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.

The impact of family ownership on the relationship between the existence of the woman Board of Commissioners and firm performance

“…In the context of Egyptian companies, gender diversity on the board of commissioners positively affects firm performance, as measured by TQ. While Molinero-Díez et al (2022) evidenced that women board of commissioners improve economic performance in companies in Germany, Mahsina and Agustia (2023) showed that board gender diversity has a positive effect on firm performance in companies that went public in Indonesia from 2017 to 2019. Assenga et al (2018) also found that gender diversity has a positive impact on the financial performance of listed firms in Tanzania.…”

“…The sampling criteria are 1) companies listed on the Indonesia Stock Exchange from 2017 to 2021 from the non-financial sector, and 2) companies that provide a complete annual report to accommodate all research variables used. The non-financial sector serves as the criterion because the financial statements of non-financial companies with financial companies have different formats and components, thus reducing bias if included in the research sample (Mahsina & Agustia, 2023). However, since most of the data presented in the annual report are not available to cover our variables , the final sample includes 788 observations using a pooled unbalanced sample after purposive sampling.…”

The Effect of Board Gender Diversity on the Company: A Literature Review

“…Gender diversity in the board of directors is closely related to the company's ability to innovate (Nadeem et al, 2020). The presence of women on the board of directors brings different perspectives, experiences, and approaches to decision-making (Mahsina & Agustia, 2023). Likitapiwat et al, (2022) shows that more gender-diverse boards of directors tend to be better able to drive corporate innovation.…”

The Effect of Green Innovation and Sustainability Report on the Financial Performance of MSMEs in Karawang

“…Unfortunately, the growing environmental issues are a result of the abundance of MSMEs (Firdausyi et al, 2023). This is due to their ignorance of the importance of environmental sustainability and because of their smaller size, their impact on the environment is not properly considered at regional and national levels (Mahsina & Agustia, 2023). Direct disposal of production waste without prior recycling can contaminate water and soil both within and outside the company environment (Firdausyi et al, 2023).…”

“…Green innovation, namely innovation that takes into account environmental factors in the production process, can reduce MSME operational costs by saving energy, water, and raw materials. In the long term, this can increase profits and the competitiveness of MSMEs in the market (Mahsina & Agustia, 2023).…”