The Glass Ceiling in Chinese and Indian Boardrooms ELSEVIER ASIANSTUDIESSERIES SeriesEditor:ProfessorChrisRowley, CassBusinessSchool,CityUniversity,London,UK; Director,ResearchandPublications, HEADFoundation,Singapore; AdjunctProfessor,DepartmentofInternational Businessand AsianStudies,GriffithUniversity,Australia (email:[email protected]) Elsevier is pleased to publish this major Series of books entitled Asian Studies: Contemporary Issues and Trends. The Series Editor is Professor Chris Rowley of City University, London, UK, Director, Research and Publications, HEAD Foundation,SingaporeandAdjunct Professor,Department ofInternational Business &AsianStudies,GriffithUniversity,Australia. Asia has clearly undergone some major transformations in recent years and books in theSeriesexaminethistransformationfromanumberofperspectives:economic,man- agement, social, political and cultural. We seek authors from a broad range of areas and disciplinary interests covering, for example, business/management, political science,socialscience,history,sociology,genderstudies,ethnography,economicsand internationalrelations,etc. Importantly, the Series examines both current developments and possible future trends. The Series is aimed at an international market of academics and profes- sionals working in the area. The books have been specially commissioned from leading authors. The objective is to provide the reader with an authoritative view of currentthinking. Newauthors:wewouldbedelightedtohearfromyouifyouhaveanideaforabook. We are interested in both shorter, practically orientated publications (45,0001 words)andlonger,theoreticalmonographs(75,000(cid:1)100,000words).Ourbookscan besingle,joint ormulti-authorvolumes.If youhave anideaforabook,pleasecon- tactthepublishersorProfessorChrisRowley,theSeriesEditor. DrGlynJones ProfessorChrisRowley Email:[email protected] CassBusinessSchool,CityUniversity Email:[email protected] www.cass.city.ac.uk/faculty/c.rowley The Glass Ceiling in Chinese and Indian Boardrooms Women Directors in Listed Firms in China and India Alice de Jonge AMSTERDAM(cid:129)BOSTON(cid:129)HEIDELBERG(cid:129)LONDON NEWYORK(cid:129)OXFORD(cid:129)PARIS(cid:129)SANDIEGO SANFRANCISCO(cid:129)SINGAPORE(cid:129)SYDNEY(cid:129)TOKYO Elsevier Radarweg29,POBox211,1000AEAmsterdam,Netherlands TheBoulevard,LangfordLane,Kidlington,OxfordOX51GB,UK 225WymanStreet,Waltham,MA02451,USA Copyright©2015A.deJonge.Allrightsreserved. Nopartofthispublicationmaybereproducedortransmittedinanyformorbyanymeans, electronicormechanical,includingphotocopying,recording,oranyinformationstorageand retrievalsystem,withoutpermissioninwritingfromthepublisher.Detailsonhowtoseek permission,furtherinformationaboutthePublisher’spermissionspoliciesandourarrangements withorganizationssuchastheCopyrightClearanceCenterandtheCopyrightLicensingAgency, canbefoundatourwebsite:www.elsevier.com/permissions. Thisbookandtheindividualcontributionscontainedinitareprotectedundercopyrightbythe Publisher(otherthanasmaybenotedherein). Notices Knowledgeandbestpracticeinthisfieldareconstantlychanging.Asnewresearchandexperience broadenourunderstanding,changesinresearchmethods,professionalpractices,ormedical treatmentmaybecomenecessary. Practitionersandresearchersmustalwaysrelyontheirownexperienceandknowledgein evaluatingandusinganyinformation,methods,compounds,orexperimentsdescribedherein. Inusingsuchinformationormethodstheyshouldbemindfuloftheirownsafetyandthesafetyof others,includingpartiesforwhomtheyhaveaprofessionalresponsibility. Tothefullestextentofthelaw,neitherthePublishernortheauthors,contributors,oreditors, assumeanyliabilityforanyinjuryand/ordamagetopersonsorpropertyasamatterofproducts liability,negligenceorotherwise,orfromanyuseoroperationofanymethods,products, instructions,orideascontainedinthematerialherein. ISBN:978-1-84334-617-3 BritishLibraryCataloguing-in-PublicationData AcataloguerecordforthisbookisavailablefromtheBritishLibrary LibraryofCongressCataloging-in-PublicationData AcatalogrecordforthisbookisavailablefromtheLibraryofCongress LibraryofCongressControlNumber:2015932041 ForinformationonallElsevierPublications visitourwebsiteathttp://store.elsevier.com/ This book is dedicated to the memory of my Oma, Janna de Jonge, and my Grandma, Blanche Hutchings Preface The aim of this book is to understand the influences behind perceptions of govern- ment regulation for gender diversity on listed firms in China and India and to fur- ther understand the environment within which those perceptions are formed. This understanding is important for policy formation. If the main obstacles to the intro- duction of special measures for gender diversity are political,then traditional politi- cal campaigns may help to overcome such resistance. In the meantime, social and organisational initiatives, including mentoring schemes, networking programs, childcare provision and flexible work arrangements, can be used to assist talented women with the potential to contribute at the boardroom level. Where the main obstacles to the introduction of special measures are social and economic, then reg- ulatory initiatives, including mandatory targets and quotas, can help to ensure that qualified women are nominated to decision-making roles and can also help to pro- motesocialchangebybreakingdowntraditionalpatterns,alliances,beliefsandpre- judices. Quotas have been most effective when backed by enforceable sanctions, as isthecaseinNorway,wherewomennowoccupyover40%ofdirectorshipsinpub- licly listed companies. Voluntary targets have also been effective, though less dra- maticallyso,asexperienceinSpain,France,Belgiumandelsewheredemonstrates. Women at senior corporate level in both China and India operate in an environ- ment where corporate boards are dominated by men and where the prevailing cul- ture presents many obstacles to career advancement for women in business. Fewer than 10% of directors on the boards of major firms in China are women, while fewer than 5% of directors leading India’s top firms are women. Experience from many other countries indicates that simply waiting for economic development and social change to bring about the conditions for gender equality does not work. Special measures of the kind envisioned by Article 4 of the Convention on the Elimination of All Forms of Discrimination against Women are needed. In both China and India, government regulations expressly seek to establish and protect equal rights for women in employment, social security and political participation. Both countries have also established regulations and guidelines aimed at enhancing the quality of corporate governance in publicly listed corporations. The question this book seeks to explore is whether similar corporate governance measures aimed at ensuringgender diversity on companyboards are likelyto beeffective in the dif- ferentenvironmentsofChinaandIndia. Legal transplant theory warns that regulatory concepts from one political(cid:1) legal(cid:1)social culture cannot simply be transposed to a different context and expected to operate in the same way or with the same degree of effectiveness (Legrand, 1997; Mattei, 1994; Watson, 1993; Berkowitz et al., 2003). Law is a x Preface productof the society and political system in which it operates (cid:1)not the other way round. A socio-legal approach (as opposed to a legal(cid:1)doctrinal approach) to the study of regulation explicitly recognises this. It recognises that the choices of deci- sion makers, resulting in regulatory change, are themselves shaped by wider social forces (Berkowitz et al., 2003; Halliday &Schmidt, 2004). Likewise,thoseaffected by a particular regulatory change will demonstrate a variety of responses and atti- tudes towards that change depending upon personal beliefs and experiences that havealsobeenshapedbysocialforces. Institutional theory considers the processes by which structures, including rules, normsandroutines,becomeestablishedasauthoritativeguidelinesforsocialbehav- iour. It inquires into how those elements are created, diffused, adopted and adopted overspaceandtime.Althoughthefocusistypicallyupontheperpetuationofstabil- ity and order, institutional theory also seeks to understand processes of conflict, reform and change in social structures (Meyer & Rowan, 1977; DiMaggio & Powell, 1983; Powell & DiMaggio, 1991; Scott, 2004). Both legal transplant theory and institutional theory are relevant to the problem examined in this book, which is whether and which regulatory reforms aimed at promoting greater gender equity on companyboardsmightsuccessfullybeadoptedinChinaand/orIndia. Also relevant are insights provided by those scholars who have tried to capture and compare the essential characteristics of different national cultures (Hofstede, 1984; Hofstede, Hofstede & Minkov, 2010; Schwartz, 1992). The most widely referenced framework for discussing and categorising differences between national cultures in this regard is the one developed by Hofstede in 1980. This book makes useofthemostrecentversionofHofstede’sframework,whichidentifiessixdimen- sions of national culture: power distance, individualism/collectivism, masculinity/ femininity, uncertainty avoidance, long-term orientation (Chinese value system) andindulgenceversusrestraint. Legal transplant theory, institutional theory and culture analysis each provide valuable perspectives on forces of resistance to change within institutions and orga- nisationsundergoingtransformation(Bovey&Hede,2001;Greenwood,Suddaby& Hinings, 2002; Hall& Thelen, 2009; Neck, 1996; Schiele, 2011; Yilmaz & Kılıc¸og˘lu, 2013). In this book, I utilise the insights provided by these scholars to examine(throughtheinstrumentofasurvey)attitudesofcompanyleaderstowardsa variety of different possible regulatory reforms aimed at enhancing gender diversity ofcompanyboardsinChinaandIndia.Theconceptualframeworkutilisedtoanalyse surveyresponsesrecognisesthatattitudestowardsgenderdiversityandtowardsreg- ulatory/organisational change generally are themselves formed by a combination of individual,organisational,social/culturalandinstitutional/regulatoryforces. This book examines the theory that the most important obstacles to bringing about greater gender equity on company boards in China are political. Politics and policy formation in China are dominated by the Chinese Communist Party (the Party). Top Party posts and Party processes are, in turn, dominated by men (Ding, 2012). Gender equity on company boards simply does not feature on the Party’s current list of policy priorities. Special measures aimed at enhancing gender diver- sity in business decision making are unlikely in the current environment. If and Preface xi when the Party and its key policy makers do decide to take the need for gender diversity seriously, then history indicates that change could be achieved with remarkable rapidity. In the meantime, women in China do relatively well in terms of health, education and economic opportunities when compared with other devel- oping countries in Asia. They are well placed to begin campaigning for social and organisational level measures such as gender-blind recruiting practices, women- only networking, recruiting and mentoring events, and flexible working arrangements. InIndia,incontrast,thekeyobstacles tobringingabout gender diversity inbusi- ness decision making are social and economic. At the elite level, wealthy Indian women have access to quality health and educational services. Unlike China, India has had both a female president and a female prime minister, as well as several influential female chief ministers. Indian women politicians are able to exercise influence over policy formation. Their influence is evident in the design of India’s National Rural Employment Guarantee Scheme and in the introduction of draft leg- islation establishing quotas for women in India’s parliament. More recently, female politicians were instrumental in establishing new rules issued under Section 149 of the Companies Act 2013 requiring all listed companies to have at least one woman on the board of directors. However, when special measures such as these are intro- duced, the problem is they are often thwarted by social and economic forces keep- ing Indian women, particularly those from the lower classes, in their place. ExamplesofsuchforcesareexaminedindetailinChapter4. Study 1 of this book (Chapter 6) uses quantitative data to explore organisational predictors of women on corporate boards in China and India. The most interesting finding to emerge from analysing the data collected for Study 1 is that while state- controlled listed firms in India had a higher proportion of women directors than did their family-controlled counterparts, the opposite was true in China. This finding indicates that government nominees to Indian company boards are more likely to be women than is the case for Chinese state-controlled company boards. This con- clusion is furthersupportedby thefinding thatcompanies operatinginsectorsdom- inated by the state (cid:1) particularly, the energy, utilities, materials and industrials sector (cid:1) tend to have fewer women directors than do firms operating in other industry sectors. The significant size and importance of state-controlled companies in the Chinese economy makes the conclusion that state-controlled firms in China are less likely to have women sitting at the boardroom table an important one. It is also a finding that indicates a lack of female influence in government decision making. In Study 2 of this book (Chapter 7), surveys were conducted in both China and India to empirically test attitudes towards a variety of possible approaches to enhancing gender diversity on corporate boards through regulatoryand/or voluntary measures. Survey respondents were senior employees of listed companies in China/ India. Survey responses confirmed that women in India face greater social and eco- nomic barriers to corporate career advancement than their Chinese counterparts. Indian respondents were particularly aware that lack of educational opportunities was a barrier to women seeking corporate careers. Indian respondents were also xii Preface more supportive of affirmative action measures aimed at assisting women to suc- ceed in corporate life. Finally, survey responses also confirmed that women remained generally more supportive of affirmative action measures than their male colleaguesinbothChinaandIndia. The book concludes by highlighting the policy and social action implications of the findings from the studies undertaken. In particular, it concludes that social and economic challenges are going to be harder to overcome in India than in China. In China,thegreatestchallengemaywellprovetobethemale-dominatednatureofthe party-statepoliticalhierarchy.Inbothcountries,itissuggestedthateffortstoachieve genderequityattheboardroomtable needtobemulti-pronged, withsocioeconomic discrimination and the old boys’ club nature of politics and business all being addressed. The book ends by suggesting a number of areas for further research (cid:1) particularly, studies aimed at evaluating the relative effectiveness of different types ofmeasuresaimedatassistingwomentobreakthroughtheglassceiling. About the author Alice de Jonge joined Monash University from legal practice in 1992. She is now senior lecturer in the Department of Business Law and Taxation, Monash University, lecturing in the postgraduate units of International Law and Policy and Comparative Business Law in Asia. In 1998 she won the LAWASIA Research Award and in 2008 graduated with a doctorate in juridical science from the University of Melbourne Law School. In 2008 she was awarded the Dean’s Prize for excellence in teaching. She is the author of two books: Corporate Governance and China’s H-Share Market (Edward Elgar, 2008) and Transnational Corporations and International Law: Accountability in the Global Business Environment (Edward Elgar, 2011). She is also the author of various book chapters andjournalarticles.