She-E-Os and innovation: do female CEOs influence firm innovation?

Purpose - This paper empirically investigates whether female CEOs (She-E-Os) have an effect on firm innovation among Chinese listed firms based on patent data. This study also delved further by looking at whether the internal corporate environment moderates the effect of female CEOs on innovation, that is, state ownership. Finally, this study investigates an additional test of financial constraints to examine whether financial constraints also moderate the impact of female CEOs on firm innovation. Design/methodology/approach - This study used the data of all A-share listed companies on the Shanghai and Shenzhen stock exchanges for the period from 2008 to 2017. The authors use ordinary least squares regression as a baseline methodology, along with firm-fixed effect, lagged measure of female CEOs, alternative measures of innovation, Heckman two-step model and negative binomial regression to check and control the possible issue of endogeneity. Findings - The authors’ findings show that CEO gender plays an important role in producing higher levels of innovation output by improving the governance structure. However, female CEOs have no effect on state-owned enterprises' (SOEs) innovation activities, which suggests that the main goal of SOEs is achieving sociopolitical objectives. Furthermore, female CEOs' influence on innovation output is weaker in firms with financial constraints. Social implications - This study adds to the emerging global discussion on gender diversity. Many legislative bodies require a quota for women on corporate boards due to gender inequality. This study's findings reinforce such guidelines by emphasizing the economic benefits of including women in top management positions. Originality/value - This study provides new insights by highlighting the role of female CEOs in increasing firms' innovation activities. Additionally, this study provides evidence on whether the internal corporate environment (state ownership and financial constraints) moderates female CEOs' effect on innovation.