Innovation in women-led firms: an empirical analysis

The availability of resources is paramount for innovation in women-led firms. We define a women-led firm where a chief executive officer (CEO) is a woman. We examine how nature - a pervasive and arbitrary type of institutional environment as well as access to resources is associated with different propensity to innovate between women and men-led firms. Using micro-level cross-country data of 12,412 firms and a reduced sample of 5,052 firms during 2008-2015 and across 75 economies, we find that the differences in risk perception between women and men-led firms ae not associated with innovation propensity. Instead, the availability of resources proxied by a country's fiscal freedom and availability of internal resources lead to an increase in innovation in women-led firms. The relationship is non-linear and increases with the availability of finance. This work has important policy implications for the role of institutions to spur innovation in women-led firms.