Response to a Post by Lisa Schiltz

I shared with a colleague Lisa's post titled  "Support for Complementarity" (here).  I thought that my colleague's response would be of interest:

About the Wellesley College study on the impact of women on corporate boards.  I couldn't get web access to the study itself, only to the abstract of the study.  The abstract doesn't tell me much about the methodology of the study. I do know that of 62 persons interviewed, 50 were women directors who, not surprisingly, tell us that having lots of women on boards is a good thing for corporations.  Why only 12 CEOs?  How many of them were women?  Is bias possible here?

The next problem with the methodology is the interview format.  Economists care more about what behavior reveals than what people say, and thus are always suspicious of survey results.  In this particular area of corporate governance, the question that is usually asked about various practices that have been studied is "do they improve corporate performance, as evidenced in stock prices?"  There are studies that demonstrate that even long term anticipated benefits, such as from research, are reflected in current stock prices. There is no suggestion in this blog or the abstract of any such rigor in this study.

I serve on the Nomination and Governance Committee of [name deleted], which I currently chair.  (We have one woman on our board, a representative of a venture capital firm that is an investor.)  We have been looking for new directors, using both the contacts of our current board members and a search firm.  Very few women have shown up in the pool, and their experience has generally been more limited than that of the men, many of whom have served as CEOs and COOs of public companies.  The limited number of women CEOs and COOs thus explains the thin pool of women candidates, as far as I can tell.

One response to this problem might be - why not think outside the box, and pick candidates with other kinds of experiences?  On our board, I'm an example of such a pick - an academic.  One of the problems is that I add value only in certain limited areas to the board's deliberations.  I don't understand science, and I have no experience in the drug industry. Here I learn from and rely on others, which is proper.  But how many such semi-ignorant board members do we need?  Does a woman have a different take on issues of drug development than a man?  I can't see how - we do our research in limited areas - HIV and Hepatitis drugs, where gender doesn't seem to play a role.  Has the company hired women for responsible positions? Two of our vice presidents (regulatory affairs and alliance and project management) are women.  We have one Hispanic vice president. What we look for are the smartest and most experienced people we can attract, because the united goal of the board is to (1) find the financing to allow us to develop and test our present and future drugs, (2) get them through the clinical process to FDA approval, and (3) then get them into the market where they can save lives and earn a return for our investors, some of whom have been stockholders for eight years without any return at all.  This kind of patience is what it takes in the drug  development business.  I can't see how gender makes a difference here.

There may be companies where gender might matter.  Consumer product companies where the market is largely composed of women is an obvious example.  There may be other companies faced with charges or complaints involving gender, such as discrimination, where women's insights could be valuable.  But proving that would require a focused empirical study, not simple assertions or anecdotal observations.