Can Women’s Leadership Drive Optimal Performance? Evidence from Non-Financial Companies in Indonesia

Purpose: This study explores how women’s leadership influences company performance, examining its linear, dynamic, and non-linear effects. It specifically identifies the optimal proportion of female leaders that maximizes company performance. Design/methodology/approach: Grounded in complexity theory, this study employs multiple linear regression, dynamic regression, and non-linear regression to analyze firm performance. The sample consists of non-financial firms in Indonesia from 2013 to 2022, with 3,270 firm-year observations collected through purposive sampling. The analysis incorporates women CEOs, women on boards, and women president commissioners as indicators of women’s leadership. Return on Net Assets (RONA) measures firm performance, while control variables enhance result robustness. Findings: The results confirm that women’s leadership significantly impacts firm performance. Previous-year performance influences current outcomes, with better past results linked to stable or slightly improved firm performance. The study identifies an optimal threshold, revealing that firm performance peaks when women hold approximately 25% of board positions. Research limitations/implications: This study is limited by its sampling method, which includes only non-financial firms with at least one female leader during the study period, potentially limiting the generalizability of the findings to the broader population of firms in Indonesia. Nevertheless, the findings can inform policymakers and corporate leaders in designing more targeted gender diversity strategies; rather than solely focusing on increasing the number of women, firms are encouraged to strategically optimize board composition to enhance organizational performance. Originality/value: This study advances existing research by applying non-linear models to determine the ideal composition of women leaders, offering new insights into the relationship between women’s leadership and firm performance, particularly within the Indonesian corporate context.