Shaping SME success through gender diversity

Abstract

This study explores the impact of board gender diversity (BGD) on the financial performance of SMEs in Portugal, with a focus on family-owned businesses, framed within agency theory. It hypothesises that gender-diverse boards improve firm performance by enhancing governance, decision-making, and aligning managerial interests with shareholder objectives. The research examines how gender diversity influences various performance indicators, particularly profitability, and investigates the moderating role of corporate social responsibility (CSR) initiatives. A quantitative approach was adopted, using survey data from SMEs across Portugal. Financial performance is assessed through return on assets (ROA) and return on equity (ROE), with independent variables including board gender diversity, corporate governance practices, and stakeholder engagement. The study finds that CSR moderates the relationship between gender diversity and financial outcomes, offering new insights into how gender-diverse boards can foster sustainable business practices. This research contributes to the literature by focusing on SMEs, a sector underrepresented in existing studies and emphasises the growing importance of gender diversity in corporate governance. The findings have practical implications for policymakers, business owners, and managers aiming to integrate gender diversity and CSR strategies to enhance governance and improve financial performance in the Portuguese SME sector.