Is there a sweet spot for gender diversity in organizations? The S-curve relationship between gender diversity and financial performance

By integrating theories of social identity, the resource-based view of the firm, and status hierarchies, we propose an S-curve model of the relationship between gender diversity and firm performance. We test our hypotheses using two retail store samples and a third sample of Fortune 500 companies. Across all three samples, we find support for an S-shaped relationship between gender diversity and firm performance where moderate levels of gender diversity serve as a "sweet spot" for the effect of gender diversity on firm performance. Further, we find that this relationship is dependent upon gender equality management such that effective gender equality management is necessary to realize the benefits of gender diversity. Theoretical and practical implications are discussed.