Corporate culture is often perceived as a top-down phenomenon, with norms set by senior leaders and with managers and other employees following in line. However, managers themselves can have significant influence on the application of a firm’s practices, policies, and culture. This is especially true in terms of pay and promotion differences among men and women, or gender gaps within firms. While managers may directly influence pay and promotion decisions, a firm’s overall culture can also affect women and men’s career outcomes even when the manager changes. This raises a question about the degree to which individual managers can reshape a firm’s culture.
The authors study this question by focusing on gender gaps in pay and promotions using 11 years of detailed personnel records from a large multinational firm operating in over 100 countries, along with Brazilian linked employer-employee data (RAIS) from 2009 to 2021. The multinational firm is well-suited to this question as it operates across countries with widely varying gender attitudes, requires foreign rotations for advancement into senior leadership, and assigns rotation locations based on factors unrelated to managers’ gender views, thus providing a quasi-natural experiment. The authors measure a manager’s gender attitudes using World Values Survey data matched to respondents from the same home country and birth cohort, treating these as inherited cultural values rather than individually measured beliefs. The authors’ analysis of the firm’s data reveals the following:
- When managers from countries with more progressive gender attitudes are assigned to a firm’s location in another country, the gender pay gap reduces by 4.9 percentage points, about 18% of the baseline mean, largely through higher promotion rates for women. This gap is roughly equivalent to the difference between an American and a Chinese manager, or a Chinese and an Indian manager.
- Intuitively, this effect is larger in destination offices with more conservative prevailing norms, suggesting that progressive managers have more room to make a difference where the status quo is more unequal. Importantly, the effects persist after the foreign manager has left, and there is no evidence of backlash in offices where the incoming manager is more conservative than local norms.
- A meaningful share of the narrowing pay gap comes from promotions to higher salary grades and work levels, rather than from changes in workforce composition. There is also some evidence of lateral reallocation, where women move to different tasks, alongside promotions.
- Company survey data further suggest that progressive expat managers improve employees’ perceptions of managerial effectiveness and overall workplace morale.
- Finally, these cultural influences extend beyond the initial managerial setting: Local managers who interact with the foreign manager (but do not report to the foreign manager), also promote women more at an increasing rate.
The authors then test whether these firm findings align with the broader economy by analyzing Brazil’s RAIS dataset. The track establishment-level exposure to foreign managers with varying gender norms across thousands of firms from 2009 to 2021 to find that establishments with foreign managers from more gender-egalitarian countries have a roughly 3% smaller gender pay gap among high-skilled white-collar workers, as well as higher female representation in managerial roles. While these results are correlational rather than causal, they are consistent with the main findings and suggest the mechanisms at work are not unique to the multinational context.
Bottom line: By examining gender pay gaps across countries with varying cultural norms, this work offers evidence for the role that managers can play in shaping corporate culture. Exposing workers to managers from different cultures, gender-related attitudes and managerial practices can shift in ways that impact within-firm gender pay gaps.