She Innovates- Female owner and firm innovation in India

TL;DR

This study demonstrates that female ownership in Indian firms positively influences innovation, especially in firms with better internal funding, younger age, and safer regions, highlighting the importance of promoting female entrepreneurship.

Contribution

It provides empirical evidence linking female ownership to increased firm innovation in India, using instrumental variable methods to address endogeneity.

Findings

Female ownership increases firm innovation probability.

Positive effects are stronger in firms with internal funding and in safer regions.

Promoting female entrepreneurship can enhance innovation in Indian firms.

Abstract

Using data from World Bank Enterprises Survey 2014, we find that having a female owner in India increases firm innovation probability using both input and output indicators of innovation. We account for possible endogeneity of female owner variable using a two stage instrumental variable probit model. We find that the positive effect of female owner variable is observed in the sub-samples of firms with more access to internal funding, young firms and firms located in regions with no or less crime This study highlights the need to promote female entrepreneurship as a potential channel for promoting firm innovation in India.