When Do Firms Choose Substantive Over Symbolic Compliance with Board Gender Quotas?

This study assesses whether and when the firms choose to use symbolic or substantive compliance strategies in response to exogenous shocks in their institutional environment. We theorize that the joint effect of a quota target for women on boards and the quality of the firm’s performance is such that firms with a high distance to the country’s quota target and are satisfied (v. dissatisfied) with their financial performance are more likely to use symbolic (v. substantive) compliance. While institutional theorists have often noted the use of symbolic compliance, ours is one of the first studies to provide conditions under which firms are more likely to prefer one or the other form of compliance. Further, by highlighting the preference of female CEOs for substantive compliance in all scenarios, we provide boundary conditions on institutional theory predictions. We contribute to literatures on institutional theory, behavioral theory and gender diversity on corporate boards.