Are Female CEOs Really More Risk Averse? Examining Economic Downturn and Other-Orientation

Abstract

Scholars and practitioners have offered anecdotal evidence that firms led by female chief executive officers (CEOs) fare better during global recession, perhaps because they take fewer risks. In contrast to commonly held stereotypes that women are more risk averse than men, neither systemic theorizing nor empirical findings support that this popular assumption holds among top organizational leadership. Rather than seeking absolute gender differences in risk aversion, we take a more nuanced approach, considering executive job demands and decision orientation theories to examine underlying psychological mechanisms and economic boundary conditions to gender differences in strategic risk-taking. We test our hypotheses using multiple methods and samples, including an archival study of Fortune 1,000 firms and a survey of CEOs. Our results challenge absolute assumptions of gender risk preferences; rather, we find that female CEOs are less likely to choose risky strategies in a high job demands environment (e.g., economic downturn) due to underlying gender differences in other-orientation.