The impact of interlocking directorates on innovation: the effects of business and social ties

Abstract

Purpose Boards of directors of large companies all over the world frequently have a certain number of shared directors, which can be motivated by social structures that foster different types of links, including investments and vertical relationships. The purpose of this paper is to identify the effects that board interlocking exerts on innovation, considering the different nature of shared directors that finally determines the type of links dominating the boards. Design/methodology/approach Panel regression analyses were conducted using data collected from 69 Spanish listed innovative sector companies during the period 2010–2014, which provided an unbalanced panel of 325 data observations. Findings The results suggested that the typology of interlocks determined their effects on innovation, which had a positive influence when independent and extra-industry directors held multiple directorships, whereas it was negative in the case of intra-industry and women interlocking directors. Practical implications This study provided evidence for the diverse effects of interlocking directorates and contributed to the open debate on the best board composition for improving business innovation, considering the common feature of shared directorships. Originality/value The value of this research was twofold. On the one hand, the study considered a wide typology of interlocking directorates, such as women, affiliated and independent directors, intra- and extra-industry directorships, as well as shared directors from the same country. On the other hand, the effects of these different interlocking directorate typologies were analysed on innovation by considering different innovation indicators.

The board of directors and firm innovation: A meta-analytical review

“…R&D investments (inputs) require in-depth knowledge of the firm, access to financial resources, risk tolerance, a conciliatory attitude, and the possibility of alliances with other firms (Liang et al, 2013). For new products and patents (outputs), market knowledge, project management, creativity, new ideas are required as well as access to knowledge about new technologies, new production techniques that favor knowledge creation, and so on (Hernández-Lara & Gonzales-Bustos, 2019). Third, we show that the relationship between the board and innovation is moderated by the presence of other factors, such as the context of the sample analyzed, and the methodology employed.…”

Board effects on innovation in family and non-family business

“…This indicator is directly related to inventiveness and has been used as the basis for the development of innovation indicators in many studies ( Balsmeier et al, 2014 ). In the case of R&D, to avoid asymmetry problems in the distribution of the variable, we added a very small constant 0.001 ( David et al, 2008 ) and transformed the variable by measuring its logarithm ( Feng et al, 2014 ; Hernández-Lara and Gonzales-Bustos, 2019 ; Hernández-Lara et al, 2014 ). This transformation reduces asymmetries and standardizes the variable ( Lin and Germain, 2003 ).…”

Social Sustainability on Corporate Boards: The Effects of Female Family Members on R&D

“…Nevertheless, some scholars also warn that these positive effects are influenced, and perhaps jeopardized, by other matters. There are situations that moderate the impact of women on boards, for example interlocking directorates, where female directors perform differently than other regular females on the board [41]. There are also problems and situations that emerge in the absence of the necessary conditions that let women at the top create more equalitarian and sustainable firms, and exert a real influence [20].…”