Institutional discrimination against female managers as a barrier to firm internationalization and international trade

We show that firm internationalization is affected by the interaction between the board of directors’ female share and gender-related institutions in foreign countries. The combination of a high share of female directors and gender-discriminating institutions in a destination reduces sales in that foreign country relative to less discriminatory destinations. We deal with potential endogeneity due to omitted variable bias by including firm-year and origin-destination-year fixed effects, while an event study exploiting the appointments of new female board members addresses endogeneity due to reverse causality. This firm-level relationship transfers to the country-level when using countries’ aggregate share of female directors and bilateral exports in a structural gravity framework including origin-year, destination-year and origin-destination fixed effects. Our findings suggest that institutionalized discrimination against female managers is a barrier to firm internationalization on the micro level and international trade on the macro level. This might give rise to disadvantages for female managers even in non-discriminatory countries.