Sustainability and stability through gender-diverse boards in SMEs

Abstract

This study examines the impact of board gender diversity on the financial performance and stability of Portuguese SMEs, drawing on resource dependence theory. Using a cross-sectional survey of 224 SMEs between 2022 and 2024, results show that board gender diversity significantly enhances profitability, measured by return on assets, and reduces earnings volatility. The findings further reveal that internal control quality and sustainability commitment positively moderate the relationship between board gender diversity and financial outcomes, strengthening the firm's strategic capacity. Robustness tests, including bootstrapped standard errors and alternative diversity measures, confirm the stability of the results. This research extends resource dependence theory to smaller firms and demonstrates that diversity's benefits depend critically on internal governance structures and stakeholder engagement practices. For SME managers, board diversity emerges as a strategic lever for growth and resilience rather than mere compliance. Policymakers are encouraged to support capacity-building initiatives that integrate diversity, governance quality, and sustainability frameworks. Overall, the study highlights that gender-diverse boards, when embedded within robust governance systems, substantially improve SME competitiveness, stability, and strategic adaptability. Future research should explore longitudinal dynamics and intersectional diversity effects across different institutional and industry contexts.