Innovation Governance : Does board diversity matter?

Summary The objective of this thesis is to identify governance mechanisms that appear to influence innovation activities. First, we examine how director characteristics might influence innovation. Our study shows that the presence of women on the board positively influences product innovations, while the presence of independent directors favors the number of patents and process innovations. Second, we show that highly qualified directors can better understand complex decisions and absorb new ideas and technologies, which promotes innovation activities. In addition, we point out that directors with a university degree in finance or management seem to marginalize innovation investments because they are more likely to focus on activities with short-term financial returns. Second, directors of different ethnic, cultural, and nationality backgrounds appear to incentivize a firm to improve or develop new products. On the other hand, our results show that older directors are less risk tolerant than younger directors: they invest less in risky R&D investments.Next, we study how the internal organization of boards of directors, in particular the roles of committees and their composition, could influence the trajectory of innovation projects. We show that the presence of nominating committees is negatively associated with the number of patent applications and the number of scientists and experts in the R&D team. Furthermore, most nomination committee attributes (such as the presence of independent and female members) do not have a significant association with innovation activities. We also show that large nomination committees tend to increase innovation in terms of effort as well as in the number of patents filed. Finally, our results show that the frequency of nomination committee meetings could reduce information asymmetry on innovation projects, which leads to increased R&D spending.Finally, we examine how the introduction of an innovation activity could generate another form of innovation. More specifically, we determine whether organizational innovations introduce technological innovations, or vice versa. Our study confirms the existence of a causal link between organizational innovations and processes in both directions. Moreover, our results show that new product development seems to generate organizational changes within the firm's structure. On the other hand, a simple introduction of new organizational practices or methods is not sufficient to promote product innovations.