Does green innovation have an important role in the effect of board gender diversity and firm performance?

Abstract

Purpose: This research is motivated by the development of the debates on the role of board gender diversity and green innovation on firm performance. This study aims to investigate the mediating role of green innovation on the effect of board gender diversity and firm performance.Design/methodology/approach: This research employs regression analysis. The dataset using samples of 518 public listed companies on the Indonesia Stock Exchange over the period of 2017–2019.Findings: Based on 1,554 firm-year observations for the period of 2017 to 2019, the results revealed that the presence of board gender diversity had a negative effect on green innovation and the relationship between green innovation and firm performance was insignificant. However, we found that board gender diversity showed a positive effect on firm performance. More importantly, green innovation is not an essential factor in the relationship between board gender diversity and firm performance.Research limitations/implications: This research used only sample companies in a single country, therefore, the theory implication might apply to emerging countries with similar conditions (Indonesia). Future research needs to do more in more samples with multiple countries. Also, future research might apply with others corporate governance characteristics variables.Practical implications: Our result findings, first, can be used to support the company to implement the alternative of the low cost of green innovation. Second, this paper can be used to give insight for the government of Indonesia in supporting the business-based environment by strengthening the regulation on the environmental aspect, provide the incentives for companies with green innovation implementation.Social Implications: This paper’s result can be used as a reference to enhance women’s participation in the board’s firm. Furthermore, this study also brings the changes of the community behavior to use and consume the product with green and environmental concerns.Originality/value: Our study contributes to the literature in many ways, first, on gender literature that the presence of female directors on board is still proven to have more commitment to improve the firm performance. Second, the findings also provide an important insight of green innovation’s role in the relationship between board gender diversity and firm performance that it is still a controversial issue, where green innovation is not an important factor in the relationship of gender to firm performance improvement.