The positive effects of gender diversity in companies are well established. Why is the progress so slow?

Norway is one of the most egalitarian countries with a high level of gender equality and a high percentage of women at work. Nevertheless, as shown in this article, mandatory rules appeared necessary to bring about the desired change in the composition of the Boards.

As experienced, businesses did not change gender equality on their own, in spite of a long grace period. The explanation to why seems to be a combination of be path-dependency, power and money.

Why don’t they get it?

It seems logical and obvious that limiting oneself to only men or only women in any corporate setting may diminish the potential for constructive and open-minded discussions that bring a company forward. Detrimental group-think is a risk in any very homogenous context. Conversely, the positive effects of diversity – gender, cultural and age – are well-known. Experienced business people will tell us that having a heterogeneous board is fruitful. So in the words of one of the male contributors at the gender diversity conference at Deakin University October 2014 where this paper was presented: “why don’t they get it”? Why the resistance, or formulated positively: the very slow progress, which underpins the discussion of whether to legislate to achieve change?

Can gender diversity create sustainable value?

The article presents the coup that got us this rule as the first country in the world and its innovative legislative approach. Furthermore, the Norwegian rule is elaborated on including its background as a corporate governance initiative rather than a gender equality one and the compliance by Norwegian companies.

The article discusses the effect of the rule after first elaborating on the challenges and uncertainties connected with such an investigation. With these caveats, the corporate governance significance of gender diversity is discussed, drawing on empirical studies of the effect on the performance of the companies. This may be especially relevant for the discussion that the Norwegian rule has inspired in many jurisdictions around the world. The article also discusses the potentially broader impact of gender diversity in the board room, including the pressing question of whether gender diversity in the board room can help companies create sustainable value within the planetary boundaries.

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Article by Sjåfjell, Beate

Gender Diversity in the Board Room & Its Impacts: Is the Example of Norway a Way Forward?’ in Deakin Law Review, Vol 20, No 1 (2015), pp. 25–52, University of Oslo Faculty of Law Research Paper No. 2014–48, Nordic & European Company Law Working Paper No. 15–10

Published Jan. 26, 2016 11:17 AM - Last modified July 25, 2016 10:44 AM