Board diversity and R&D investment

Jeanelle Midavaine, Wilfred Dolfsma*, Rick Aalbers

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

30 Citations (Scopus)

Abstract

Purpose – The purpose of this paper is to investigate the effect of board diversity on the extent to which firms invest in R&D. Design/methodology/approach – 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. Findings – 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. Research limitations/implications – 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. Practical implications – 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. Social implications – 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. Originality/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.

Original languageEnglish
Pages (from-to)558-569
Number of pages12
JournalManagement Decision
Volume54
Issue number3
DOIs
Publication statusPublished - 18 Apr 2016
Externally publishedYes

Keywords

  • Board decision making
  • Board diversity
  • R&D investment

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