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Senior managers in venture capitalism who have daughters are significantly more likely to hire female partners, according to a new US study.
The study by researchers at Harvard Business School also found that improved gender diversity, induced by parenting more daughters, improved deal and fund performances.
The study, And the Children Shall Lead: Gender Diversity and Performance in Venture Capital, by Professor Paul Gompers and PhD student Sophie Wang is published in a Harvard Business School Working Paper.
It highlights the overall lack of gender diversity in venture capital and says the relative percentage of venture capitalists who are female has not increased measurably over the past 25 years. The researchers put this down in large part to the old boys’ network effect, the tendency to hire individuals who are similar to the recruiter. This is exaggerated in venture capitalism as the firms tend to be small and there is not much movement of personnel.
The researchers found that the proportion of female hires increased by 1.93% for those hiring managers who had a daughter rather than a son. They speculate: “Given that about 8.03% of the new hires are female, this suggests a 24% increase in the probability of hiring a senior female investor when a son is replaced with a daughter for the existing partners.”
They also find that business performance is better among more gender diverse organisations, which they says could be due to a number of factors including the fact that a more diverse team is less likely to succumb to groupthink.
They speculate about the links between improved performance and gender diversity. They say it may be because the pool of potential female investors is relatively untapped so those hired are of higher quality than the male hires. A second potential explanation, they say, is that having a diverse set of backgrounds around the table to make decisions about investments may reduce correlated errors in judgment. Third, having more diverse backgrounds may attract a much wider deal flow and, hence, average deal quality may increase. ce of performance improvement that greater gender diversity engenders.