Functional Expertise and Firm Innovation: an Empirical Study on Female Board Members

In the wave of upper echelons theory, scholars have devoted an increasing interest towards the implications of top managerial characteristics on company outcomes, especially in terms of professional expertise and experience. However, less attention has been paid to the contribution that the female managers’ background can offer to the board decision-making. With this in mind, the aim of the paper is to explore whether and how the functional expertise of female directors affects the company innovation. By relying on the classification of functional expertise provided by Hambrick and Mason (1984), the article empirically examines a sample of Italian firms belonging to technological industries through ordinary least squares regression analyses. In particular, it tests the effects of the expertise of female directors in throughput, output and peripheral functions on innovation in terms of R&D. The empirical evidence documents that the functional expertise of women directors influences firm innovation in given circumstances. More specifically, female directors with throughput functional background increase company innovation, while peripheral functional expertise of female directors limits R&D. Different results are reported for the output functional expertise, as female directors with such background seem to not affect company innovation. The paper enriches the existing debate on the managerial expertise of female directors as it disentangles the effect of the three specifications of managerial functional expertise for innovation. At the same time, the paper has significance for practitioners as it suggests companies to promote the appointment of female board members directors according to their functional expertise.