7. Conclusion
We find that firms with greater representation of female directors invest more in innovation and achieve greater innovative success, as measured by patent and citation counts, for given R&D expenditures. In other words, the R&D expenditures in firms with female directors are more productive in generating innovation. These findings are robust to the use of alternative measures of board gender composition, econometric specifications and subsamples.
To investigate the potential mechanisms through which female directors affect corporate innovation, we explore the heterogeneity in the innovation effect of female board representation. The positive relation between female board representation and innovation is stronger when product market competition is less intense and when managers are more entrenched, which are consistent with the hypothesis that female directors improve the incentives to innovate by increasing oversight over managers. Finally, we find that female representation on the board does not add value on average. However, female directors appear to be valuable for industries in which innovation and creativity are particularly relevant, reinforcing the importance of the role of women on boards for impacting corporate innovation.
