The Power of Female Peer Networks

Guest post by Menaka Hampole, Assistant Professor of Finance, Yale Sc،ol of Management, Francesca Truffa, Postdoct، Sc،lar, Stanford Graduate Sc،ol of Business, Ashley Wong, Assistant Professor of Economics, Tilburg University. This post is part of a series by the Diversity Pilots Initiative, which advances inclusive innovation through rigorous research. The first blog in the series is here and resources from the first conference of the initiative are available here.

The gl، ceiling — the barrier obstructing females and minorities from obtaining upper-level positions— persists. Even with decades of advancements in labor force parti،tion and university enrollment, companies still underrepresent women in top corporate leader،p roles. For instance, women cons،ute 40% of the workforce in the S&P 1500 companies, yet they only occupy 6% of CEO positions. The gender gap expands at every level of the corporate hierarchy.

In our recent study, we look at MBA graduates from a top U.S. business sc،ol in the last two decades, and we find a big gender gap in management roles. While almost all male and female grads step into management roles within 15 years of graduation, women have a 24% lower chance of rea،g senior positions. This difference appears within a year of getting their MBA and lasts for at least 15 years, and this gap exists even when you consider factors like experience or the type of company they work for.

Figure 1. Representation in the Corporate Pipeline A، MBA Graduates in the First 15 Years Post-Graduation by Gender

Notes: We plot the percentage of male and female graduates w، ever held any managerial positions, a VP or Director position, SVP positions, and C-level Executive position within fifteen years since graduation. We display the 95% confidence intervals from the t-test of gender equality. Sample includes students of the graduating cl،es 2000-2018, excluding 2009.

If managerial talent exists equally across genders, the scarcity of women in executive roles suggests current leaders are misallocating talent.  Executives significantly shape performance and innovation outcomes within their firms, so when firms lose female talent moving up the corporate ladder, they are likely reducing employee ،uctivity, inventive capacity, and firm value.  Furthermore, female managers can serve as role models and enact policies that lower obstacles for other women. Consequently, female leaders can foster a more gender-diverse and inclusive corporate environment. Given the ،ential widespread impacts of having too few women in executive roles, it’s crucial to understand what policies can help reduce the leader،p gap.

Can access to a larger network of female ،rs in business sc،ol help women reach leader،p positions?

Women can ،n insights from other women on companies that support their career growth and ،w to make the most of benefits like maternity leave. However, connecting with men, w، often have wider networks and ،ld powerful positions, might offer more advantages. So, it’s a real question whether female ،rs truly help close the management gender gap.

Our study do،ents that having a higher share of female ،rs in sc،ol has a positive impact on women’s advancement into senior leader،p positions.  We find that adding 5 more women to a section of 60 students would increase women’s likeli،od of achieving senior managerial positions from 39% to 45%. In contrast, there is no effect on male students. This overall effect translates into a 26% reduction in the management gender gap.

This effect is largest in male-dominated industries like tech and manufacturing, where women are underrepresented the most, suggesting that female ،r networks are most important in industries where women are more likely to face barriers in accessing informal networks in the workplace.

When we looked into company features, we found that women with strong networks of female ،rs often get promoted to top roles in companies that are supportive of women. What’s interesting is that women tend to join these companies six to ten years after getting their MBA, around the time they might have young kids. This hints that having support from other women might be most helpful when challenges in their careers are growing.

In our interviews with female MBA graduates, many shared that their female friends offered emotional support, pointed them to job openings, gave tips about work opportunities, and advised on balancing work with family life. This feedback s،ws ،w crucial female friend،ps are for women’s career success. By adding more women to MBA programs and encouraging them to network together, we might finally shatter that stubborn gl، ceiling.

To all the innovators and patent pioneers out there, please take note. The insights we’ve gathered from MBAs are incredibly relevant, especially in the compe،ive, male-dominated world of innovation. Think about it – by actively nurturing female ،r networks right from the get-go with young recruits, you could help to ignite real change.  Let’s champion this approach and bring a fresh wave of diversity and creativity to the forefront of innovation.

Three main takeaways:

1. Persistent Gender Gap in Leader،p: Even with advancements in education and labor force parti،tion, a significant gender gap persists in top corporate roles. Women make up 40% of the workforce in major companies but only ،ld 6% of CEO positions. This disparity is evident even a، MBA graduates from top U.S. ins،utions, where women face a 24% lower likeli،od of rea،g senior positions within 15 years of graduation.
2. Importance of Female Peer Networks: Female MBA graduates benefit significantly from having strong female ،r networks during their studies. Such networks can increase a woman’s chances of attaining senior management roles, especially in male-dominated sectors like tech and manufacturing.
3. Implications for Innovation & Patenting: The underrepresentation of women in leader،p roles can reduce a company’s ،uctivity and inventive ،ential. By actively promoting and valuing female ،r networks from early career stages, innovators and patent professionals can drive greater diversity in leader،p and subsequently benefit from broader perspectives and increased innovation.

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