Gender diversity in firm ownership: Direct and indirect effects on firm-level innovation across 29 emerging economies

Abstract

Highlights • Gender diversity in ownership-management is positively associated with the firm’s overall innovativeness, technological and non-technological innovation • This relationship is mediated by the firm’s investments in R&D and reliance upon a breadth of external capital • These results are generated using secondary data on 7848 owner-managers collected during 2012-2016 across 29 emerging economies • They are robust to alternative measures of focal variables, checks of endogeneity, self-selection, and sensitivity analyses to various subsamples Abstract Despite recent evidence linking various measures of gender diversity in the firm with firm-level innovation, we know little about the mediating channels underlying this relation. Building on and extending the Upper Echelon and entrepreneurship literature, we address the following question: how, i.e., through which mediating channels does gender diversity in ownership-management gets at the heart of firm innovation? We use cross-sectional survey data collected in a random sampling of 7848 firm owner-managers across 29 emerging economies during 2012–2016 to test our hypotheses. Our findings demonstrate both direct and indirect effects of our focal independent variable. Specifically, firms with greater gender diversity in ownership are more likely to invest in R&D and rely upon external capital, with such differentials explaining sizeable proportions of higher likelihoods of overall innovativeness, as well as technological and non-technological innovation exhibited by their firms. Our post-analytical extensions reveal gender diversity among the workforce and human-resource-management practices that support employees' creativity and learning as additional mediating channels through which gender diversity in ownership likely impacts firm innovation. Furthermore, gender diversity in ownership allows firms from less-advanced emerging economies to catch up in their overall innovativeness with firms from more-advanced emerging economies.