Impact of Women in the Invention Team on Product Development Outcomes

Does having additional women participate in research and product development teams result in more successful products downstream? We examine this question in the context of the pharmaceutical industry which has suffered from historically low women participation in the patent invention teams, leading US congress to act. Using a unique database compiled from data obtained from the FDA through a Freedom of Information Act, US Patent and Trademark Office, and Compustat, we examine our central hypothesis that women’s participation in patent invention teams is associated with a higher likelihood of FDA-approved drug, but with diminishing returns. Results from 268,631 patents filed by 214 US publicly traded companies show support for the negative U-shaped relationship. We validate our results with numerous robustness checks. We also demonstrate two mechanisms for the relationship: novelty and attention to women subjects in the early stages. A post hoc analysis shows that women’s participation in patent invention teams also reduces the probability of future recall of a patented invention. Our study is particularly timely because women’s participation rates have stagnated at around 12% since 1998, while our results show that the highest likelihood of FDA approval is when women’s participation proportion is at around 40%. We posit that these results provide a strong economic rationale and empirical support to managers and policymakers respectively, for increasing women’s participation in research and product development initiatives.