The Influence of Female Directors on Product Recall Decisions

Problem definition : The influence of female directors on firm decision-making and performance is a frequently studied research topic but has received limited attention in operations management. We investigate if adding female directors to a firm’s board of directors changes whether and how quickly the firm recalls defective products. Academic/practical relevance : By demonstrating a relationship between an increase in female directors and more rule-conscious, customer-focused recall decisions, we highlight that adding female directors may enable more societally beneficial operational decisions. Methodology : We analyze 4,271 medical product recalls from 2002 to 2013 across 92 publicly traded firms regulated by the Food and Drug Administration using negative binomial and ordinary least squares fixed effect regression models. In robustness checks, we include an instrumental variable analysis, propensity score matching models, and reverse causality regression models. Results : As boards add female directors, recall decisions change. Firms initiate more medical product recalls that are low in severity and hence easier for firms to avoid initiating, highlighting the increased rule-following brought to bear by adding female directors. Firms also make faster recall decisions for the most serious defects that are high in severity and dangerous for customers, highlighting the increased stakeholder responsiveness resulting from adding female directors. Managerial implications : Firms may more closely align recall decisions with regulatory rules and become more sensitized to customer health and safety by adding female directors. Further, at least two female directors may be required to speed up recall decisions for the most serious, life-threatening defects.