– The purpose of this paper is to investigate the effect of board diversity on the extent to which firms invest in R&D.
– Based on data collected about the composition of the board of directors, the authors determine statistically if the characteristics of directors predicts the extent to which firms invest more in R&D.
– The authors find, unexpectedly, that tenure diversity lead firms to invest less in R&D, while education diversity and gender diversity makes firms invest more. Gender diversity positively moderates education diversity as well, strengthening the effect found.
– The sample of firms the authors include in the paper is restricted due to the overwhelming difficulty in collecting data about the composition of boards of directors, and their backgrounds.
– The paper offers insights into how boards of directors might need to be composed in order to try have firms invest more in R&D.
– Innovative firms are more competitive and more sustainable. Knowing what contributes to a firm’s investment in R&D is thus of great social value.
– The authors include a much larger set of diversity measures than any previously published study, and provide counter-intuitive findings that have implications for practice, society, as well as theory about team composition.
