Independent directors and firm innovation: the moderating role of gender and nationality diversity

PurposeAlthough the literature on corporate governance and firm innovation finds that board independence is important, this paper proposes that the presence of independent directors alone is not enough to explain their impact on firm innovation. This study analyses if diversity among independent dir...

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Bibliographic Details
Published in:European journal of innovation management 2024-01, Vol.27 (2), p.373-402
Main Authors: Sierra-Morán, Johana, Cabeza-García, Laura, González-Álvarez, Nuria
Format: Article
Language:English
Subjects:
Boards of directors
Corporate governance
Decision making
Empirical analysis
Equality
Foreign subsidiaries
Gender
Gender equity
Globalization
Inclusion
Innovations
International agreements
Managers
Multiculturalism & pluralism
R&D
Research & development
Stockholders
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Summary:PurposeAlthough the literature on corporate governance and firm innovation finds that board independence is important, this paper proposes that the presence of independent directors alone is not enough to explain their impact on firm innovation. This study analyses if diversity among independent directors may affect the relationship between board independence and firm innovation.Design/methodology/approachA panel data on a sample of 124 Spanish listed companies for the period 2008–2019 used to test the hypotheses.FindingsResults suggest that independent directors have a negative effect on firm innovation, measured as number of patents, but when there are high levels of gender and nationality diversity among such directors, this negative effect may be mitigated.Originality/valueConsidering that firm innovation is a complex process associated with decision-making and that board independence itself may be not enough, this study goes a step further and delves deeper into the characteristics of independent directors. As far as is known, this paper is the first theoretical and empirical study that considers that independent director diversity as a moderating variable between board independence and firm innovation. Besides, this research contributes to the debate on the role of independent directors in firm innovation and the results may also serve as a guideline for policy makers and firms for structuring boards that are pro-innovation.
ISSN:1460-1060
1758-7115
DOI:10.1108/EJIM-12-2021-0621