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Norwegian School of Economics Bergen, Spring 2017

Gender Diversity and Firm Performance Evidence from Norway 2010-2014 Natalia Muscher Supervisor: Astrid Kunze Master Thesis, MSc in Economics and Business Administration, Strategy and Management

NORWEGIAN SCHOOL OF ECONOMICS

This thesis was written as a part of the Master of Science in Economics and Business Administration at NHH. Please note that neither the institution nor the examiners are responsible − through the approval of this thesis − for the theories and methods used, or results and conclusions drawn in this work.

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Abstract The aim of this master’s thesis is to investigate the impact of gender diversity in firms on firm performance using data from Norwegian firms and municipalities. Gender diversity is measured using three regional gender equality indicators measuring the ratio between men and women’s share in the labour force, the level of gender balanced business structures and the gender distribution among leaders. The first two indicators are used as proxies for gender diversity at the employee level, whereas the latter is used as a proxy for gender diversity at the management level. Firm financial performance is measured by the accounting measures return on assets and return on equity. The variables for firm performance are calculated using detailed firm level data from a population of Norwegian firms. The empirical analysis applies ordinary least square regressions, fixed effects regressions and quantile regressions. The results suggest that the effect of gender diversity on firm performance varies across the distribution of the performance variables. Gender diversity has a larger positive effect on firm performance in high-performing firms, and gender diversity at the management level is only positive for the highest-performing firms.

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Acknowledgements This thesis is written as the final piece of work, concluding my master’s degree in Strategy and Management and CEMS Master in International Management at The Norwegian School of Economics. It constitutes 30 ECTS points of my major. During my master’s studies, I have taken courses bringing up the topic of diversity in firms and the impact a heterogeneous workforce may have on firm performance. This inspired me to further immerse in the topic of diversity and the effects it may have on organisational outcomes. My supervisor, Professor Astrid Kunze, inspired me to focus on gender diversity. The existing literature on the effects of gender diversity on firm performance is extensive, but the findings are inconsistent. The empirical evidence from Norwegian firms is mostly related to the introduction of the mandatory 40 percent gender quota, which was imposed on all public limited companies in 2008. I wanted to contribute to the debate with evidence from Norwegian firms, but at a lower organisational level. Working on this thesis has been a challenging and rewarding process. It has been a great opportunity to learn how to conduct an empirical analysis based on econometric techniques using different methodological approaches. I spent a great amount of time analysing the data and investigating different empirical strategies. In contrast to many past studies using a conditional mean approach assuming the effect of diversity is constant across the firm performance distribution, I decided to use a quantile regression approach which assumes the effect of diversity varies across the distribution. I would like to thank my supervisor, Professor Astrid Kunze, for excellent guidance and inspirational discussions throughout the process. I would also like to thank family and close friends for their great support. Finally, I would like to thank SNF for providing me with access to detailed firm data which has made it possible to contribute with empirical evidence from Norwegian firms.

Bergen, June 2017 Natalia Muscher

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Contents ABSTRACT ..............................................