Better gender balance in the boardroom associated with more responsive recall decisions: Study
Jan 26, 2022
Baltimore [US], January 26 : According to a recent research, adding women to a company's board can help speed up necessary product recalls and increase customer safety and societal benefits.
The study has been published in the 'Manufacturing & Service Operations Management Journal'.
"As boards add female directors, recall decisions change. Companies initiate more medical product recalls that are low in severity, which indicates a reduced tendency to hide quality problems that are discretionary. They also make faster recall decisions for the most serious defects that are high in severity and dangerous for customers," said Kaitlin Wowak of the University of Notre Dame.
The study conducted by Wowak alongside George Ball of Indiana University, Corinne Post of Villanova University and David Ketchen, Jr. of Auburn University, analyzed more than 4,000 medical product recalls from 2002 to 2013 across 92 publicly traded firms regulated by the Food and Drug Administration (FDA).
The study's results highlighted prior research findings suggesting that women in general are more likely to follow rules than their male counterparts and supported the authors' theory that boards with more female directors will set a stricter rule-following tone than boards with few or no female directors.
"Our findings detail that one female director appears to significantly influence low severity recall decisions. This indicates that companies hide fewer discretionary recalls when women are added to the board. Interestingly, when it comes to severe recalls, at least two female directors are required to influence how quickly companies respond and recall," said Ball, an associate professor in the Kelley School of Business.
Class 1 recalls are described as having very high stakes, because its high severity is tied with the negative effects the company feels after announcing them. This builds upon female director research that indicates one female voice may be inadequate to shape decisions that can be risky for the firm.
"Female directors may also help create better balance by helping managers consider customer safety and societal benefits in addition to financial losses resulting from recalls," said Ball.
