Hidden in Plain Sight: Gender Diversity at the Innovation Core and Environmental Innovation

ABSTRACT This paper estimates the effect of gender diversity on firm‐level environmental innovation. We use a large Spanish panel data and construct an inverse‐covariance‐weighted environmental innovation index. Identification comes from persistent within‐firm increases in women's representation, measured relative to a 2‐year rolling pre‐event baseline. Across several difference‐in‐differences estimators, a 5% increase in women's share of in‐house R&D personnel is associated with an increase in environmental innovation of 1.2–1.6 points. This corresponds to approximately 3%–4% of the sample mean and builds gradually over the years, consistent with a durable reorientation of innovation effort rather than a transient compositional change. The corresponding evidence for the overall female employment share is weaker and estimator‐sensitive. Empirical Bayes analysis shows that firms with larger internal underrepresentation of women in R&D have lower environmental innovation. The evidence suggests that the relevant margin is not simply gender diversity in the firm, but gender diversity inside the innovation‐producing core.