaning the results may not apply to businesses in other countries with other cultures.
Publication: Breaking the TMT glass ceiling: Myth or reality? Female CEOs, decision authority, and family firms