Does green innovation play an important role in the effect board gender diversity has on firm performance?

Purpose: This research is motivated by the developments in the debates in the literature about addressing the 17 SDGs promoted by the UN, particularly the urgent calls for green innovation and women’s empowerment. This study aims to investigate the mediating role of green innovation in the effect board gender diversity has on firm performance. Design/methodology: This research employs regression analysis. The data set comprises a sample of 518 public listed companies on the Indonesia Stock Exchange during the 2017 to 2019 period. Findings: The results demonstrate that the presence of board gender diversity has a negative effect on green innovation and the relationship between green innovation and firm performance is insignificant. However, the results also show that board gender diversity has 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 only uses a sample of companies drawn from a single country; therefore, the implications of the results might only apply to emerging countries with similar conditions to Indonesia. Future research needs to have more samples drawn from multiple countries. Also, future research could apply, amongst others things, corporate governance characteristics as variables. Practical implications: The findings from our results can, firstly, be used to support companies seeking to implement alternative low cost green innovations. Secondly, this paper can be used to give insight to the Indonesian government regarding its support for the business-based environment by strengthening the regulations pertaining to the environmental aspects, and providing incentives for companies to implement green innovations. Social implications: Our results can be used as a reference to promote women’s participation on the boards of firms. Furthermore, this study also describes the changes in people’s behaviour regarding the use and consumption of green products and environmental concerns. Originality/value: Our study contributes to the literature in many ways. First, it contributes to the literature on gender regarding the presence of female directors on boards by demonstrating they have a greater commitment to improving their firms’ performance. Second, the findings also provide an important insight into green innovation’s role in the relationship between board gender diversity and firm performance.