Breaking the Gender Inequality in the Boardroom: Examining Female Directorship in Malaysia

Introduction

The presence of leadership among women is increasing in entrepreneurship, management and administration, education, engineering, and health, whether at the regional, national, or global level (Khuong et al., 2022). Women are beginning to break the traditional glass ceiling that prevents them from entering leadership positions even if they have the necessary skills and talents (Chen et al., 2019). The world has witnessed the greatness of women leaders whose role and involvement cannot be denied. These include Margaret Thatcher, Indira Gandhi, Hillary Clinton, Benazir Bhutto, Aung San Suu Kyi, Theresa May, and Oprah Winfrey. However, changes in working practices due to the COVID-19 pandemic have brought little progress in terms of the number of women holding senior positions in corporate organizations in Malaysia (Aldrich & Lotito, 2020).

According to the Grant Thornton International Business Report: Women in Business 2023, only 40 percent (%) of senior management positions in the country are held by women. The percentage is the same as the previous year (Grant Thornton International, 2023). At the global level, according to a report by Grant Thornton, 32.4% of senior management positions in mid-market businesses are now held by women (Grant Thornton International, 2023). The report's study involved senior leaders from 5,000 businesses between October and November 2022 across 29 economies. Given this situation, only 34% of senior leadership positions will be held by women in 2025. With almost half of businesses returning to office operations, this impacts progress to increase female leadership in business. Without flexible working practices, few women are in senior positions. If the business does not support hybrid or flexible work methods, women may leave their positions and consider part-time work or starting their own business (Bruce et al., 2022).

Organizations that support flexible working models may also benefit from cross-border work and access to a workforce, such as those with disabilities, those living in rural locations, or those looking for a better work-life balance. The companies that meet Environmental, Social, and Governance (ESG) goals have more female representatives in the boardroom, and these people may be less likely to exaggerate their qualifications to keep their positions (Yahya, 2023). Women in senior leadership are more likely to be open about their company's ESG achievements and less willing to provide misleading information about their company because they are more vocal than men in voicing unethical attitudes (Romano et al., 2020). Corporate responsibility and global standards put pressure on firms to create diverse leadership teams, and failure to do so may cause them to fail to raise capital and attract investors (Mmeje et al., 2020). Meanwhile, the government also increasingly emphasizes the Diversity, Equity, and Inclusion (DEI) policy in business. It is essential to step up the DEI initiative, given that Malaysian companies face fierce competition from talented people, and the issue of succession must be addressed.

Previous research has provided evidence that the gender composition of the board adds value to the firm, improves firm performance and reputation, and affects shareholder value (Bue & Martínez-Zarzoso, 2024). In addition, according to Garcia-Blandon et al. (2024), gender diversity is essential for any business by allowing the hiring of employees from a vast talent pool. Diversity brings richness and various experiences and perspectives that benefit the firm and its stakeholders. Having women on the board of directors encourages more creativity and innovation. It encourages board members to consider various ideas and improve the performance of female employees and the company's image (Saona et al., 2024). However, the effect of the gender quota of the board of directors on the company's performance is still an essential issue in the debate.