The influence of women on SME innovation in emerging markets

Abstract Research Summary Our study provides novel insights into how women influence SME innovation in emerging markets, despite the resource‐constrained and gender‐restrictive contexts in which they are embedded. Building from transactive memory (TM) theory and using data from 741 SMEs in 33 emerging markets, we develop and test a contextualized framework of SME innovation that considers gendered effects in ownership, workforce composition, and communication. Findings indicate that in emerging markets, female‐led SMEs employ more women than male‐led SMEs, and more women in SMEs (even at modest levels) enhance and enable the TM system to deliver more innovation outcomes. Findings also suggest that emerging‐market SMEs can be innovative through differing configurations of women in ownership and workforce composition, underscoring the importance of gendered and contextual considerations in innovation research. Managerial Summary Innovation is vital to the social progress and economic development of emerging markets. Even though institutionalized gender bias in emerging markets tends to constrain (rather than empower) women's entrepreneurial activities, our study reveals how women can be an important source of innovation. We find that women in emerging markets are stronger together: women in ownership advocate for and support other women by employing them in their SMEs, and in turn, as women's representation increases in SMEs, women are empowered to collectively share and leverage their endowed resources for innovation. Thus, our study challenges the general perception that men are more innovative than women by revealing that the presence of women in emerging‐market SMEs yields greater innovation outcomes.