The moderating role of female directors in environmental innovation and firm performance: Empirical evidence from southeast asia countries

Abstract

To strengthen firm performance (FP) and attract capital from potential stakeholders, Southeast Asian companies have been striving to create value for themselves and society, as this is one of the urgent requirements in line with the SGDs stated since 2015. Moreover, among those goals, promoting gender diversity, specifically increasing the number of female managers will help companies better address environmental risks, thereby increasing the company's performance. Therefore, this paper tends to analyze more clearly the influence of environmental innovation (EI) on FP and uniquely analyze the moderating effect of the number of Female directors (FDs) on board in Southeast Asia. To achieve the paper's objectives, various quantitative analysis methods are used including panel and time-series data analysis along with quantile regression. Using a sample of 188 enterprises from 6 Southeast Asian nations, namely Vietnam, Singapore, Philippines, Thailand, Indonesia, and Malaysia, from 2019 to 2023, the statistically significant results have been concluded. The outcomes reveal that investment in innovation related to eco-friendly products, processes, and practices can enhance competitive advantages and drive superior FP. In line with the Stakeholder Theory and Natural Resource-Based View Theory (NRBV), companies will gain long-term benefits when they strive to meet reasonable expectations from stakeholders while allocating resources sustainably. Furthermore, by developing Critical Mass theory, this study identifies a positive moderating effect of FD on the EI – FP relationship. Nonetheless, when the proportion of FD in the administrative council reaches 40% or higher, this moderating effect becomes negative, adversely impacting FP. These findings offer crucial implications for companies, governments, and investors, emphasizing the importance of proactively implementing innovative environmental policies