Board Gender Diversity, Innovation and Performance of Listed Small and Medium Enterprises in Australia

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Mitra, Debi (2022) Board Gender Diversity, Innovation and Performance of Listed Small and Medium Enterprises in Australia. PhD thesis, Victoria University.


This research analyses the relationship between gender diversity and financial performance within corporate boards of Australian Securities Exchange (ASX) listed small and medium enterprises (SMEs). It is innovative in that it addresses a gap in prior research, which either fails to consider, or is inconclusive regarding the relationship between gender diversity and financial performance in the context of SMEs. The proportion of female representation is identified in prior literature as an important variable to measure board gender diversity. Accordingly, a gender diversity index has been developed. This study discusses the key theoretical perspectives underlying the gender diversity framework. The conceptual framework underpinning this study to test the hypotheses have been based on resource dependence theory, human capital theory, agency theory, upper echelon theory and critical mass theory. Hypotheses were developed to test relationships between: (1) gender diversity and firm innovation; (2) innovation and firm performance; and (3) the effect of gender diversity on firm performance. The potential moderating effect of innovation on the relationship between gender diversity and firm performance was also tested. The study further analysed the effect of situational and contextual factors associated with the organisational environment under which board decisions are made. The research design used a quantitative research method to test the two research questions and four hypotheses. The sample is consisted of 798 SME firms from 2014 to 2018. The study was extended to include association between gender diversity and performance for the subgroups of nine SME sectors. Data were extracted from the Orbis database and firm annual reports. Linear fixed model and adjusted mixed-effect models were used for data analysis. The primary independent variable is gender diversity, which is measured by Blau’s index; the dependent variable is firm performance, which is measured by return on assets(ROA), return on equity (ROE), return on capital employed (ROCE) and Tobin’s Q. This study used four control variables: firm size, board size, firm age, and leverage. The potential for innovation as a moderating variable was explored using the firms’ research and development (R&D) expenditure. The study found that the percentage of female board members was 24.94% in 2018 compared with 16.67% in 2014. The sector-wise performance data demonstrated no significant difference in firm performance with the presence of gender diversity (75% of performances across all sectors are positive but not statistically significant). There was no association between gender diversity and performance. Further, the potential effect of R&D expenditure as a moderator was not statistically significant. This study is innovative because no previous research on board gender diversity and its influence on listed SME performance, with innovation as a potential moderating variable, has been undertaken in the Australian setting. The findings of this study are consistent with prior research, where contradictory results or no results were found when investigating the effect of board diversity on performance. The analysis of the results shows some significant effects of gender diversity on financial performance, and it found no evidence of a significant negative link between board gender diversity and performance. Thus, the results do not contradict the case for the inclusion of female members in SME corporate boards. The effect of gender diversity may be different under different circumstances and at different times and across firms and time periods; the results may offset and produce no effect on firm performance.

Item type Thesis (PhD thesis)
Subjects Current > FOR (2020) Classification > 3505 Human resources and industrial relations
Current > FOR (2020) Classification > 4405 Gender studies
Current > Division/Research > Institute for Sustainable Industries and Liveable Cities
Keywords gender diversity; financial performance; corporate boards; Australian Securities Exchange; ASX; small and medium enterprises; SMEs; female; Australia; innovation; firm performance
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