Abstract
The main aim of the current paper is to analyse how the directors’ characteristics could influence innovation. We study specifically the effect of demographic attributes, such as age, gender, nationality, educational degree and academic background on innovation. Innovation is measured by (1) the firm’s ability to engender innovation in things such as new or improved product/process and the number of patents and (2) innovation expenditures, like, for example, R&D spending on innovative projects and the number of scientists and experts per R&D teams. This study is conducted on the firms listed on SBF120 index between 2002 and 2013. The SBF120 index consists of the 120 largest capitalisations listed on the French Stock Exchange market (SBF: Société des Bourses Françaises). It provides the following results. First, the presence of women on the board positively influences product innovations while the presence of independent directors fosters the number of patents and process innovations. Secondly, highly educated directors can better understand complex decisions and absorb new ideas and technologies, which increase innovative products. Regarding the academic degree, we highlight that business educated directors seem to marginalise innovation investments as they are more likely to focus on activities with short-term financial returns. Then, directors of different ethnic, cultural backgrounds and different nationalities seem to stimulate a firm to improve or develop new products. Moreover, older directors are less risk-tolerant than younger ones: they invest less in risky R&D investments. By looking at the impact of various types of directors’ characteristics on innovation, and by taking into account various types of innovation; this paper brings practical insights to board structures issues. This paper contributes to the debate on the urgent need to increase the firms’ capacity to appoint on board individuals displaying diverse types of knowledge, abilities, skills and networking that could drive more innovations.