The Effect of Female Top Managers on the Performance of Firms in Kenya

Abstract

The gender equality agenda and its accompanying benefits in the governance of corporates has been and continues to be a focus of many a debate around the world. Many corporate jobs and leadership positions have historically been held by men. Even though much has been done, the underrepresentation of women is still a glaring issue worldwide. On the issue of gender diversity of top managers and its impact on performance, the limited studies done have yielded inconclusive results, hence this study sought to establish the impact of female top managers on firms’ performance in Kenya using the World Bank’s Enterprise Survey 2018. By using the IV2SLS model and controlling for both selection bias and endogeneity issues, the results established that female top managers influenced firms’ performance positively and it was statistically significant at 1%, 5% and 10% levels of significance, by increasing firm’s performance by 1.65 percent point. The findings are consistent with literature implying that having female in top management is likely to bring onboard inimitable leadership skills such as mentorship especially towards female employees. The study recommends that, firms in Kenya should aim at increasing the number of women in top management positions intentionally by making direct appointment of women in the top management. The intervention should be coupled with government legislative such as, coming up with laws that sets a minimum quota for women on top management positions in firms in Kenya, and additionally by legislating laws that requires disclosure gender diversity of firms’ top management teams.