While some countries have introduced mandatory quotas on women in boardrooms, research from Anglia Ruskin University suggests that “soft laws”, such as principles, agreements, and declarations, are usually more effective.

“We know from previous research that enhanced gender diversity in the boardroom provides firms with a wealth of benefits, including driving strategic change, promoting fair earnings, and driving sustainability,” the researchers explain.

The researchers examined the effectiveness of such approaches in boosting the diversity of boards in over 14,000 companies in 99 countries between 2000 and 2021. The results show that women make up 20% of boards in jurisdictions with soft laws, and just 11% in those where no such laws exist.

Making a difference

The researchers believe that the most effective approaches were when precise rule-based rules were in place with minimal ambiguity. Quotas, for instance, were found to be effective at boosting female representation but only in scenarios where sanctions were applied to companies that weren’t complying.

They suggest that companies were most likely to comply with policies when they had sufficient time to implement them and also when the targets set by the policies were not hugely different from the existing levels of diversity in their boardroom.

“Our findings suggest that some forms of soft laws introduced by countries to increase diversity in the boardroom do work, but they have varying levels of success,” the researchers conclude. “It appears that clear, strict rules do have more of an effect, and sanctions encourage firms to adhere by these rules.”

“However, we also found that firms appeared to be more compliant when targets were realistic and there was sufficient time to get their house in order.”