Board gender diversity, quotas and critical mass theory

What is it about?

Following the 2022 EU directive, all EU member states will have to attain a 40% women representation on large corporate boards to achieve board gender diversity and what has been termed a 'critical mass'. However, the literature indicates that gender diversity benefits may not be achieved if a critical mass is not composed of independent women directors who create a voice that produces a collective action. The authors highlight why a critical mass may not be achieved. The inconsistency in prior research linking corporate board gender diversity to economic performance may result from the critical mass of women directors not reflecting an independent collective action. However, as gender-diverse boards evolve, the authors argue that women will not just be seen as female directors but will be accepted on equal terms with their male counterparts and have an equal voice; gender will no longer be an issue, and critical mass theory may then become irrelevant. This paper gives a conceptual viewpoint on the critical mass theory and corporate board gender diversity, identifying that it is not just the numbers that are important but also the issue of minority independence and collective action, and it is, therefore, unique in this respect. Future research should identify if a critical mass (not just numbers) of women on corporate boards has been achieved. It is only then that the linkage, based on critical mass theory, between board gender diversity and corporate performance/profitability can be made. It would also be interesting to know if board sizes are being increased to accommodate the added female directors, or will the new female directors replace existing male directors? However, the most important research question, once gender diversity has been achieved, could be: Is critical mass theory relevant with respect to board gender diversity?

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