How Board of Directors’ Social Capital Enhances the Effectiveness of IT and R&D Resources Toward More Effective Innovation

Abstract

A board of directors (BOD) plays a critical governance and strategic oversight role in an organization; acting as a fiduciary for shareholders, advising strategic decision making, and providing supportive resources and information to key decision makers. Especially critical is the role and contribution of corporate governance in guiding firm innovation. Such guidance has implications for investment in new products and services. In this paper, we examine the synergistic relationship between a firm’s BOD and technology and R&D inputs to innovation. We focus on the influence of the social capital of a BOD on different types of innovation. Our longitudinal findings show IT, R&D, and BOD social capital individually contribute to innovation performance, reflected in exploitative and exploratory innovation productivity. Moreover, BOD social capital enhances innovation enabled by IT activities. However, the combination of R&D activities and dimensions of BOD social capital leads to both negative and positive innovation performance.