Does Board Diversity Promote Disruptive Innovation?

Posted: 23 Aug 2021 Last revised: 12 Jan 2022

See all articles by Wenting Ma

Wenting Ma

University of Massachusetts, Amherst-Department of Finance

Gennaro (帅纳) Bernile

University of Miami - Department of Finance

Vineet Bhagwat

George Washington University - Department of Finance

Aurora Genin

University of Massachusetts Amherst - Department of Management

Date Written: August 20, 2021

Abstract

This paper studies how corporate board diversity affects disruptive innovation. We find that director boards with diverse demographic and cognitive traits are positively related to not only the quantity of disruptive and novel patents invented by their firms but also to these patents’ technological and market impacts. We glean evidence on causality for this positive relationship using an instrumental variable approach. We shed light on the mechanisms that explain this relationship. Specifically, diverse boards tend to prioritize strategic alliances (e.g., joint R&D and technological licensing) and hiring executives with general skills, both of which reduce managerial concerns over the exploration risk.

Keywords: disruptive innovation; board diversity; exploration risk; strategic alliances; general managerial skills

JEL Classification: G34; O31; O32; M14

Suggested Citation

Ma, Wenting and Bernile, Gennaro (帅纳) and Bhagwat, Vineet and Genin, Aurora, Does Board Diversity Promote Disruptive Innovation? (August 20, 2021). University of Miami Business School Research Paper No. 3908606, Available at SSRN: https://ssrn.com/abstract=3908606 or http://dx.doi.org/10.2139/ssrn.3908606

Wenting Ma (Contact Author)

University of Massachusetts, Amherst-Department of Finance ( email )

121 Presidents Drive
Amherst, MA 01003
United States

Gennaro (帅纳) Bernile

University of Miami - Department of Finance ( email )

P.O. Box 248094
Coral Gables, FL 33124-6552
United States

Vineet Bhagwat

George Washington University - Department of Finance ( email )

2023 G Street
Washington, DC 20052
United States

Aurora Genin

University of Massachusetts Amherst - Department of Management ( email )

United States

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