Employee Diversity and Environmental Innovation: The Roles of Gender, Nationality, and Education

This paper investigates the roles of employee diversity for environmental innovations in firms. Utilizing firm‐level survey data on environmental innovations and employer-employee register data, we construct measures of employee diversity across education, nationality, and gender for over 6500 Swedish firms. We argue, grounded in the Lundvall-Johnson conceptualization of knowledge, that the positive role of employee diversity stems from knowledge diversity. We find empirical support for this, demonstrating that national and educational diversity positively influence the likelihood that a firm has introduced environmental innovations. Finally, we find that a negative role from demographic diversity creating fault lines entails that the positive association between diversity and environmental innovation may diminish at higher levels of diversity due to the emergence of negative fault lines.