Zoom Video Communications Inc. CMO Janine Pelosi took control of the company’s marketing tiller just a year before the COVID-19 pandemic, and played a pivotal role in transforming Zoom from a relatively unknown conference call software to a widely recognised symbol of remote work during a new work from home era. She guided Zoom through its 2019 IPO, managed its rapid growth to around 505,000 customers with over ten employees, and supervised a sales and marketing budget that increased from USD 280 million in the first half of 2020 to USD 516 million in 20211. Pelosi is part of the rising wave of female leaders taking the helm as Chief Marketing Officers (CMOs) in recent years, shaping the course of marketing for their respective companies.

In 2021, for the first time in the 18-year history of tracking CMO gender and ethnic diversity, consulting firm Spencer Stuart noted that female CMOs exceeded the number of their male counterparts, with 71% of freshman CMOs in 2021 being women, up from 52% in 20202.  

This milestone, coupled with a study by Raghu Bommaraju, Associate Professor, Marketing, highlights the dual benefits of enhanced female representation in marketing leadership—amplifying diversity while bolstering firm performance.  

The research delves into gender-specific risk-taking behaviours among CMOs, emphasising that female CMOs exhibit a propensity to avoid short-term orientation, yielding positive long-term outcomes for firms, and shedding light on the influential factors at play. The findings affirm how female CMOs are less likely to engage in myopic practices which positively impact firms in the long term.

The gender paradox

In the world of marketing and finance, gender differences in risk-taking are more than just a difference; they can have a significant influence on firm decisions and outcomes. Studies reveal that men take higher risks across various scenarios, including investments. Female CFOs and CEOs, however, often opt for safer financial strategies.

The ISB study boils the divide down to three factors:

• Overconfidence: Men tend to overestimate their abilities, driven by a need to assert their independence or individuality. This can explain why they are more likely to step into competitions and aim for positions beyond their qualifications.

• Failure Avoidance: Women see failure as a consequence of their innate (in)ability, thereby actively avoiding failure. This perception can lead to a more cautious approach to their choices.

• Fear of Scrutiny: Women face not only a "glass ceiling" but also a "glass cliff" in leadership roles. Small mistakes can have a bigger impact on women in these roles, affecting their perceived competence.

These factors are interesting because research has shown that companies are more likely to appoint women to leadership positions when the companies’ performance is faltering.  

The term "glass cliff," coined by University of Exeter researchers in 2005, describes a phenomenon in which firms appoint women to their boards during periods of overall stock market decline. These companies are statistically more likely to have experienced consistently poor performance in the preceding five months compared to those appointing men.

Take, for example, Xerox CEO Anne Mulcahy, who helmed the company from 2001 to 2009, ascending to the role during a period when the company teetered on the brink of bankruptcy and skilfully orchestrated its recovery3.

Or consider auto company GM, which brought in Mary Barra as CEO after a scandal over faulty ignition switches in its vehicles that allegedly caused dozens of deaths4.  

But understanding these dynamics is not just about recognising differences; it is about delving into the theories that underpin them. Two prominent theories, agency-communion theory, and self-construal theory, play a vital role in understanding gender disparities, Professor Bommaraju notes.

Agency-communion theory suggests that men tend to exhibit agency traits such as assertiveness, while women lean towards cooperation. This implies that men often focus on individuality, or on distinguishing themselves, while women perceive themselves in relation to others, emphasising interdependence.

But these theories are not isolated; they are influenced by a cocktail of factors, including societal norms, childhood experiences, biology, and genetics. These forces collectively shape the gender disparities observed above.

Gendered decision making

The ISB study explores gendered decision-making around three pivotal points: advertising intensity, real earnings management (REM), and new product introductions (NPIs). REM pertains to cutting a company's "discretionary expenses" during a specific period to artificially increase its earnings.

Budgeting advertising expenditure is like any sports premier league auction, wherein CMOs allocate resources to advertising campaigns without a guaranteed outcome. This is unlike REM where short-term earnings can be optimised through cost-cutting of discretionary expenses such as advertising, despite the potential risks and long-term repercussions. Finally, NPIs are again high-risk gambles, offering promises of profitability but harbouring the ever-present threat of expensive failures.

These metrics hold the key to understanding a CMO's role, carry significant weight in the marketing landscape, and possess the potential to significantly impact a company's financial well-being.

However, the ISB study points out that CMOs do not make these decisions in a vacuum and three critical categories of factors influence decision-making: structural, organisational, and environmental.

Under structural factors, the CEO's gender comes into play because it shapes the reporting structure and workplace dynamics, influencing the CMO's decision-making process. On an organisational level, a company's performance relative to its peers impacts a CMO's risk appetite. Lastly, environmental factors, such as demand uncertainty in the firm's industry, affect the CMO's responsibilities and shape their risk-taking tendencies.

Navigating gender dynamics

The ISB study evaluated gendered decision-making and risk-taking through three studies and the findings offered a nuanced view of how gender subtly influences key aspects of business strategy.

It is noted that gender does not significantly affect the intensity of advertising budget allocations. However, when the ISB team investigated earnings management through advertising, a pattern emerged that showed that female-CMO-led firms exhibited prudence. They observed that female CMOs are less likely to engage in manipulative tactics, a practice that safeguards the integrity of the brand and the financial stability of the company.  

The gender of the CMO also plays a pivotal role in the introduction of new products. Female CMOs tend to be circumspect, leading to fewer new product introductions. In an environment where product failures and associated costs loom large, this cautious stance can be seen as a strategic advantage.

Supporting this finding, a 2023 study by the UCP Business School examined the impact of women in a company's board of directors during a crisis. The research showed women strategists enhance value and reduce stock volatility and bankruptcy risks. It indicated that women in advisory roles lead to proactive risk management and effective risk control, particularly beneficial for organisations utilising derivative instruments. As a result, the study suggested that businesses should actively advocate gender equality on their boards, moving beyond acknowledging diversity requirements5.

Yet, the story is far from static. The context in which female CMOs operate holds significant sway. Under the leadership of a female CEO, they embrace more risk in their marketing decisions, resulting in relatively more new product introductions as compared to when they have male CEOs. The gender dynamic at the top of the corporate hierarchy appears to influence their strategic choices.

Taking a global perspective, a 2023 study by Greece's Hellenic Open University delved into the corporate boards worldwide, focusing on the role of women in executive positions and their impact on business outcomes. The study showed that the percentage of female executives and women on boards increased in 2021. Their analysis uncovered that a 10% rise in women on boards was linked to a substantial 1.4% to 1.8% rise in profitability, regardless of the metric used to measure female executive participation. These findings also remained consistent over time, which meant that even if there were unpredictable issues such as pandemics, the presence of female executives consistently contributed to firms' profitability.6

The ISB study also noted that female CMOs are more likely to introduce NPIs when their firms are performing relatively better as compared to their peers.

Lastly, the influence of demand uncertainty is quite significant as high demand uncertainty prompts female CMOs to engage in less advertising-related earnings management. However, this situation may also lead them to opt for fewer NPIs.

Decisive advantage

The ISB study findings hold significant implications for management. The impact of female CMOs' cautious approach to marketing decisions is evident in the tangible benefits it brings to companies, such as cost savings and protection against potential product failures.

Moreover, female CMOs are sensitive to their business environment and adjust decision-making based on relative performance and demand uncertainty. During periods of increased demand uncertainty, they tend to exercise more caution, while they become more inclined to take calculated risks when their companies are performing well.

Considering their findings, Professor Bommaraju recommends that corporate boards consider appointing more female CMOs, and not just from the viewpoint of meeting diversity goals. The appointments have the potential to significantly benefit shareholders.  

The study also noted a spillover effect related to female representation in senior leadership positions. When female CMOs work alongside female CEOs, the former exhibit a greater willingness to take risks. This phenomenon can be attributed to factors like heightened confidence, reduced fear of failure, and a decreased sense of scrutiny. The presence of a female CEO challenges gender stereotypes and dispels the perception that senior leadership roles are exclusively reserved for men. Additionally, research suggests that female CEOs are adept at recognising the productivity signals of their female subordinates, further underscoring the benefits of having women in key leadership positions.

Finally, the ISB research revealed that, contrary to the abundant advice urging women to enhance their confidence, it was heightened workplace scrutiny that posed more significant obstacles to effective decision-making than women's confidence levels.

• https://www.forbes.com/sites/martyswant/2021/09/29/worlds-most-influential-cmos-2021/?sh=1aa76aab4b55
• https://www.spencerstuart.com/research-and-insight/cmo-tenure-study-women-outnumber-men-for-first-time-in-cmo-role
• https://www.vox.com/2018/10/31/17960156/what-is-the-glass-cliff-women-ceos 
• https://www.mdpi.com/2071-1050/15/14/11145
• https://www.mdpi.com/2071-1050/15/11/868