Top Manager Gender and Open Innovation: Evidence from Malaysia

This study examines how top manager gender affects open innovation activities of firms in Malaysia. The sample consists of 585 Malaysian manufacturing firms in 2015 collected from the World Bank Enterprise Survey database (WBES). To measure the open innovation activities of a firm, the following three proxies are used: (1) open innovation for new or significantly improved products, (2) open innovation for new or significantly improved processes, and (3) purchase or licensing of intellectual property rights to develop new or significantly improved products or processes. Since gender of a top manager candidate may influence a firm’s decision of hiring the candidate, using gender as the test variable without adjustment may cause sample selection bias and endogenous issues. To control for these potential issues, the Heckman two-stage regression model is used. In the first stage, female top manager, the dependent variable, is regressed on factors which can affect the selection of top manager along with control variables. The inverse Mill’s ratio is calculated from the results and is included in the second stage as a control variable to correct sample selection bias and endogenous issues. In the second stage, each of the three proxies of open innovation is regressed on female top manager and other control variables. Major findings are as follows. First, the presence of female top managers has a significantly positive association with open innovation for new or significantly improved processes as well as purchase or licensing of intellectual property rights to develop new or significantly improved products or processes. However, the relation with open innovation for new or significantly improved products is insignificant. These results indicate that firms led by female top managers are more likely to be involved in process-related open innovation or purchasing intellectual property to develop new or significantly improved products or processes compared to those led by non-female top managers.