Gender Diversity in Top Management and Firm Performance in Kenya

Abstract

This paper analyses the relationship between gender diversity in top management and firm performance. It investigates the moderating role of the business environment and their interaction on top manager gender and firm performance in Kenya. The specific objectives were to assess the relationship between gender diversity in top management and firm performance and the moderating effect of business environment on the relationship between gender diversity and firm performance informed by Human Capital theory. The study uses the Cobb-Douglas empirical model estimated using Ordinary Least squares. The variables were the gender of the top manager, firm productivity, firm size, exports, firm ownership, formal research and development, business environment, and formal training. However, the Instrument Variable- Two-Stage Least Squares (IV-2SLS) technique handled the endogeneity issues. The study finds that there is a neutral relationship between female in top management and firm performance except for the medium sized firms where the relationship was negative. In addition , all the moderating effects of business factors such as power outages , bribes, informal competition , influenced the firm performance negatively .The study therefore recommends the need to include more women in top management position of firms , since women managed-managed firms perform as well those managed by men.