Female directors are quicker to recall dangerous medical products

Medical product recalls number in the thousands each year. In the first quarter of 2018, for example, 84 pharmaceutical companies in the U.S. reported at least one recall. Some 4,500 Food and Drug Administration-approved drugs and devices are pulled from shelves annually — decisions greatly influenced by the presence of women on a firm's board, according to new research from the University of Notre Dame.

Severe product problems that injure or kill consumers are recalled much faster when there are women on the board, and lower-severity product defects that can be hidden from regulators and not recalled are less often hidden when there are female directors, according to "The Influence of Female Directors on Product Recall Decisions," forthcoming at Manufacturing & Service Operations Management from lead author Kaitlin Wowak, assistant professor of information technology, analytics and operations in Notre Dame's Mendoza College of Business.

Wowak, along with co-authors George Ball at Indiana University, Corinne Post at Lehigh University and David Ketchen at Auburn University, found that compared to boards composed of all male directors, those with female members announce high-severity recalls 28 days faster, a 35 percent reduction in recall timing — truly a matter of life or death, according to Wowak.

The researchers analyzed 4,271 medical product recalls from 2002 to 2013 across 92 publicly traded firms regulated by the FDA.

Additionally, they found the more women on the board, the more efficient recalls become. While consumers have the most to gain from faster recalls of defective products, Wowak notes, firms have the most to lose since recalls expose them to the most public, regulatory and stock market penalties. As such, the study shows high-risk decisions require more female input to push firms to act faster.

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"Just one female director is insufficient to push firms to recall these serious problems more quickly," Wowak explains. "It takes at least two female directors to influence the timeliness of severe product recalls, and three moves things along even faster."

However, in instances involving low-severity recalls that could be hidden from regulators, even having one women at the boardroom table makes a difference. Firms with female directors announce 120 percent more low-severity, high-discretion recalls than firms with all-male boards.

"In this case, just one female director can influence how these decisions are made," Wowak says, "and the number of low-severity recalls announced continues to increase as firms add each additional female director."

"We believe our study shows that there is a difference in very real and important outcomes between firms who add women to their boards and those who don't," she says. "More broadly, we align with recent calls for all directors on boards to look beyond the bottom line and be more responsive to all stakeholders, especially when products may harm or kill their customers or other stakeholders."