Sunday, 28 June 2015

Does gender equality offer any advantages to Burundi's companies?

Burundi (and Rwanda) has many women in prominent positions in public life, both in politics and in business.  But does gender equality offer companies any competitive advantage?  It is reasonable to think that promoting talented people to jobs, regardless of gender, will help companies.  If talent is distributed fairly evenly across men and women, and they both participate in the labour force, then **on average** companies with equal numbers of men and women should perform well.

One measure of performance is whether a company is innovating in new products.  Here is a graph from Burundi showing the probability that a company introduced a new product in the last three years, plotted against the percentage of the company owned by women:

Source for data:  Results are smoothed using probit estimation with linear and quadratic dependence on the percentage owned.

It looks like innovation is maximised with the percentage of female ownership at about 30 to 35 percent, based on this very quick graph.  The results are in rough agreement with my more detailed work in Europe, where innovation is maximised for roughly the same managerial percentages for each gender.  So it seems that Burundi is benefiting economically from its gender equality.

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