Gender Quotas for Corporate Boards

Gender quotas for corporate boards of directors have attracted attention in Europe, where a number of countries have enacted mandatory or voluntary quotas. In the United States, some activists, scholars, and policy makers have advocated quotas as a way to shatter the glass ceiling for women in business and (possibly) to improve corporate decisionmaking.

The appeal of quotas is that they represent the kind of structural change that could alter business practices that exclude women from leadership roles. Social psychology has demonstrated that gender discrimination flourishes when institutions allow actors to give free reign to stereotypes and to unconscious biases. Effective anti-discrimination measures must inform actors about these biases and limit the effects of bias on hiring, promotion, and the distribution of rewards in the workplace and in society. Still, quotas may have a dark side: critics worry that quotas could damage women’s career prospects if new directors are seen as tokens. Critics also predict that quotas could harm corporate performance, if new female directors are untrained or inexperienced. Empirical claims on both sides await further study by scholars.

Still, whatever international experience may prove to be, there is a more fundamental problem with proposals for gender quotas in the United States. Even if a quota could survive constitutional scrutiny here, gender quotas for corporate boards appear to represent the kind of intrusive state regulation of business that our nation’s laissez-faire ideology will not tolerate. American principles of free markets, investor choice, and employment at will sit uneasily, to put it mildly, with the notion that the state should dictate to investors the gender of the decisionmakers entrusted with the management of their money.

But a closer look at U.S. institutions reveals that the cultural and legal mismatch is not as severe as it may first appear. Gender quotas designed with sensitivity to exceptional U.S. institutions could fit comfortably with U.S. legal principles. For instance, the federal tax code and securities law may offer stronger vehicles for implementation of a mandatory or voluntary quota than state corporate law. To take another example, the prominence of nonprofits in health care and education should prompt us to consider carefully whether some (or all) nonprofits should be subject to quotas as well and how nonprofits might be integrated into tax-based initiatives. Finally, thoughtful transition policies could address concerns about the scarcity of experienced women in the pool of potential director candidates.

The full paper is available for download here.