Abstract
Diversity in the boardroom, particularly gender diversity, has emerged as a critical issue in corporate governance. Although the number of women on boards has increased, more data on whether this benefits companies financially needs to be collected. This essay examines if having more women on boards improves financial success. Pertinent theories, writings, and illustrations support the topic. Significant findings point to a complex and context-dependent relationship between gender diversity on boards of directors and financial success, with both possible advantages and disadvantages. This essay emphasizes the significance of considering board diversity as a crucial element of efficient corporate governance in its Analysis.
Introduction
The importance of boardroom diversity as a critical component of efficient corporate governance has grown in recent years. In this context, gender diversity has become a hot topic in particular. Although there has been an increase in the number of women on boards, it is still being determined whether their presence genuinely helps businesses financially. This essay uses pertinent theories, sources, and examples to analyze how gender diversity on boards affects financial performance critically. The significance of this subject resides in the broader context of encouraging inclusiveness and diversity in corporate leadership, which has been associated with more significant judgment and overall business performance. Understanding the effects of board gender diversity is essential, given that women are still underrepresented in top leadership positions. Does having more women on boards improve financial success is the research question this essay attempts to answer. Examining pertinent case studies and reviewing prior research will help answer this question. The essay will be organized as follows. The background information and Analysis of the relevant literature will be presented in the first section. The second portion will explore the findings and offer examples that support or refute the proposition that gender diversity on boards improves financial success. The last team will summarize the significant conclusions and their ramifications for good corporate governance.
Background literature and Analysis
A collection of guidelines, protocols, and practices control and run a business. The phrase “corporate governance” refers to the methods and factors that make it crucial for a company to be managed. Corporate governance is essential in an organization as it assists in identifying who is in charge, who is accountable, and who makes choices. Therefore, corporate governance is often defined as a system of guidelines, standards, and procedures that direct and oversee a corporation (Bhagat & Bolton, 2019). It plays a significant role in the day-to-day functions of an organization as it safeguards the interests of shareholders and other stakeholders and ensures accountability, fairness, and transparency in decision-making. The notion of corporate governance has become more critical due to several high-profile business scandals and failures in recent years that emphasized the need for more robust monitoring and regulation.
Board diversity is a crucial component of good company governance. This refers to a company’s board of directors with diverse backgrounds, experiences, and viewpoints. Board diversity has been associated with improved decision-making, innovation, and overall business performance. Given the underrepresentation of women on boards, gender diversity has become an essential topic of concern in recent years. There is conflicting research on how gender diversity on boards affects financial performance. While some research suggests that having more women on boards improves financial results, other study finds no discernible link. The effect of board gender diversity on economic performance is context-dependent. It may differ based on factors such as industry, firm size, and the country is one explanation for these inconsistent results. Several research gaps are revealed by critically analyzing the literature. For instance, many studies look at the number of women on boards, ignoring other facets of diversity like age or race. However, there is a shortage of studies on how board gender diversity could influence financial success, such as through enhanced risk management or increased stakeholder engagement. According to a growing body of research, promoting diversity in corporate leadership is a crucial part of efficient corporate governance, even though the literature on board gender diversity and financial performance is still in its infancy.
Discussion and Examples
Many ideas explain the link between gender diversity on boards and financial performance. According to the “Critical Mass Theory,” a board can achieve a “critical mass” by having at least three women on it, which can enhance performance and decision-making (Yang, Yang & Gao, 2019). Another theory, the “Social Identity Theory,” asserts that board diversity can foster innovation, problem-solving, and communication (Trepte & Loy, 2017). Many studies have attempted to link the gender diversity of boards and financial performance with various degrees of success. While some studies have identified a positive correlation between board gender diversity and financial success, others have found no discernable link. For instance, a McKinsey & Company study discovered that businesses with diverse executive boards were 21% more likely to exceed their sector counterparts in profitability (Keller & Meaney, 2017).
In contrast, a Credit Suisse analysis revealed no appreciable difference in financial performance between companies with at least one woman on the board and those with all-male boards (Keller & Meaney, 2017). The effect of board gender diversity on financial performance has also been studied using case studies. For instance, the Norwegian government mandated that at least 40% of the board seats at all publicly traded companies in the country be held by women (Kitterød & Teigen, 2018). Businesses in Norway with gender-diverse boards had higher returns on invested capital and returns on equity than those with all-male boards, according to an MSCI study. Notwithstanding the contradictory results, there is growing agreement that gender diversity on boards is crucial for corporate governance. The decision-making process benefits from a more extensive range of viewpoints and experiences, which produces better results for the business and its stakeholders.
Additionally, it encourages gender equality and offers women the chance to rise to leadership roles. The research implies that diversity is crucial for corporate governance and can result in better decision-making and outcomes. However, the relationship between board gender diversity and financial success is not established (Tyrowicz, Terjesen, & Mazurek, 2020). Businesses should develop more diverse boards representing the variety of their staff and clients.
Conclusion
In conclusion, the literature has conflicting data on board gender diversity and financial performance. While some research implies that gender diversity improves financial performance, others show no discernible effect. The potential advantages of gender diversity on boards are explained by critical mass theory and resource dependence theory. The research is constrained, nevertheless, by issues including the difficulty in determining causality and the need for more diversity in the populations utilized in some studies. Notwithstanding these drawbacks, board diversity is crucial for establishing good corporate governance. Women’s participation in leadership positions gives various viewpoints and experiences that can enhance decision-making and encourage creativity. As a result, businesses should work to increase boardroom diversity while acknowledging that gender diversity is simply one component of board diversity. Future studies might examine how factors like racial and cultural diversity affect financial performance. Research may also investigate how board diversity affects a company’s performance concerning other corporate governance factors like CEO and executive compensation. Overall, it is evident that board diversity is a significant problem that calls for ongoing consideration and study in corporate governance.
References
Bhagat, S., & Bolton, B. (2019). Corporate governance and firm performance: The sequel. Journal of Corporate Finance, pp. 58, 142–168.
Do female board directors promote corporate social responsibility? An empirical study based on the critical mass theory. Emerging Markets Finance and Trade, 55(15), 3452-3471. Retrieved from https://doi.org/10.1080/1540496X.2019.1657402
Keller, S., & Meaney, M. (2017). Attracting and retaining the right talent. McKinsey & Company. Retrieved from https://www.peoplestratconsulting.com/assets/pdf/attracting-and-retaining-the-right-talent.pdf.
Kitterød, R. H., & Teigen, M. (2018). Bringing Managers Back in: Support for Gender-Equality Measures in the Business Sector. Nordic Journal of Working Life Studies, 8(3). Retrieved from https://www.academia.edu/download/81142598/158906.pdf.
Trepte, S., & Loy, L. S. (2017). Social identity theory and self‐categorization theory. The international encyclopedia of media effects, 1-13. Retrieved from https://www.researchgate.net/profile/Sabine-Trepte/publication/314531246_Social_Identity_Theory_and_Self-Categorization_Theory/links/5a12b8eb458515cc5aa9ee51/Social-Identity-Theory-and-Self-Categorization-Theory.pdf.
Tyrowicz, J., Terjesen, S., & Mazurek, J. (2020). All on board? New evidence on board gender diversity from a large panel of European firms. European Management Journal, 38(4), 634-645. Retrieved from https://doi.org/10.1016/j.emj.2020.01.001Get rights and content
Creating An Entrepreneurial Mindset Free Essay
What I think about the book
The book “Creating an Entrepreneurial Mindset” by Roger Cowdrey is a complete and helpful guide to developing an entrepreneurial mindset and set of skills. It covers a broad range of topics connected to entrepreneurship, including ideologies, skills, leadership, and the execution of ideas, among other things. To explain essential concepts using real-life examples and case studies, the author draws on his broad knowledge of the business world and the corporate sector. He does this by building on his prior experience. The book will provide the reader with valuable insights and information that will aid them in conquering the problems of starting and managing a company.
How the book matches the interview of an entrepreneur
The interview and the information on “Creating an Entrepreneurial Mindset” stress how important it is to help people develop an entrepreneurial mindset that values taking calculated risks, being persistent, and coming up with new ideas. The interview emphasizes the necessity of business owners being willing to take risks and being prepared to fail. In contrast, the book highlights the condition of identifying possibilities and discovering gaps in the market. Both of these ideas are relevant to the success of a business. Even though the company owner profiled in the article stressed the importance of being comfortable with uncertainty and taking calculated risks, the book urged business owners to see failure as a chance to learn. Both the interview and the book come to the same conclusion, in which they stress how vital it is for companies to be inventive and in which they challenge enterprises to think imaginatively and in ways that are not conventional.
How the book does not support the development of a business plan
“Creating an Entrepreneurial Mindset” is not a book that teaches students how to draft a business plan in a step-by-step format; instead, this class focuses on building the attitude and abilities necessary to be a successful entrepreneur. It shows how important it is to solve problems, be creative, and develop new ideas. It also shows how important it is to find new opportunities, think creatively, and take calculated risks. Moreover, it focuses on knowing one’s market, rivals, and target markets. While the book is not intended to be an all-encompassing guide to developing an attitude, it provides a strong foundation for readers to build upon. It encourages people to use their knowledge, skills, and ideas over the period, which is needed to make and carry out a successful business plan. Aside from that, it encourages people to see setbacks as chances to grow as people. It stresses the importance of solving problems, being creative, coming up with new ideas, taking risks, and knowing the market. All of these are essential parts of a successful company’s strategy.
How does the book link up with the lecture content of this course?
“Creating an Entrepreneurial Mindset” is an excellent book for anyone who wants to learn the skills and mindset they need to be successful as entrepreneurs. The book gives helpful advice on developing an entrepreneurial mindset, which is a vital part of the course’s focus on learning through hands-on experience and taking the lead to succeed in entrepreneurship. In addition to covering a wide variety of topics pertinent to the class, such as innovation, creativity, risk-taking, and problem-solving, the book strongly emphasizes taking action and gaining knowledge via personal experience. Some of the topics covered in the book include innovation, creativity, risk-taking, and problem-solving. It tells people to look at failures as chances to improve as people and at their jobs, and it tells them to try new things and often practice to improve their ideas and skills. Also, “Creating an Entrepreneurial Mindset” is a good book for anyone who wants to learn how to develop the essential skills and mindsets needed for success in the business world. This book is an excellent resource for anyone interested in doing so. It shows how important it is to have a growth mindset, which puts learning and development ahead of instant success, and how important it is to network, make connections, and find mentors. It also talks about the importance of a growth mindset that puts learning and development ahead of immediate success. The information in the book about hands-on, practical experience, a growth mindset, and networking is an excellent addition to what was said in the interview about the course.
Why I have an Entrepreneurial Mindset
I have an entrepreneurial approach since I am naturally motivated to innovate, solve issues, and take chances. I’m always looking for new challenges and opportunities and am fearless in taking calculated risks to reach my goals. I appreciate working alone and taking responsibility for my efforts, and I am flexible in changing situations. I am also highly driven and motivated to succeed and continually explore new strategies to grow my firm and myself. Due to my entrepreneurial viewpoint, I can think creatively, recognize and seize possibilities, and tackle and conquer challenges. I can also keep my long-term goal in mind while being adaptive in the immediate term, which helps me manage the ups and downs of business. I am okay with failing, considering each setback an opportunity to learn and progress. I am continually seeking advice and perspectives from others. However, I can also follow my intuition and make my conclusions. Due to my entrepreneurial viewpoint, I can transform obstacles into opportunities and ideas into realities, producing value for myself and others.
References
Cowdrey, R. (2012). Creating an entrepreneurial mindset: Failure is an option. Bookboon. Com, First edit, 1-57.
Decision-Making Techniques Essay Sample For College
Introduction
Decision-making remains a daily process that every person frequently performs, making it an exciting topic among researchers. Decision-making is performed using various decision-making theories and styles. Some decision-making theories and styles include intuitive, descriptive, analytical, heuristic, normative, rational, emotional, and creative decision-making. The author will utilize heuristic, rational, intuitive, and creative decision-making styles to decide on a personal situation (University of Minnesota, 2015).
From December 2019 to January 2020, I was in the process of applying for placement which was a requirement for my degree. I applied to two critical companies, including British Petroleum and British Airways. However, I had to consider the distance from my home to the workplace and extra time to study an online course during the placement. I had to decline one offer, which did not allow me adequate study time and was far from my home. Fortunately, after the interviews with the two companies, British Petroleum Limited offered me a placement on 3rd February 2020, and I had two weeks to decline the offer. British Airways also sent a placement letter on 20th February 2020.
I had various alternatives, including accepting the British Petroleum Ltd placement, declining the placement offer at BP before the three weeks, meaning I could lose the job placement, or waiting for an offer from British Airways. However, if I failed to receive an offer from British Airways, I would lose the placement opportunities and continue making more offers. The outcome of the decision includes refusing the BP offer as it did not meet the conditions. Fortunately, on 20th February, British Airways offered me a placement letter, and I started working on 22nd February. I had time for an online course in the evening near home.
Rational decision making
The dimensions of decision-making have been researched extensively and refer to decision-making procedures involving gathering information necessary for the decision and depending on the analysis of the information to make a choice. Indicators of rational decision-making include using the decision-makers knowledge, cognition, and well-informedness and gathering and analyzing the information (Malewska, 2019). A decision maker assesses the possible outcomes of various decision alternatives to minimize uncertainty and select the decisions that remain favorable in consideration of the risk-benefit analysis (Kaufmann et al., 2016)
The steps involved in rational decision-making include the following.
First, identify the problem clearly because failure can affect the entire decision-making process. Second, create decision criteria by identifying the decision’s relevance and may include other stakeholders, preferences, values, and interests in the procedure. Third, weighing the decision criteria through the developed criteria to develop the proper priority in their decision. Fourth, generate alternatives or options by listing the potential alternatives to making a decision. Fifth, assessing alternatives. After developing a list of potential options, the decision maker should evaluate every option and finally choose the most appropriate option. The decision maker should choose by evaluating the options (Lumen, n.d).
For instance, the problem in the scenario is getting a placement. The second step is identifying the critical factors, including placement in a company near home, which would provide enough time to study an online course. After getting a placement letter from BP, I declined the offer because I needed more study time, and the firm was far from home. I waited for a letter from British Airways. The alternatives include accepting the British Petroleum Ltd placement, declining the placement offer at BP before the three weeks meaning I could lose the job placement, or waiting for an offer from British Airways. However, if I failed to receive an offer from British Airways, I would lose the placement opportunities and continue making more offers. The outcome of the decision includes refusing the BP offer as it did not meet the conditions. However, I was lucky enough to get a letter from British Airways and started the job, which gave me adequate time to study my online course and was near my home.
Intuitive decision making
Intuitive decision-making entails choices for alternatives influenced by affectively charged judgments arising via a non-conscious, rapid, and holistic connection. It differs from the rational decision-making process that allows conscious and active processes because intuitive decision-making processes happen on subconscious and non-conscious levels. Some indicators of intuitive decision-making include gut feelings, hunches, notions, and excitements. The intuitive decision-making process involves decision-makers expressing their positive and gut feelings and negative or neutral emotions concerning a specific decision alternative (Kolbe et al., 2019). Malewska (2019) claims that intuitive decisions depend on the hunch that relies on the capacity to determine patterns, memories, stimuli susceptibility, past experiences, and long-term individual preferences. Intuition translates to immediate perception or awareness of a fact between two outcomes of a phenomenon. More so, intuition assists in comprehending processes that happen externally from the conscious mind of the decision-maker (Fellnhofer & Sornette, 2022). Sometimes, the decision-maker can scan the environment for signs and cues to acknowledge patterns. Decision-makers should consider using analytical or rational decision-making during intuition decision-making to obtain the best outcomes (University of Minnesota, 2015).
For instance, I had always desired to work for British Airways, and when I was required to search for a placement, British Airways was my first choice. However, I had to apply to other companies, including BP, to increase my chances of placement. My uncle worked for British Airways, and I knew that the company offered enough free time to their employees to do their personal tasks and was near my home. Moreover, my uncle informed me that they had job placement opportunities in the business development department, which the company provided during the period every year. When the BP letter came first, I declined it because I was optimistic that British Airways could send their placement letter, too, which they did. It favored my preferences and conditions, and I started working there.
Heuristic decision making
Heuristic originates from the Greek, which means to find. Heuristic is utilized in cognitive psychology as an essential shortcut, rule of thumb, or approximation for searching via a space of possible options (del Campo et al., 2016). Lumen (n.d) Heuristics include decision-making and analytical tools that assist in simplifying the analysis procedure by depending on tested and tried rule thumb. Heurits simplify complicated situations and permit decision-makers to concentrate on essential information. Some of the heuristics utilized in decision-making include take-the-best and recognition heuristics. The recognition heuristic includes an inference strategy that depends on a single piece of information or the recognition cue while assuming other information (del Campo et al., 2016). Take-the-best heuristics defines potentially various characteristics of options and gets considered a model of boundedly rational decision-making (del Campo et al., 2016).
For instance, I had been informed that British Airways recruits and provides job placement to learners every year in January and February. My uncle further confirmed that, indeed, the company had the opportunity. British Airways is near my home and provide enough time for its employees to perform other tasks. More so, it was recruiting people during that period. Therefore, I had to decline the BP placement offer, which came first, and wait for the British Airways offer, which I was optimistic I would get.
Conclusion
In conclusion, decision-making remains a section of an individual’s life because one has to make decisions frequently. However, decision-making is made using various decision-making styles and theories, and the decision-maker has to consider various factors before reaching a decision. From the above scenario, the author has utilized various decision-making styles to decide on job placement, including heuristic, intuitive, and rational decision-making. In rational decision-making, the decision maker has to adhere to different steps, including determining the problem, developing the decision criteria, weighing the decision criteria, identifying the options, determining the best option, and selecting the option. The process has assisted in identifying the most appropriate decision of waiting for the British Airways placement and declining the BP offer because it did not meet the factors. However, the decision maker risked returning to making more job placement offers in case British Airways failed to provide the placement.
Intuitive decision-making focused on my preferences and past experiences with British Airways. The decision maker preferred to work at British Airways because it met the factors needed. More so, the uncle worked for the company, and the decision-maker had some experience with its operations. Heuristic decision-making offered the most simplified type of decision-making. The decision maker relied on the rule of thumb that British Airways offered placement opportunities to students from January to February and had opportunities in the target business development department. It further met the factors considered.
Bibliography
del Campo, C., Pauser, S., & Steiner, E. (2016). Decision-making styles and the use of heuristics in decision-making. J Bus Econ 86, 389–412 (2016). https://link.springer.com/article/10.1007/s11573-016-0811-y#citeas
Fellnhofer, K., & Sornette, D. (2022). Embracing the Intuitive-Analytical Paradox? How Intuitive and Analytical Decision-making Drive Paradoxes in Simple and Complex Environments. Working Paper. https://www.research-collection.ethz.ch/bitstream/handle/20.500.1185
Kaufmann, L., Wagner, C., & Carter, C. (2016). Individual Modes of Rational and Intuitive Decision-making by Purchasing Manager. Journal of Purchasing & Supply Management, 2016. https://isidl.com/wp-content/uploads/2017/07/E4382-ISIDL.pdf
Kolbe, L., Bossink, B., & de Man, A. (2019). Contingent Use of Rational, Intuitive and Political Decision-making in R&D. Journal of Management Decision, 58(6). https://www.emerald.com/insight/content/doi/10.1108/MD-02-2019-0261/full/html
Lumen. (n.d ). Principles of Management. https://courses.lumenlearning.com/wmopen-principlesofmanagement/chapter/rational-decision-making-vs-other-types-of-decision-making/
Malewska, K. (2019). Rationality vs. Intuition in the Process of Managerial Decision Making. In book: The Functioning of the Company During the Crisis (pp. 33-35). The Poznan University of Economics. https://www.researchgate.net/publication/331375333_Rationality_vs_intuition_in_the_process_of_managerial_decision_making
The University of Minnesota. (2015). 11.3 Understanding Decision-Making. Pressbooks. https://granite.pressbooks.pub/principlesmanagement/chapter/11-3-understanding-decision-making/