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Firms with women on the board recall risky products faster

On Behalf of | Apr 15, 2020 | Business Litigation

A new peer-reviewed study examines whether having women on a firm’s Board of Directors effects management decisions to pull a defective medical product off the market. The researchers also took steps toward explaining their clear results.

The study showed that companies with women directors are much quicker and more likely to recall medical products. The researchers point to evidence that such boards enable the company to make customer safety top priority.

Comparing risk, speed, priorities and gender

The study’s sample included more than 90 FDA-regulated, publicly traded firms and nearly 4,300 recalls of medical products such as medical devices, pharmaceuticals and biologics.

The researchers were able to look at each product’s defect level, using the FDA’s scale of low-, moderate- or high-severity based on patients health threat. The study also tracked how long each firm took to issue a recall, if at all. Of course, it also collected the number of women on each firm’s Board of Directors.

Finally, the research team got more perspective by adding interviews to this hard data. They interviewed a vice president of quality and a director of manufacturing, each from a separate FDA-regulated, publicly-traded medical product firm on the Fortune 500 list.

Women leaders may inspire a focus on customer health

Firms with any female directors issued high-severity product recalls 28 days sooner than those with all-male boards. One female director made little difference for this type of recall, but when the number of women on the board rose higher, the speed and frequency of these recalls also correspondingly increased.

However, that result is for high-severity recalls, which are closely watched by the FDA. Low-severity recalls sometimes do not come to the attention of the FDA at all, and researchers reasoned the decreased oversight might allow these recalls to reflect the culture of the company more closely.

For low-severity recalls, only one woman member of a firm’s board of directors made a significant impact on the recall speed and rate, yielding 120% more recalls than firms with all-male boards of directors.

Boards lead managers to hide from or confront defects

Managers, not boards of directors, decide to recall a defective medical product. The researchers’ interviews with managers suggested that direction and priorities set by some boards made the safety of customers come first.

The quality manager at a firm with women on the board reported that the thought process “focuses keenly on customer harm and that managerial recall committees are only allowed three days to prove that a recall is not warranted.” In other words, the firm’s default is to recall the product and evidence to stop a recall must come fast.

But the director of manufacturing at a different company said managers in charge of their recalls have no deadline. They also “have the burden of proving that a recall is absolutely necessary and if unable to do so, no recall is initiated.” According to the study, the male members of the board of directors often ask “who is going to be fired and how quickly.”

The study is in the current issue of a journal from the Institute for Operations Research and the Management Sciences (INFORMS).


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