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PurposeThis study explores the influence of partner innovation in board interlock networks on a firm's innovation tendency.Design/methodology/approachThis study collects a sample of publicly listed Chinese firms from 2008 to 2017 and uses fixed-effects ordinary least squares regressions to analyze the data.FindingsThis study shows that interlocking partners with different innovation levels than that of the focal firm affect its innovation tendency in distinct ways. For more innovative partners, the innovation level has a U-shaped effect on the focal firm's innovation tendency. In the case of less innovative partners, the innovation level facilitates the focal firm's innovation tendency.Originality/valueGoing beyond previous research that emphasized the role of interorganizational networks in facilitating firm innovation through a unitary learning effect, this study differentiates network partners into two categories based on their relative level of innovation compared with the focal firm and takes the hitchhiking effect into account to highlight potential obstacles in the learning process depending on the innovation conditions of partners. The study advances the literature on organizational learning, social networks and innovation.

Purpose The purpose of this paper is to explore the implications of the relative status between two interlocking firms for financial fraud or non-fraud contagion through interlock ties. Design/methodology/approach This study uses a sample of publicly listed firms in China over a ten-year period from 2005 to 2014. Data are collected from the China Stock Market and Accounting Research Database. Findings This study finds that non-fraud behaviors of lower-status partners inhibit fraud behaviors of the focal firm, whereas their fraud behaviors have no effect on the focal firm. In contrast, fraud behaviors of higher-status partners facilitate fraud behaviors of the focal firm, whereas their non-fraud behaviors have no effect on the focal firm. Originality/value This study provides new insights to the misconduct contagion literature by considering firms’ status differential as an important factor that governs the contagion process of fraud or non-fraud behaviors in board interlocks. It combines role theory and the contagion literature by studying the influence of the match between the status-based role expectations and practices of interlocking firm on the focal firm’s decision to engage in the same type of practice.

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Previous studies on corporate misconduct have focused mainly on preventing misconduct or remedying it after detection, but it remains unclear how misconduct can be effectively detected in the first place once it occurs. We apply the good faith perspective in the context of China, which represents a weak institutional environment, and argue that the ability of culpable leaders to conceal information may delay misconduct disclosure because such ability helps maintain the good faith of regulators. Moreover, we argue that because the regulators have faith in professionals (external auditors, institutional investors, and securities analysts) whose skills are in fact often underdeveloped in detecting misconduct in weak institutional environments, the impact of managerial concealment on disclosure delay becomes stronger when fraudulent firms are followed by such professionals. Using a sample of Chinese public firms involved in financial misconduct, we find support for these arguments—that is, compartmentalization in governance positions, which enhances culpable leaders’ ability to conceal misconduct, delays public disclosure by regulators. Furthermore, the relationship becomes stronger when the misconduct goes undetected by credible professionals.