Gender Diversity in Ownership and Firm Innovativeness in Emerging Markets. The Mediating Roles of R&D Investments and External Capital

TL;DR

This study investigates how gender diversity in firm ownership influences innovativeness in emerging markets, highlighting the mediating roles of R&D investments and external capital, based on survey data from SMEs.

Contribution

It reveals the mechanisms through which gender diversity impacts firm innovativeness, emphasizing R&D and external capital as key mediators in emerging markets.

Findings

Higher gender diversity correlates with increased R&D investment.

Gender-diverse firms rely more on external capital.

Gender diversity leads to greater overall innovativeness.

Abstract

Despite recent evidence linking gender diversity in the firm with firm innovativeness, we know little about the underlying mechanisms. Building on and extending the Upper Echelon and entrepreneurship literature, we address two lingering questions: why and how does gender diversity in firm ownership affect firm innovativeness? We use survey data collected from 7,848 owner-managers of SMEs across 29 emerging markets to test our hypotheses. Our findings demonstrate that firms with higher gender diversity in ownership are more likely to invest in R&D and rely upon a breadth of external capital, with such differentials explaining sizeable proportions of the higher likelihood of overall firm innovativeness, product and process, as well as organizational and marketing innovations exhibited by their firms. Our findings are robust to corrections for alternative measurement of focal variables, sensitivity to outliers and subsamples, and endogenous self-selection concerns.