Is a critical mass of women always enough to improve firm performance? The importance of the institutional context

This paper aims to present a comprehensive theoretical framework that seeks to explore the impact of cultural, legal and social factors within the external environment on the relationship between women on corporate boards and firm performance. By investigating these boundary conditions, the paper aims to shed light on how these pressures influence the aforementioned relationship. The findings indicate that the positive influence of a critical mass of women on corporate boards on firm performance is contingent upon the institutional context. Specifically, the authors observed that this relationship is strengthened in institutional contexts characterized by an individualistic culture, whereas it is not as pronounced in collectivist cultural contexts. Furthermore, this research provides compelling evidence that the presence of a critical mass of women on boards leads to enhanced firm performance in institutional settings where gender quotas are not binding, as opposed to settings where such quotas are enforced. Lastly, the results demonstrate that the presence of a critical mass of women on boards is associated with improved firm performance in institutional settings characterized by low progress in achieving gender equality. However, the authors did not observe the same effect in institutional contexts that have made significant strides toward gender equality.