Workforce Diversity and Innovation Performance: A Micro-Level Analysis of Transition Economies

The aim of this paper is to examine the relationship between the gender diversity of the workforce and innovation, using micro level data from 27 transition economies. The gender composition of the workforce is captured by the percentage of women employees, the Blau index of heterogeneity and Shannon entropy index. In exploring the effect of gender diversity, this study differentiates between product and process innovation. In addition to the main variables of interest, the empirical analysis is complemented by a set of control variables, industry and country dummies. To address potential endogeneity in the estimations, an instrumental variable approach is employed. The results of this study show that the presence of women in the workforce exerts a positive and statistically significant impact on both, product and process innovation. A positive association is also found between the gender diversity indices and the probability of introducing a new product and a new process, respectively. These finding are consistent with the view that having a more gender diverse workforce is associated with a variety of perspectives, skills and knowledge on performing creative tasks, new problem-solving techniques, which ultimately contribute to firm innovation