Empowering Female Executives Boosts Retail Profits

By Erin Garrett

University of Mississippi

Granting more power to female executives in retail management teams leads to improved profitability, according to a study from the University of Mississippi School of Business Administration.

Cong Feng, Morris Lewis Lecturer and associate professor of marketing, and Kexin Xiang, instructional assistant professor of marketing, analyzed more than 100 publicly listed retailers and found a positive association between female executives’ structural power – their influence and control of key organizational resources – and company profitability. The Journal of Business Research will publish their research in its November issue.

“When we talk about structural power, we refer to the power endowed to a female executive,” Feng said. “If we were in a meeting, a person may or may not be able to express his or her opinion – structural power allows people to speak out and give their concerns.”

While women make up a significant portion of retail management compared to other sectors, the study suggests female leaders require sufficient structural power to drive top performance.

“To increase the percentage of female presence is good, but how much weight of power would you give to this female?” Xiang said. “All kinds of companies are trying to increase the number of women managers, but not a lot of studies look at female executives’ power distribution and how many have speaking power.”

Feng and Xiang acknowledge that challenges still exist with representation. In 2019, around the time their research began, Forbes released “America’s 100 Most Innovative Leaders.” The list featured only one female executive: Barbara Rentler, CEO of Ross Stores.

“She is an extremely successful CEO,” Feng said. “Every major city you can find a Ross store. If you look at her senior management team, the structural power for females is very high. Their profitability is also way above industry average.

“It was a surprise to see only one woman to make that list. So, we need to have this discussion about the contributing factors in how businesses understand gender diversity.”

Xiang and Feng credit colleague Saim Kashmiri, the Mr. and Mrs. James E. King Lecturer and associate professor of marketing, for his previous research that showed women executives have a positive impact on customer orientation. Their intention was to take this idea a step further.

“Kexin and I were talking about gender diversity and equality in society in general and then also in an organization,” Feng said. “We tried to come up with ideas to think about – a lot of the past research is just trying to make a business case for gender presence. Once you have a woman, then that’s it.”

“They don’t care about how a woman should be endowed with sufficient power so she can have a say in a meeting. What if you look at two retailers with the same number of female executives? The structural powers endowed to female executives really matter.”

The authors hope to expand this research in the future.

“It would be interesting to go beyond the retail industry – to look at other industries and management levels, such as lower-level managers,” Xiang said. “We could also observe other factors like personalities, confidence, narcissism and risk aversion.”