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Board capital and exploration: from a resource provisional perspective

Board capital and exploration: from a resource provisional perspective Purpose– Drawing upon the resource dependence theory, the purpose of this paper is to examine how the board capital diversity influences the explorative innovation of firms, attempting to resolve the inconsistent empirical findings of the effect of outside directors on firm’s R&D strategy. Design/methodology/approach– Using a sample of Korean manufacturing firms which consider R&D capability to be one of their core competencies, the study uses negative binomial model to test the influence of board capital diversity on explorative innovation. Findings– Results support the value of moderate level of board diversity hypothesis by demonstrating that board capital diversity shows an inverted U-shaped relationship with explorative innovation. The results also suggest that CEO ownership positively moderates the relationship between board capital diversity and firms’ innovative performance. Originality/value– Mainstream research has focussed on the directors’ monitoring role based on agency theory, overlooking the more positive resource provision role. Taking on the concepts of board capital and exploration, the study introduces the notion that outside directors should be selected with a view as vehicles for bringing in valuable expertise and social linkages for the firm’s explorative innovation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Management Decision Emerald Publishing

Board capital and exploration: from a resource provisional perspective

Management Decision , Volume 53 (9): 19 – Oct 19, 2015

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0025-1747
DOI
10.1108/MD-11-2014-0648
Publisher site
See Article on Publisher Site

Abstract

Purpose– Drawing upon the resource dependence theory, the purpose of this paper is to examine how the board capital diversity influences the explorative innovation of firms, attempting to resolve the inconsistent empirical findings of the effect of outside directors on firm’s R&D strategy. Design/methodology/approach– Using a sample of Korean manufacturing firms which consider R&D capability to be one of their core competencies, the study uses negative binomial model to test the influence of board capital diversity on explorative innovation. Findings– Results support the value of moderate level of board diversity hypothesis by demonstrating that board capital diversity shows an inverted U-shaped relationship with explorative innovation. The results also suggest that CEO ownership positively moderates the relationship between board capital diversity and firms’ innovative performance. Originality/value– Mainstream research has focussed on the directors’ monitoring role based on agency theory, overlooking the more positive resource provision role. Taking on the concepts of board capital and exploration, the study introduces the notion that outside directors should be selected with a view as vehicles for bringing in valuable expertise and social linkages for the firm’s explorative innovation.

Journal

Management DecisionEmerald Publishing

Published: Oct 19, 2015

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