Why women make better directors

The positive correlation between the presence of female directors on boards and corporate performance suggests that women appear to make better directors than men. But why? Using the Defined Issues Test (DIT) instrument (Rest, 1979, 1986), 624 board directors (75% male; 25% female) were surveyed to determine their reliance on three reasoning methods (i.e., ‘Personal Interest’, ‘Normative’ and ‘Complex Moral Reasoning’ or ‘CMR’) to make decisions. The results showed that female directors achieved significantly higher scores than their male counterparts on the CMR dimension which essentially involves making consistently fair decisions when competing interests are at stake. Since directors are compelled to make decisions in the best interest of their corporation while taking the viewpoints of multiple stakeholders into account, having a significant portion of female directors with highly developed CMR skills on board would appear to be an important resource for making these types of decisions and making them more effectively.