Board Gender Diversity and Workforce Reductions in Family Firms

This study investigates the impact of board gender diversity on workforce reductions. The findings suggest that firms with gender-diverse boards undertake more job cuts, but this relationship is attenuated in family firms. We propose that female directors favor more job cuts in order to comply with their role on the board and deal with their greater scrutiny and expectations. Yet, in family businesses, female directors develop a heightened identification with the family firm’s affective endowment, leading them to avoid job cuts (a practice that puts the family’s socioemotional wealth (SEW) at risk). Based on a sample of publicly listed firms (including family and non-family firms) in the US from 2008 to 2017, our empirical evidence provides support for our hypotheses. These findings advance our knowledge of employment practices and the effects of gender diversity on boards and offer important implications for theory and practice.