Women Directors May Mean Faster Drug and Medical Device Recalls

Published on April 21, 2020 by Sandy Liebhard

A new study suggests the presence of female board members significantly influences the speed in which medical products companies recall defective drugs and devices from the market.

How Female Directors Influence Product Recalls

The U.S. Food & Drug Administration (FDA) announces roughly 4,500 medical device and drug recalls every year. During just the first quarter of 2018, 84 pharmaceutical companies conducted at least one recall in the United States.

To determine how the presence of female board members might influence these decisions, researchers at the University of Notre Dame, Indiana University, Lehigh University, and Auburn University analyzed 4,271 drug and medical device recalls conducted from 2002 to 2013 by 92 publicly traded firms regulated by the FDA. Compared to boards composed of all male directors, companies with female members announced high-severity recalls 28 days faster, a 35% reduction in recall timing.

“Just one female director is insufficient to push firms to recall these serious problems more quickly,” noted lead author Kaitlin Wowak, an assistant professor of information technology, analytics and operations in Notre Dame’s Mendoza College of Business said in a statement announcing the findings. “It takes at least two female directors to influence the timeliness of severe product recalls, and three moves things along even faster.”

However, companies with at least one woman serving on the board issued 120% more low-severity, discretionary recalls – those most likely to be concealed from regulators – compared to firms with all-male boards.

Women Directors May be More Responsive to Customer Needs

“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,” Womack continued. “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.”

The findings line up with previous research suggesting women are more risk-averse, follow rules more closely, and consider how their decisions influence a wider array of stakeholders.

A year ago, California became the first state in the nation to require that all public companies headquartered there have at least one female director. The European Commission mandates that all companies based in Europe have at least 40% female representation on their boards.

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