Female Directors and Technological Innovation: Evidence from China

Abstract

Research on strategic leadership's role in achieving superior performance in technological innovation is still evolving, particularly regarding the effects of female directors and the contextual factors that enhance their effectiveness. This study provides a comprehensive view of female directors’ influence on R&D initiatives, innovation outputs, and innovation efficiency. Using Upper Echelons Theory and Agency Theory as the theoretical framework, the study employs fixed-effect regression for baseline outcomes, addressing endogeneity with prediction modeling, propensity score matching, and an instrumental variable approach on panel data from Chinese listed firms (2008–2021). Findings indicate that female directors not only enhance R&D investment but their presence on the board achieves higher innovation outcomes and ensures innovation efficiency. Findings also reveal that the interaction with CEOs is crucial, as newly appointed CEOs moderate the advisory role of female directors, while CEO power influences their monitoring role. The study also shows that female directors are more effective when they constitute a critical mass on the board rather than merely having token representation. These findings suggest that including women on the board is essential for superior innovation outcomes, especially when resource efficiency is a firm's priority.