Lead Like a Woman to Improve Your Firm’s Performance

You might have heard the headline finding: firms with women in top management often perform better. What has been much less clear is why. In our article, “Bottom-up effects of female strategic leadership: Firm performance effects through employees,” we offer a practical answer that shifts attention away from the C-suite alone and toward what happens within firms every day.

The core insight is simple but powerful: women in strategic leadership positions tend to improve firm performance by fostering higher levels of employee participation—and that participation pays off, especially in the right contexts.

Focusing on a “bottom-up” perspective, we find that firms with more female top managers have employees who feel freer to speak up, participate in decisions, and exercise autonomy in their work. In turn, firms with more employee participation achieve stronger financial performance.

This matters because employees—particularly those close to customers, operations, and technologies—often see problems and opportunities before executives do. Bottom-up inputs help firms avoid getting stuck in outdated ways of thinking. When people at lower levels feel empowered to contribute ideas and influence decisions, organizations better understand how to adapt and can enlist employees to implement those changes.

Why does female strategic leadership matter here? A large body of prior research shows that women leaders, on average, are more likely to use democratic and participative leadership styles. These behaviors—asking for input, sharing information, encouraging voice—create organizational conditions where employee participation becomes the norm rather than the exception.

Importantly, our findings suggest that this effect does not depend on women “overhauling” formal structures. Even relatively informal actions—open-door policies, visible engagement with frontline employees, signaling the value of employee ideas—can meaningfully increase participation across the firm.

Moreover, we find that employee participation is particularly beneficial in some types of firms: innovation-oriented forms and labor-intensive firms. When a company competes through innovation, employee participation fuels idea generation, experimentation, and strategic renewal. And in organizations where human capital is central to value creation (e.g., services, healthcare, knowledge work), participation boosts employee buy-in and commitment—critical ingredients for performance and change implementation.

With that in mind, our findings suggest several practical implications for leaders, managers, and employees:

For senior leaders:. Top leaders shape how well their firm can learn and adapt. Pay attention to whether leadership behaviors actively invite employee voice—and encourage those behaviors in yourself and others.

For middle managers: Middle managers also play a critical role in translating participative signals from the top into daily practices. Encourage upward voice and protect space for employee input.

For employees:  Speaking up can directly contribute to your firm’s success, especially in innovation- and people-driven organizations. When leadership creates real opportunities to participate take advantage of  them by sharing your ideas and voicing your concerns.

Bottom line: The performance benefits of women in strategic leadership do not stop at the executive table. They ripple downward, unlocking employee participation that helps organizations innovate, adapt, and, ultimately, perform better.