Guest post by Menaka Hampole, Assistant Professor of Finance, Yale School of Management, Francesca Truffa, Postdoctoral Scholar, Stanford Graduate School of Business, Ashley Wong, Assistant Professor of Economics, Tilburg University. This post is part of a series by the Diversity Pilots Initiative, which advances inclusive innovation through rigorous research. The first blog in the series is here and resources from the first conference of the initiative are available here.
The glass ceiling — the barrier obstructing females and minorities from obtaining upper-level positions— persists. Even with decades of advancements in labor force participation and university enrollment, companies still underrepresent women in top corporate leadership roles. For instance, women constitute 40% of the workforce in the S&P 1500 companies, yet they only occupy 6% of CEO positions. The gender gap expands at every level of the corporate hierarchy.
In our recent study, we look at MBA graduates from a top U.S. business school in the last two decades, and we find a big gender gap in management roles. While almost all male and female grads step into management roles within 15 years of graduation, women have a 24% lower chance of reaching senior positions. This difference appears within a year of getting their MBA and lasts for at least 15 years, and this gap exists even when you consider factors like experience or the type of company they work for.
Figure 1. Representation in the Corporate Pipeline Among MBA Graduates in the First 15 Years Post-Graduation by Gender
Notes: We plot the percentage of male and female graduates who ever held any managerial positions, a VP or Director position, SVP positions, and C-level Executive position within fifteen years since graduation. We display the 95% confidence intervals from the t-test of gender equality. Sample includes students of the graduating classes 2000-2018, excluding 2009.
If managerial talent exists equally across genders, the scarcity of women in executive roles suggests current leaders are misallocating talent. Executives significantly shape performance and innovation outcomes within their firms, so when firms lose female talent moving up the corporate ladder, they are likely reducing employee productivity, inventive capacity, and firm value. Furthermore, female managers can serve as role models and enact policies that lower obstacles for other women. Consequently, female leaders can foster a more gender-diverse and inclusive corporate environment. Given the potential widespread impacts of having too few women in executive roles, it’s crucial to understand what policies can help reduce the leadership gap.
Can access to a larger network of female peers in business school help women reach leadership positions?
Women can gain insights from other women on companies that support their career growth and how to make the most of benefits like maternity leave. However, connecting with men, who often have wider networks and hold powerful positions, might offer more advantages. So, it’s a real question whether female peers truly help close the management gender gap.
Our study documents that having a higher share of female peers in school has a positive impact on women’s advancement into senior leadership positions. We find that adding 5 more women to a section of 60 students would increase women’s likelihood of achieving senior managerial positions from 39% to 45%. In contrast, there is no effect on male students. This overall effect translates into a 26% reduction in the management gender gap.
This effect is largest in male-dominated industries like tech and manufacturing, where women are underrepresented the most, suggesting that female peer networks are most important in industries where women are more likely to face barriers in accessing informal networks in the workplace.
When we looked into company features, we found that women with strong networks of female peers often get promoted to top roles in companies that are supportive of women. What’s interesting is that women tend to join these companies six to ten years after getting their MBA, around the time they might have young kids. This hints that having support from other women might be most helpful when challenges in their careers are growing.
In our interviews with female MBA graduates, many shared that their female friends offered emotional support, pointed them to job openings, gave tips about work opportunities, and advised on balancing work with family life. This feedback shows how crucial female friendships are for women’s career success. By adding more women to MBA programs and encouraging them to network together, we might finally shatter that stubborn glass ceiling.
To all the innovators and patent pioneers out there, please take note. The insights we’ve gathered from MBAs are incredibly relevant, especially in the competitive, male-dominated world of innovation. Think about it – by actively nurturing female peer networks right from the get-go with young recruits, you could help to ignite real change. Let’s champion this approach and bring a fresh wave of diversity and creativity to the forefront of innovation.
Three main takeaways:
- Persistent Gender Gap in Leadership: Even with advancements in education and labor force participation, a significant gender gap persists in top corporate roles. Women make up 40% of the workforce in major companies but only hold 6% of CEO positions. This disparity is evident even among MBA graduates from top U.S. institutions, where women face a 24% lower likelihood of reaching senior positions within 15 years of graduation.
- Importance of Female Peer Networks: Female MBA graduates benefit significantly from having strong female peer networks during their studies. Such networks can increase a woman’s chances of attaining senior management roles, especially in male-dominated sectors like tech and manufacturing.
- Implications for Innovation & Patenting: The underrepresentation of women in leadership roles can reduce a company’s productivity and inventive potential. By actively promoting and valuing female peer networks from early career stages, innovators and patent professionals can drive greater diversity in leadership and subsequently benefit from broader perspectives and increased innovation.
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