Do women still lack the ‘right’ kind of human capital for directorships on the FTSE 100 corporate boards?

Siri Terjesen, Val Singh and Susan Vinnicombe INTRODUCTION In FTSE 1001 company boards, only one in 30 executive directors is female, and overall, women comprise just over 11 per cent of FTSE 100 directors (Sealy et al., 2007). This number is substantially less than in Norway and Slovenia (22 per cent and 16 per cent respectively in 2006) and higher than in Japan and Italy (0.2 per cent and 2 per cent respectively in 2006) (Terjesen and Singh, 2008). Human capital theory (Becker, 1964) provides an obvious basis for understanding the continued exclusion of women from corporate boardrooms. It is linked with resource dependency theory (Pfeffer and Salancik, 1978). Human capital theory suggests that, given an increasingly uncertain business environment, boards should be composed of individuals who can provide access to a breadth of resources. Critical resources include access to prestige and legitimacy, financial capital, and functional and geographic market knowledge. During the 1990s, surveys of chief executives and chairmen in several countries reported that women were generally perceived to lack the qualifications and experience required from directors (Ragins et al., 1998; Catalyst/Opportunity Now, 2000). Thus, a human capital-based argument was used to explain women’s absence from boardrooms, whether or not the women lacked human capital in reality. In this chapter, we use human capital theory to explain recent appointments of new female as well as new male directors. Although previous studies examined the human capital of entire boards or of existing directors, we have little knowledge about...