Board gender diversity and economic performance: Lessons from a controlled experiment

Board gender diversity and economic performance: Lessons from a controlled experiment

From the paper by Professors Karine Lamiraud and Radu Vranceanu, "Group gender composition and economic decision-making: Evidence from the Kallystée business game", Journal of Economic Behavior & Organization, Volume 145, 2018.


Laboratory experiments and field experiments can offer significant insights into how gender interaction in teams may lead to better decision-making. In a paper forthcoming in theJournal of Economic Behavior and Organization, Karine Lamiraud and Radu Vranceanu use evidence from a controlled experiment to address the question of whether a firm’s economic performance is impacted by the gender composition of its executive board.

Data were collected in 2012 and 2013 at the ESSEC Business School from a proprietary business game called Kallystée, a mass-attendance business game developed in the 1990s by Daniel Tixier and Raymond Gambini with the support of l’Oréal Paris. We used a random selection process to create teams of five women, and teams with four, three, two, one and, finally, no women (respectively referred to as 5W, 4W, 3W, 2W, 1W and 0W teams).

Regression analysis highlights that 0W (all-man) and 4W teams perform significantly better than 5W teams, with economic performance assessed by three distinct variables: total equity, profits and sales.

Moving beyond sheer performance analysis, we carried out a joint analysis of team economic performance and tolerance to risk. When controlling for team tolerance to risk, the performance premium of all-man teams vanished, and the performance premium of all other gender combination teams diminished. It turns out that team tolerance to risk has an important mediating effect on economic performance. Even when controlling for average tolerance to risk, four women teams maintained their performance edge compared with all-women teams.

This outstanding performance of 4W teams appears to be grounded in their risk taking behavior. As shown in the second part of our study, 4W teams take more risks than the average tolerance to risk of their team would indicate, as if these teams develop some specific form of risk-shift or action bias that drives them to use aggressive first-mover strategies. They launch new products and invest heavily in R&D, in a decision pattern similar to that of teams with a majority of men.

From a policy perspective, our findings support the policy of increasing the gender diversity of corporate boards, as the best performance is achieved by mixed teams, although not without taking more risks than the reference team.

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