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Archives of Business Research – Vol. 11, No. 4

Publication Date: April 25, 2023

DOI:10.14738/abr.114.14561.

Huang, X. (2023). Effects of Women in Top Management Teams on Corporate Wrongdoing: The Moderating Roles of Chairwoman

and Female Relational Capital. Archives of Business Research, 11(4). 181-196.

Services for Science and Education – United Kingdom

Effects of Women in Top Management Teams on Corporate

Wrongdoing: The Moderating Roles of Chairwoman and Female

Relational Capital

Xin Huang

Faculty of Economics and Business Administration

Sapporo Gakuin University 11 Bunkyodai,

Ebetsu-shi, Hokkaido 0698555, Japan

ABSTRACT

In recent years, corporate wrongdoing has attracted widespread attention

worldwide, and the media has vigorously debated whether senior management

should be held accountable. Based on upper echelons theory, this study aims to

investigate the relationship between women's representation in top management

teams and corporate wrongdoing, as well as the moderating roles of the presence of

a chairwoman and female relational capital. This research employs data from 333

small and medium-sized enterprises listed on the Shenzhen Stock Exchange in 2017

and mainly finds through regression analysis that: in small and medium-sized

enterprises in China, women's representation in top management teams has a

significant and negative impact on corporate wrongdoing; the presence of a

chairwoman strengthens the negative effect, but female relational capital weakens

the negative effect. This paper not only enriches research on female executives but

also provides some references for companies to promote the construction of

diverse top management teams.

Keywords: Female executives, Top management team, corporate wrongdoing,

Chairwoman, Relational capital

INTRODUCTION

The escalating incidence of corporate misconduct has garnered global attention in recent times

(Virk, 2019). Many widely reported corporate scandals have not only severely damaged

organizational reputations (Kish-Gephart et al., 2010) but also caused considerable financial

losses to companies, potentially leading to a decline in public trust in the entire industry and,

to some extent, social turmoil. Hence, the prevention of corporate wrongdoing is a pressing and

formidable undertaking for both the business and scholarly spheres. To tackle this

consequential issue, researchers have been endeavoring to identify determinants that can

mitigate corporate wrongdoing. Among them, top management teams seem to be a critical

factor in elucidating corporate misconduct (Daboub et al., 1995). In particular, the role of

women in top management teams has been repeatedly mentioned, as their sensitivity to

morality and unique leadership styles may be potential solutions (Eagly & Johnson, 1990; Post

& Byron, 2015).

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Archives of Business Research (ABR) Vol. 11, Issue 4, April-2023

Services for Science and Education – United Kingdom

With women increasingly entering core management positions, the influence of female

executives in organizations has also significantly improved (Dezsö & Ross, 2012). Existing

research has explored the impact of women in top management teams on corporate behavior

and outcomes from various angles and approaches. First, a large number of studies have

focused on the relationship between the proportion of women in top management positions

and corporate performance, especially how increasing the proportion of women improves

company performance (Adams & Ferreira, 2009; Campbell & Mínguez-Vera, 2008; Carter et al.,

2003; Dezsö & Ross, 2012; Erhardt et al., 2003; Post & Byron, 2015), although sometimes

women must reach a specific proportion to exert a positive impact (Joecks et al., 2013) or no

effect (Noland et al., 2016). Second, the increase in female representation in top management

can promote innovation (Chen et al., 2018; Miller & del Carmen Triana, 2009), but sometimes a

certain proportion must be reached to play a role (Torchia et al., 2011). At the same time, female

representation in top management positions also has a positive impact on group effectiveness

(Nielsen & Huse, 2010). Additionally, female representation at the executive level enhances

corporate social responsibility levels (Bear et al., 2010), and they are more inclined to invest in

projects related to social responsibility (Zou et al., 2018). Finally, some researchers have found

that the impact of women in top management teams on companies may be more complex after

reviewing related literature, as it may only appear in specific situations, meaning that other

factors may influence their relationship (Abatecola & Cristofaro, 2020). For example, research

has shown that human capital and social capital can enhance the relationship between female

participation and firm performance (Ren & Wang, 2011). Furthermore, the impact of female

executives on corporate performance is more significant in state-owned enterprises and

industries with higher environmental sensitivity; corporate social responsibility likely

mediates the relationship between female executives and corporate performance (Liu et al.,

2020).

In summary, although female executives have become a hot topic in the fields of corporate

governance, organizational behavior, and business ethics, there has been little research

specifically exploring the underlying mechanisms of the effect of female executives on

corporate wrongdoing. The contribution of this study is to thoroughly analyze the impact of

women's participation in top management teams on corporate wrongdoing in the unique

political and cultural context of China, an emerging economy, and to further explore the

moderating roles of the presence of a chairwoman and female relational capital. In addition to

giving organizations useful references for diversified management, the research also integrates

the moral exemplar theory into the upper echelons theory, aiming to foster the development of

organizational moral culture by building more diverse and inclusive management teams, thus

reducing corporate wrongdoing.

THEORY AND HYPOTHESES

Women’s Representation in Top Management Teams and Corporate Wrongdoing

Enterprises with more female executives are more likely to create an organizational culture

with moral values. Based on the upper echelons theory, the characteristics, composition, values,

and cognitive foundations of an enterprise's top management team will have an impact on the

organization's strategic decision-making and performance (Hambrick & Mason, 1984).

Moreover, in the decision-making process of top management teams, the leadership style of

female executives is distinctly different from that of male executives (Eagly & Johnson, 1990).

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Huang, X. (2023). Effects of Women in Top Management Teams on Corporate Wrongdoing: The Moderating Roles of Chairwoman and Female

Relational Capital. Archives of Business Research, 11(4). 181-196.

URL: http://dx.doi.org/10.14738/abr.114.14561.

For instance, in contrast to the task-oriented leadership style of men, female executives

emphasize transformation, democracy, and participation, focusing more on the needs and

development of employees and encouraging collaboration (Eagly et al., 2003; Eagly & Karau,

2002). This leadership style reduces moral risks caused by unhealthy competition. At the same

time, women may have advantages and be stricter in terms of moral values and moral

orientation (Fumagalli et al., 2010), which encourages organizations to adopt more honest and

responsible behaviors (Choi et al., 2018) and helps businesses form an inclusive culture and

ethical organizational atmosphere. Additionally, some studies have shown that companies with

more female executives are more concerned about their corporate reputation and actively

assume social responsibility (Bear et al., 2010), thus reducing the occurrence of illegal

behaviors.

Secondly, women's representation in top management teams and gender diversity may

improve the team's decision-making process. When businesses develop strategies or make

decisions, a diverse top management team can provide different perspectives and approaches,

as well as abundant information sources (Page, 2007). As a result, team members engage in

thorough discussions, promoting comprehensive thinking and analysis of issues, avoiding

cognitive errors and biases caused by fixed mindsets, and ultimately improving the quality of

decision-making (Cox et al., 1991; Milliken & Martins, 1996; Surowiecki, 2004). In particular,

gender diversity can alter the cognitive structure of top management teams (Abatecola &

Cristofaro, 2020), thereby influencing organizational outcomes (Carpenter et al., 2004). Some

scholars have concluded through business case analyses that enterprises with gender diversity

are indeed more transformative and creative (Herring, 2009). Consequently, augmenting the

representation of women in top management teams could help businesses identify potential

risks, such as reducing non-performing loans (Mojambo et al., 2020), and prompt them to

thoroughly evaluate and predict the moral impacts of strategic choices, thus keeping businesses

away from unethical practices such as bribery (Tran et al., 2022) and taking appropriate

measures to minimize losses in a timely manner.

In brief, female executives reduce corporate moral risk behaviors by fostering an organizational

moral atmosphere and improving the decision-making process. Therefore, the more women

are represented in top management teams, the fewer wrongful acts the company will commit.

Based on this, the following hypothesis is proposed:

Hypothesis 1: Women’s representation in top management teams has a negative effect on

corporate wrongdoing.

The Moderating Role of The Presence of a Chairwoman

The presence of a chairwoman plays a positive role in building gender-diverse top management

teams. Homosocial reproduction may lead to the exclusion of women from top management

teams (Kanter, 1977), particularly as the glass ceiling hinders women's opportunities for

promotion to executive positions where they can make greater contributions to the company

(Hoobler et al., 2011). However, the presence of female leaders in an organization helps break

down gender barriers and inherent biases, providing more promotion opportunities for other

women (Cook & Glass, 2014). Moreover, the presence of a chairwoman signifies that the

company values gender diversity and supports women's career development. Specifically, a