Does Board Diversity Influence Firms' Innovative Activity? Evidence from the firm-level micro data in Japan (Japanese)

Tomohiko Inui, Makiko Nakamuro, Kazuma Edamura and Junko Ozawa

Discussion Papers (Japanese) from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This paper empirically examines the impact of board diversity on firms' innovative activity, taking advantage of the unique firm-level dataset in the period 2000-2011 in Japan. We constructed measurements of the degree of board diversity by using various characteristics of board members such as gender, age, tenure, and education, and found no significant impacts on firm innovative activity after controlling for the firms' fixed effects. However, when we restricted the sample to a group of firms with a high foreign ownership ratio or globalized firms, we found the presence of female board members is positively associated with promoting firms' innovative activity as measured by research and development (R&D) intensity. Our finding suggests that board diversity is not associated with the innovation across firms in general, but if a firm has already accumulated the management skills to handle the diversified voices and opinions from board members, this helps it to become more innovative.

Pages: 22 pages
Date: 2014-12
New Economics Papers: this item is included in nep-cse, nep-ino and nep-sbm
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