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Key Takeaways

• Women continue to be underrepresented in top corporate leadership positions.
• Having more female peers during the MBA program increases women’s likelihood of attaining a senior management position.
• Women with more female MBA peers tend to advance into senior positions at female-friendly firms.
• Strategies for addressing the gender gap include enhancing gender diversity in MBA programs and promoting networking opportunities.

The glass ceiling — the barrier that women and minorities face in obtaining upper-level positions — is enduring. Despite decades of progress in the workforce and university enrollment, women remain underrepresented in top corporate leadership positions. For example, in the S&P 1500 companies, women account for 40 percent of employees but hold only 6 percent of CEO positions (Hindlian et al., 2018). This gender gap widens at each step of the corporate ladder (Lean In and McKinsey & Company, 2020).

To the extent that managerial talent is equally distributed across genders, the underrepresentation of women in executive roles can be indicative of talent misallocation (Hsieh et al., 2016). Since executives have significant influence on firm performance, the loss of female talent along the corporate pipeline may translate into lower firm productivity (Bertrand and Schoar, 2003; Bloom and Van Reenen, 2007; Bloom et al., 2012; Rasul and Rogger, 2018).

Beyond influencing their own firm's performance, female managers may act as role models and implement policies to reduce barriers for other women in the corporate sector (Beaman et al., 2009; Chattopadhyay and Duflo, 2004; Beaman et al., 2012; Bhalotra et al., 2017). Female leaders can contribute to a more gender diverse and inclusive corporate culture. Due to the potential aggregate consequences of female underrepresentation in executive positions, understanding the barriers to advancement along the corporate pipeline is critical.

The role of social connections

Our research asks whether access to a larger network of female peers in business school can help women reach leadership positions. Although a growing literature shows that social connections formed during business school have long-lasting impacts on future career outcomes, little is known about how they affect the gender gap in leadership (Gorshkov et al., 2021; Yang et al., 2019; Lerner and Malmendier, 2013; Shue, 2013).

Theoretically, the effect of the gender composition of social connections is ambiguous. On one hand, women may benefit from information and support from peers of the same gender. Female connections may offer specific insights on firms that are more supportive of women's career growth and advise on how to maximize female-friendly policies, such as maternity leave and flexible work schedules. Conversely, forming connections with men — who are more likely to possess larger networks and occupy more powerful positions — may be more beneficial. As a result, the role of female peers in closing the management gender gap is largely an empirical question.

Identifying the causal impact of female peers

Identifying the causal impact of female peers on management outcomes is complex, mainly due to two empirical challenges. First, networks and peer groups are likely to be codetermined. Unobservable traits, such as extroversion, may influence both the composition of an individual's network and her likelihood of reaching leadership positions. Second, this inquiry requires detailed data on long-term career trajectories with a focus on managerial positions.

To address the first challenge, we use a quasi-experimental setting provided by the Master of Business Administration (MBA) program at a top 10 U.S. business school. At the beginning of the program, school administrators randomly assign students into sections. Students in the same section take core classes together and form strong social ties. The random variation in the gender composition of the sections allows us to study the effect of female peers on the probability of achieving a senior management position, defined as vice president, director, senior vice president, or C-level executive positions.

We address the second issue by constructing a unique dataset using public LinkedIn profiles. This dataset includes comprehensive education and employment histories, job titles, and employer names. With this information, we can track an individual's career progression and gain insights into the characteristics of firms that potentially play a critical role in women's career advancement.

Gender gap in management roles

Using our data, we can document a substantial gender gap in management positions for the MBA graduates from our sample. Figure 1 shows that although 96 percent of male and female MBA graduates enter management roles within 15 years of receiving their degrees, women are 24 percent less likely to hold senior management positions. This gender gap emerges as early as the first year after the MBA and persists for at least 15 years. Importantly, this gap remains large even after we account for gender differences in pre-MBA characteristics, firm characteristics, industry choice, and gaps in the employment history.

Figure 1. Representation in the Corporate Pipeline Among MBA Graduates in the First 15 Years Post-Graduation by Gender

Notes: We plot the percentage of male and female graduates who ever held any managerial positions, a VP or Director position, SVP position, and C-level Executive position within 15 years since graduation. We display the 95% confidence intervals from the t-test of gender equality. Sample includes students of the graduating classes 2000-2018, excluding 2009.

The impact of female MBA peers

We then document the causal impact of having a higher share of women in the MBA section on women’s advancement into senior leadership positions. Figure 2 shows the relationship between the proportion of female section peers and the probability of holding a senior management position for male and female MBA graduates. We find that a 4 percentage point (or 1 SD) increases women’s chances of becoming a senior manager by 8.4 percent. In contrast, there is no effect on male students. This overall effect is economically significant and translates into a 26 percent reduction in the management gender gap.

Figure 2. Effect of Female Peers on Holding Senior-Level Management Positions

Notes: We plot the binned scatterplot of the relationship between female peers and the probability of becoming a senior manager. Both the outcome and female share have been residualized by the full list of controls in our main specification. Each dot represents the average likelihood of holding a senior management position within 10-percentile bins of female share. Estimates are separately run for men and women and include class fixed effects, year fixed effects, class-by-year fixed effects, an indicator for having attended a top 20 U.S. undergraduate university based on U.S. News Ranking, indicators for having any senior management experience, and having worked in finance, as well as their interactions with a female dummy. Finally, it includes a series of section-level characteristics: share of section with management experience, senior-level management experience, worked in finance, worked in consulting, worked in other industries, worked in a P&L role, white, and foreign. Sample includes students of graduating classes 2000-2018, excluding 2009. Observations are restricted to the first 15 years since graduation.

Interestingly, we find the largest effects in male-dominated industries, such as consulting, tech, and finance. This suggests that female MBA peer networks are important in industries where women are more likely to face barriers in accessing informal networks in the workplace.

Female peers and female-friendly firms

We next explore the role of firm characteristics in explaining our results. We find that women with more female peers are not more likely to move into smaller or lower-compensation firms, but they are more likely to be promoted into senior management at female-friendly firms.

These firms are identified using data from InHerSight.com, an online platform where female employees anonymously rate their companies. These ratings provide crucial insights into the firms’ culture, policies, and support toward women's career advancement. Female-friendly firms are those that generally have more generous family leave policies, offer more flexible working schedules, and are rated higher for having equal career opportunities for men and women in the company.

Our findings suggest that having more female peers both facilitate women’s promotions into senior management while at these firms and lead women to transition into these firms during their career. Interestingly, the effect on entries into these firms emerges six to 10 years after MBA graduation, often when women are most likely to have young children in the household. These results suggest that the support of female peers may be more effective at a point in the career path when the gender gaps in the labor market start widening (Bertrand et al., 2010; Kleven et al., 2019).

To provide additional insights into the underlying mechanisms, we conduct qualitative interviews of female MBA graduates in our sample. They revealed that female peers helped them overcome career barriers by providing emotional support, job referrals, information on work-related opportunities, as well as advice on navigating firms and family-friendly policies. In ongoing work, we will empirically test the relative importance of each mechanism in a quantitative survey.

Policy implications

Our research has several policy implications for closing the gender gap in corporate leadership.

First, our findings underscore the vital role of gender diversity in MBA programs. By striving to increase female representation in their programs, business schools can increase the proportion of women who will ascend into senior management positions. Moreover, we find suggestive evidence that the women that benefit the most from having more female peers were those in the sections with the least number of women. MBA programs could consciously ensure a significant female representation in each section to maximize the beneficial effects of female peer networks. By providing women access to a robust network of female peers, business schools can empower their female students to overcome the barriers in their career progression and thrive in leadership roles.

Second, our results suggest that female networks play an important role in women’s career advancement, especially for those working in male-dominated sectors. Previous studies suggest that women receive less support in the workplace in terms of access to mentoring, sponsorships, and informal networks. Therefore, it could be beneficial for both corporations and business schools to develop initiatives that foster networking opportunities for women.

Lastly, our findings indicate that female MBA peers help women succeed, especially in female-friendly firms. This highlights the potential for female-friendly corporate policies, such as maternity leave and flexible work schedules, in boosting the overall representation of women in leadership roles. We also find that women with more female MBA peers are more likely to transition to female-friendly firms and succeed in these types of firms. Policymakers and educators may want to facilitate these types of transitions through information dissemination about female-friendly firms, fostering networking opportunities, and creating platforms where women can share their experiences and insights about different firms and their policies.

In conclusion, our research demonstrates the importance of female social connections for women's career outcomes. Increasing gender diversity within MBA programs and promoting networking opportunities among women could prove instrumental in breaking the persistent glass ceiling.

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