NEW YORK, May 31 (Thomson Reuters Foundation) - Venture
capital firms whose partners have more daughters tend to
outperform their competitors, hiring more women and earning more
money, according to a new academic study.
In a rare examination of how gender diversity translates
into profit, the Harvard University researchers said raising
more daughters encourages executives to hire more women which in
turn "improves deal and fund performances".
Their paper was published by the influential National Bureau
of Economic Research, a nonprofit research organisation based in
Venture capital has long been a heavily male-dominated
world, with three quarters of firms employing no senior female
investors, according to previous research cited in the study.
But increased gender diversity could be a recipe for a
better bottom line, wrote business professor Paul Gompers and
researcher Sophie Wang in the study they co-authored.
Venture capital firms are typically deep-pocketed, small
companies that bet on startup success by investing millions in
exchange for an ownership interest and hopes of high returns.
According to the study, firms that increased their gender
diversity by hiring more women saw their deal success rate
increase by nearly 3 percent. Their profitability, as measured
by internal rates of return, rose by more than 3 percent.
The academics based their results on some 12,000
venture-capital investments made between 1990 and 2016,
primarily by U.S.-based firms.
They also studied personal information obtained from some
1,400 investing partners. Mathematical models showed that the
probability of hiring a senior female investor increased by some
25 percent when a son was replaced with a daughter among a
The authors counted as successful the investments that led
to an initial public offering of the company or when the company
was acquired for more money than had been invested.
The study, published on Monday, adds weight to business
arguments in favor of gender diversity, they said.
"While diversity has been lauded as an important cornerstone
of modern civil society and contemporary workplace, there have
been few rigorous studies, to our knowledge, that estimate the
causal economic impact of a diverse workforce in a real business
setting," they wrote.
Looking beyond the data, it was unclear why partners having
more daughters improved performance of venture capital firms,
The authors wrote that partners who raise daughters might
feel less biased toward women, and therefore hire more of them.
Female partners, due to their background, could also open the
doors to more business opportunities.
(Reporting by Sebastien Malo @sebastienmalo, Editing by Lyndsay
Griffiths. Please credit the Thomson Reuters Foundation, the
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change and resilience. Visit news.trust.org)