Balancing Risk and Reward: How Female Representation on the Board Drives Innovation and Alleviates Managerial Career Concerns in High-Stakes Environments

Prior research predominantly associates female directorship with conservative risk-taking behaviour, arguing that female directors impose stricter monitoring and enhanced oversight, leading to lower corporate risk-taking and reduced innovation investments. However, this study challenges that perspective by demonstrating that female representation on the board positively influences firm innovativeness, particularly in high-risk environments. Using a panel dataset of U.S. publicly traded firms, we find a significant positive relationship between female representation on boards and corporate innovation, measured by R&D intensity and accumulated knowledge capital. Contrary to existing literature emphasising risk aversion among female directors, our findings suggest that female directors alleviate managerial career concerns, encouraging executives to pursue long-term R&D investments even under uncertain conditions. This study extends career concerns theory by showing that female directors mitigate managerial myopia and foster an environment tolerant of failure, allowing for strategic risk-taking in innovation. It also contributes to resource dependence theory by demonstrating that female directors enhance access to diverse perspectives and external knowledge networks, driving innovation outcomes. These findings have important governance and policy implications, emphasising the need for greater female representation on corporate boards to align strategic decision-making with sustainable innovation goals, especially in a high-stakes environment that may trigger managerial myopia.