The Effect of Board Diversity on the Innovation of Jordanian Industrial Companies

Abstract

The purpose of this study is to determine the impact of board diversity on innovation. This study also aims to determine whether firm size has a moderating effect on this relationship; three variables were used to measure board diversity (age diversity, gender diversity and member diversity) as independent variables, as well as innovation as a dependent variable. A sample of (41) companies listed in Amman Stock Exchange (ASE) for the years (2009-2017) was used. The study used the (fixed effect model and random effect model). Ordinary Least Square (OLS) and Binary Logistic methods were used in order to achieves the objective of the study. The study found that member diversity positively affects innovation and that age diversity does not affect innovation. In addition, the study found that gender diversity have a negative effect on innovation. The study also found that there are no differences attributable to the size of the corporation. In accordance to the results of the study, it is recommended to support the woman’s role in corporation structure and labor. In addition, the study recommends enhancing diversity in order to improve competition in the higher executive management.