Projects

Project Eight: Addressing Gender Inequality through Corporate Governance

Principal Investigator: Simon Deakin (University of Cambridge)
Principal Investigator: Colm McLaughlin (University of Cambridge)

Aims
There is an increasingly important link between corporate governance, social policy, and issues of economic competitiveness. Attention has been drawn, in particular, to new mechanisms that are intended to combine the advantages of competitiveness with the demands of social justice under the auspices of new practices of corporate governance, particularly corporate social responsibility. These mechanisms were recently promoted in the Kingsmill Review of Women's Pay and Employment (2001). It offered an account of progressive human resource management as a means of addressing gender pay equity and the work-life balance issue. The Review appeals to companies to move 'beyond compliance' with minimum legal standards and similarly encourages shareholders to consider not just ethical but also socially responsible investment (see also Myners report 2001). These developments have been paralleled, to a certain degree, at EU level, where a Green Paper on corporate social responsibility was published in 2001. There, too, there is a debate about the role of non-government actors in promoting a social policy agenda, which is put largely in terms of corporate social responsibility. However, there are potentially significant differences between the EU and UK approaches in terms of the emphasis placed on the respective roles of shareholders and other stakeholders, and on the role to be played by regulation acting as a 'floor of rights'. The EU dimension to this issue is particularly relevant to UK practice given the importance of the EC Treaty and Directives in the field of gender equality.

Against this background, the proposed project will explore empirically and theoretically the developing linkage between corporate governance and pay equity.

It will aim to: (1) examine how far actors at corporate level (human resource and finance managers, and employee representatives) perceive the issue of pay equity in terms of governance and competitiveness rather than (or as well as) fairness of treatment; (2) to examine to what extent institutional investors are willing to put pressure on the companies in which they invest to prioritise the issue of gender equality; (3) to study the mechanisms by which pay equity issues are addressed within companies, in particular in terms of the internal audits recommended by the Kingsmill Review, and the outcomes in terms of the extent of gender equality and segregation; (4) to study the techniques and metrics (many of which are only just in the process of emerging) through which institutional investors and financial markets view the social performance of companies, with particular reference to the proposed Operating and Financial Review, and consider outcomes in terms of long-term share performance; (5) to assess more generally how successful 'soft law' strategies such as those recommended by Kingsmill are in practice, and how far they rely, directly or indirectly, on 'hard' legislative standards of the kind provided by background legislation on pay equity at both UK and EU level.

A key aim is to understand the interaction between managerial strategy on gender equity issues and the mechanisms of corporate governance. The use of corporate governance mechanisms in this context is new and much of the research is concerned with processes and perceptions, rather than outcomes at this stage. This makes a predominantly qualitative approach appropriate. The empirical work is guided by two hypotheses:

1. since good employee relations are a source of value for the corporation, shareholders increasingly see it as in their interest to press for adoption of progressive HRM practices, including gender equity issues (this was the position of the Kingsmill review), but
2. there may be significant blockages both internally and externally (information costs, institutional rigidities, uncertainty of outcomes) to this process occurring.

These hypotheses are directly of relevance to listed companies, but the project will also look at some privately-held companies and public-sector organizations to examine how far a similar logic of corporate governance engagement with gender equity issues arises under different forms of ownership.

The research will draw on a purposive sub-sample from the most successful organizations identified by Kingsmill Review. Qualitative research will be conducted with managers on both the human resource side and the finance side; with employee representatives; with employees; and also with institutional investors and policy makers. The project will connect the findings with theoretical issues, specifically, the literature on 'responsive regulation' and 'reflexive law' which considers the effectiveness of the types of regulatory techniques suggested by Kingsmill, and the related literature on Sen's 'capabilities approach' (Browne, Deakin and Wilkinson, 2002).

Project Contact
Professor Simon Deakin
The Judge Institute of Management Studies
University of Cambridge
Trumpington Street
Cambridge
CB2 1AG
sfd20@cam.ac.uk
+44 (0)1223 765339