RICHARD NESBITT, a former chief operating officer at the Canadian Imperial Bank of Commerce, has long been an evangelist for women in business. In “Results at the Top”, a book he wrote with Barbara Annis, he describes his efforts to convince men to promote women. When speaking to bosses, he stresses data showing that companies with more senior women are more successful. But he has noticed that men with daughters tend to be more receptive to his message. At least for venture-capital (VC) firms, recent research confirms this observation, as well as the assertion that gender diversity boosts performance.
Paul Gompers and Sophie Wang at Harvard University wanted to determine whether VC firms with more women managers do better. Answering this question is tricky—firms that hire more women may have other characteristics that lead to success. VC-investing remains a predominantly male activity. In the authors’ sample of 988 VC funds in 301 firms, around 8% of new hires were women. Very few firms hired more than one woman manager (see chart). Managing partners who hire more women may be less hidebound by convention—a good trait for someone investing in innovative technologies. The authors needed a way to measure the impact of women on success independent of other factors. Ideally, a random factor would influence the number of women hired by a firm. The authors looked at the number of daughters among partners’ children.
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Parenthood changes perspectives. VC partners with one extra daughter rather than an extra son employed on average almost two percentage points more women managers. This led to a 24% higher probability that a firm would have a senior female manager. The researchers reasoned that a link between daughters and success could be attributed to a greater number of women managers.
A firm where a partner has an extra daughter rather than an extra son had a 2.9% higher chance that its deals would be a success (defined as an initial public offering or other profitable sale of a company the firm had backed). Such firms also have higher internal rates of return. Hiring women is indeed a sound business strategy.
Mr Nesbitt notes that this finding matches one of the main arguments of his book. Gender diversity in business increases diversity of thought, which leads to better decisions. He adds that, on its own, the paper is unlikely to lead to more women in executive offices. To achieve that, men need not only to accept the case for women intellectually, but to acknowledge that they personally need to act to promote them. Ideally, that should not take the birth of a daughter.
Source: economist
Venture capitalists with daughters are more successful