Corporate strategic innovation, board diversity, and the moderating role of board independence: evidence from an emerging Islamic economy

Purpose This study aims to investigate the influence of board diversity, measured through gender, ethnicity, tenure and education, on corporate strategic innovation (CSI), specifically focusing on the moderating role of board independence. Design/methodology/approach Based on 362 firm-year observations from 129 public-listed technology and healthcare companies in Malaysia between 2021 and 2023, this study employs Prais–Winsten regression with panel-corrected standard errors to assess the effects of board diversity on research and development intensity, a proxy for CSI. Findings The results indicate that gender diversity is negatively associated with CSI; however, this relationship becomes significantly positive when moderated by board independence. Ethnic and tenure diversity show no significant direct effects but demonstrate positive moderating effects when paired with independent boards. Educational diversity, in contrast, does not exhibit significant influence. These findings are robust across alternate proxy measures of CSI, although some interaction effects vary in strength. Research limitations/implications The findings are preliminary and highlight that board diversity and independence are of growing relevance to CSI, particularly in Islamic and emerging market contexts. While the results provide valuable insights, further investigation is required to develop a more comprehensive understanding of how Islamic corporate governance principles influence corporate innovation outcomes. This is especially important for regulators and policymakers, such as the Securities Commission Malaysia and Shariah-compliant governance bodies, in refining guidelines related to board composition and innovation oversight. Future research is recommended to strengthen the enforcement and application of diversity and independence principles within Shariah-aligned governance frameworks, such as those outlined in the Malaysian Code on Corporate Governance (MCCG) 2021. Originality/value To the best of the authors’ knowledge, this study is the first to examine the effect of board diversity measured by gender, ethnicity, tenure and education on CSI in the context of an emerging Islamic economy, using board independence as a moderating variable. The research offers new insights by integrating Malaysia’s dual priorities: enhancing board diversity and aligning corporate governance practices with Islamic values under the MCCG 2021 framework.