Breaking glass-ceiling for women using vertical ties

Large manufacturing factories rely heavily on referral for promoting workers to managerial roles. Since these roles require skills which are not directly observable to the management, supervisors invest costly (production time) resources to observe and make referrals. This practice creates barriers for historically disadvantaged groups as they are less likely to be observed for these qualities and hence are less likely to be referred. However, our theoretical model shows that ‘suitable’ workers from this disadvantaged group can engage in costly signalling and gain referrals. We test these predictions by incorporating elements from experimental methods to overcome data limitations in the context of Indian garment manufacturing factories. We find that women are less likely to be referred for high-valued managerial roles, however, equally likely for less-valuable promotions. Further, women with larger vertical networks are more likely to be referred. Our results are driven by the fact that signaling is costly for women (i.e., forging heterophilous informal vertical ties due to strict cross gender interaction norms) and only suitable women incur this cost. Our results are robust to consideration of other factors such as aspiration levels, other types of ties, out-of-factory networks, and supervisor’s characteristics. We conclude that women can break the ‘glass ceiling’ by having larger informal vertical networks. Further, management can provide protected formal avenues for cross-gender interactions as a step forward in addressing gender gaps at managerial levels in the short run.