Networks As Newsletters: The Effects of Female Network Connectedness On Gender Diversity Efforts

Today, many researchers and practitioners highlight the benefits of having a board with well-connected, demographically diverse directors on enhancing board effectiveness and firm performance. Ironically, using the archival data of the S&P 1500 firms in the past 24 years (1999 – 2022), the current research suggests that the female directors’ social network connections may unintentionally hamper the progress in boardroom gender diversity. That is, the female board directors’ network may function as a channel of signaling the firm’s previous diversity effort, which further increase perceived previous diversity efforts and license decision-makers to reduce their future effort on gender diversity. The effect was especially stronger when female directors have longer tenures, leaving more time for the information to spread in the networks.