Wall Street Journal highlights business professor Dave Ketchen’s study on women and corporate boards
The Wall Street Journal featured a study conducted by Raymond J. Harbert College of Business Professor Dave Ketchen along with colleagues at Notre Dame, Indiana and Lehigh University. The study looks at whether adding women to corporate boards changes product recall decisions. Psychology research has found that women tend to be more empathetic toward other people than men. Although boards themselves seldom order recalls, having more women on a board could set a more empathetic tone and expectations for the executives who make recall decisions. Because recalling products is expensive and generates bad publicity, executives sometimes drag their feet before deciding to conduct a recall and, in the case of minor defects, they sometimes decide to not conduct a recall at all.
Using data on more than 4,000 recalls in the medical products industry, the study found that firms with female directors announced recalls of products with high-severity defects 28 days sooner than firms with all-male boards: a 35 percent reduction in the time between when a firm was first made aware of a defect and when executives decided to recall the defective product. The study also found that firms with female directors announced 120 percent more recalls involving minor defects compared to firms with all-male boards. This is equivalent to 12 additional recalls per firm.
Recall practices won’t automatically change simply by adding women to the board, but taking a fresh look at a board’s gender composition and what tone and expectations the board is setting for executives likely would benefit many companies, especially those in industries where product defects are a serious worry such as medical products, food, toys and automobiles.
The study is being published in Manufacturing & Service Operations Management, a leading business journal, and is available at https://pubsonline.informs.org/doi/abs/10.1287/msom.2019.0841. The Wall Street Journal article is available at https://on.wsj.com/2JOc2tE.