Are sustainable and innovative enterprises more equal in rewarding their women?

Abstract

The strategic importance of innovation and sustainability for business success is widely emphasized in the literature. To the best of our knowledge, no in-depth analyses have been developed to understand if there is a relationship between companies' engagement in innovative and sustainable projects and their attitudes towards implementing fair compensation and reward systems, given that this point is generally acknowledged to be critical, especially with regard to women. In this article, we pose the following research question: “Do sustainable and innovative companies reward their women equally, compared to men?” and test two hypotheses. The first recognizes the fact that innovation and R&D areas are still male-dominated, increasing the level of inequality in women's compensation, as measured by the gender pay gap (GPG), i.e., the average difference in pay between men and women, so we posit: “There is a positive relationship between innovation and the GPG”. As for the second hypothesis, in line with the ongoing debate on sustainable human resource practices, we expect that companies with a sustainability agenda will reduce their GPG so that “There is a negative relationship between sustainability and GPG”. We analyzed data from the Italian Business Census to test our hypotheses. The results show that the first hypothesis is confirmed, while the second is only partially confirmed. On this basis, policy implications and future research directions are identified.