Why Female Marketing Leaders are More Cautious

A study by ISB’s Raghu Bommaraju and Siddharth S Singh finds when and why female Chief Marketing Officers (CMO) make different strategic decisions than their male counterparts.

Over the past decade, women have steadily risen to top management roles. In 2019, 31 of Forbes's 50 most influential CMOs were women. Despite this progress, there has been limited research on how gender influences decision-making in marketing, which often involves balancing risk and reward.

A study conducted by ISB faculty Raghu Bommaraju and Siddharth S. Singh, along with co-author Rajita Varma, analyses when and why female CMOs make different choices than men, uncovering nuanced insights into gender-based leadership approaches in marketing.

Self vs. Social: How men and women differ as leaders

The study draws on two psychological theories to explain how men and women view and relate to their environment differently. According to American psychologist David Bakan, everyone has two types of traits: agentic traits, which focus on self-assertion and success, and communal traits, which focus on social acceptance and working with others. While both men and women have these traits, women tend to exhibit more communal traits than men.

The self-construal theory by E. Susan Cross and Laura Madson suggests that men usually see themselves as independent, focusing on personal success and competition. On the other hand, women have an interdependent sense of self, focusing more on relationships and community.

Building on these theories, the authors of the study looked at three main questions:

1. Do female and male CMOs make different marketing decisions?
2. Under what conditions do female CMOs take more or less risky decisions?
3. What underlying reasons drive female CMOs' risk-taking behaviour?

How gender shapes marketing choices

The researchers analysed data from publicly listed companies in the United States to compare how male and female CMOs approached three critical marketing decisions: advertising spending, earnings management, and new product introductions.

1. Advertising spending: There was no significant difference in how much male and female CMOs spent on advertising. Both groups prioritised advertising similarly.
2. Real earnings management (REM): Female CMOs were significantly less likely to engage in REM, a practice that can make financial results look better in the short term but harm a company’s long-term prospects.
3. New product introductions: Female CMOs introduced fewer new products overall, opting for smaller, incremental innovations rather than high-risk, radical ones.

The researchers conducted a controlled marketing simulation with MBA students to validate these findings. The results confirmed that gender influenced risk-taking, particularly in new product launches. They also ran surveys to understand the underlying reasons for these differences.

Fear of failure and workplace scrutiny

The study challenges the conventional view that men take more risks simply due to greater confidence. Instead, it finds that female CMOs are more risk-averse because they face higher scrutiny and are more concerned about failure.

Women in leadership roles, particularly in male-dominated environments, are often judged more harshly for mistakes, leaving them with fewer opportunities to learn from failure. However, context matters. The study finds that:

1. Female CMOs take more risks when working under a female CEO, likely due to reduced scrutiny and greater confidence.
2. They become even more risk-averse when marketing uncertainty is high, as ambiguity intensifies scrutiny and fear of failure.
3. There is some evidence that higher firm performance encourages female CEOs to take more risks, though this effect is less consistent.

What this means for marketing leaders

The findings suggest that gender diversity in marketing leadership can have tangible benefits for businesses.

1. Female CMOs’ cautious decision-making can be an asset: Their careful approach to new product launches can help companies reduce costs and avoid failures. Their ability to adjust risk-taking based on factors like company performance and market uncertainty also benefits shareholders.
2. Hiring more female executives benefits other women: Female CMOs take bolder risks when working under a female CEO. This is linked to increased confidence and a lower fear of failure or scrutiny. The presence of a female leader challenges the stereotype that senior leadership positions are exclusively held by men.
3. Organisations should reduce unnecessary scrutiny on female executives: While female executives are not less confident than men, they often face more workplace scrutiny, which can affect their decision-making and performance.
   
   

The study challenges assumptions about risk-taking, demonstrating that cautious decision-making is not a weakness but a nuanced leadership strategy that can drive sustainable growth. By understanding these dynamics, companies can create environments where all leaders—regardless of gender—can make the best decisions for business success.

Author: ISB Editorial Team