UT research finds women in executive suite improve customer orientation, financial performance

Isabella Zeff, News Reporter

A new UT study found that though the presence of women on executive management teams tends to improve a company’s customer orientation, leading to long-term financial gains, women continue to be underrepresented on companies’ top management teams.

The Aug. 3 study looked at 389 companies on the Fortune 500 list from 2007 to 2015 to determine what benefits women in top management teams brought to companies in terms of marketing and financial performance. Study co-author Saim Kashmiri said that in Fortune 500 companies, women make up only 13% of executives in the top management teams, although roughly half of all graduates who receive their masters in business administration programs are women.

Kashmiri, an associate marketing professor at the University of Mississippi, said he worked with UT marketing professor Vijay Mahajan and St. Edward’s University marketing lecturer Chandra Srivastava to identify benefits women bring to companies. Kashmiri said they measured female influence in top management teams, not just female representation.

“(Female influence is) a construct that not only looks at the number of women, but also the power that they have,” Kashmiri said.

The researchers measured how female influence impacted customer orientation, which Kashmiri said refers to how much importance a company places on customer relationship building and satisfaction.

“On average, we found that high female influence in the top management team led to or was associated with a higher customer orientation for companies,” Kashmiri said. “We also found that companies where female influence with the (top management team) was high perform better financially.”

Kashmiri said these two outcomes are linked because companies with greater customer orientation generally achieve higher brand loyalty and customer satisfaction, which can lead to higher performance and cash flow.

Srivastava said the study shows the importance of diversity in gender balance in top management teams. While the researchers found women bring benefits like greater customer orientation to companies, she said a theoretical all-female top management team would result in similar groupthink issues as an all-male team.

Srivastava also said the study challenges the narrative of previous research that claims women increase risk-aversion. She said their research shows that in some situations, women aren’t more risk-averse, especially when it comes to satisfying customers.

“If you look at the research, women actually take risks,” Srivastava said. “But they tend to take more calculated risks.”