May 29, 2023
Rajita Varma, a Doctoral Candidate in Marketing, used RavenPack News Analytics to examine how decisions made by female CMOs differ from those of their male counterparts.
Gender-based studies often make headlines, but for academic researchers, it all starts with a data strategy. How do researchers approach topics like gender influence in decision-making in a systematic and objective way? A Doctoral Candidate in Marketing at the Indian School of Business, Rajita Varma tapped RavenPack news analytics, simulations and surveys, for a data-driven approach to gender-based decision modeling in a paper titled “Female Chief Marketing Officers: When and Why Their Marketing Decisions Differ From Their Male Counterparts?”.
Along with Raghu Bommaraju and Siddharth S. Singh, her marketing professors that co-authored the study, she found striking differences in risk-taking behavior by female CMOs and identified several influencing factors. We interviewed Rajita to find out more.
Doctoral Candidate in Marketing
Indian School of Business (ISB)
Female CMOs are more attuned to environmental cues in risk-taking.
While female representation in senior executive roles is important from a diversity and inclusion perspective, we also wanted to examine the value that female executives bring to their organizations. Additionally, we wanted to study if there were any differences in the decisions made by female and male executives, and if so, under what circumstances. Marketing provided a good context to examine these questions, because unlike other CXO roles where female representation is much lower, the number of women appointees in CMO roles has been almost equitable in recent years. As a result, we have richer data to examine. Also, there was some anecdotal evidence which suggested that female CMOs were performing better, for instance this Forbes article “The Superpower That Makes Female CMOs (And CEOs) Better”. This motivated us to examine how female and male CMOs differ in their marketing decisions, thereby ultimately impacting their firms’ performance.
We relied on Ravenpack to gather information about New Product Introductions (NPI) which was one of the key marketing decisions that we examined. Ravenpack uses unique tags to classify events such as product releases. Further, it has a relevance score and an event novelty score which helps us identify unique product release events pertaining to a firm, while preventing duplication.
We found that female CMOs were more cautious while making risky marketing decisions as compared to their male counterparts. Specifically, we examined decisions pertaining to advertising outlays, real earnings management and new product introductions. While female and male CMOs did not differ in their advertising outlays, we found that female CMOs were less likely to engage in myopic practices, such as undercutting advertising expenses to boost immediate profitability at the expense of future financial performance. Additionally, female CMOs were associated with fewer new product introductions, which indicates a more cautious approach to commercializing products. We also found that female CMOs were more attuned to environmental cues and suitably modified their risk-taking. For instance, they were more risk-taking when their firms were performing well or when they had a female CEO and less risk-taking during greater demand uncertainty.
Our research finds that appointing more female CMOs not just promotes gender diversity but is also beneficial for the firms. Female CMOs are more cautious in their decision-making, which can benefit firms. Given product failure rates are very high, being more cautious in introducing products may economize product development and marketing costs. In fact, we do find a positive impact of female CMOs on firm performance metrics such as Tobin’s Q (Editor’s Note: the market value of a company divided by its assets' replacement cost) and market cap. We also find that having more women in leadership roles may have positive spillovers for their female subordinates. In essence, our research suggests that having greater female representation in senior leadership roles is good, both for improving diversity as well as firm performance.
Rajita Varma is a Doctoral Candidate in Marketing at Indian School of Business (ISB). She works in the area of Marketing Strategy. In her dissertation, she examines the effect of marketing top management team composition on marketing outcomes and firm performance. Prior to her Doctoral programme at ISB, she received a MSc in International Marketing from King’s College London, a MA in Economics from University of Hyderabad and BA(Hons) Economics from Lady Shri Ram College, Delhi University.
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