Navigating the technology-tide: Mitigating the impact of technology-related political risks on firm innovativeness through strategic diversification and board technology competency

Jinglu Jiang, Soheil Goodarzi, Surinder Kahai and Ann-Frances Cameron

Journal of Business Research, 2025, vol. 194, issue C

Abstract: Technology-related political risks (TPR) present unique challenges for firms’ innovativeness. However, understanding how firms can manage these impacts remains limited. Grounded in real options theory and managerial risk aversion, this study explores how related and unrelated diversification strategies, combined with board technology competency (BTC), moderate TPR’s impact on firm innovativeness. Analyzing 4,171 firm-year observations from 2012 to 2020, we find that related diversification does not change the negative effect of TPR on firm innovativeness, while unrelated diversification amplifies TPR’s negative impact on firm innovativeness. BTC plays a pivotal dual role: as a substitute, it compensates for the synergies that related diversification would typically provide, enabling proactive TPR management within core industries; as a complement, it supports unrelated diversification by enhancing adaptive technology-related risk management across diverse areas. These findings underscore the importance of board expertise in fostering resilience and innovation under political uncertainty, advancing adaptive governance as a strategic necessity.

Keywords: Firm innovation; Technology-related political risks; Strategic diversification; Board competence; Panel data (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:194:y:2025:i:c:s0148296325001924

DOI: 10.1016/j.jbusres.2025.115369

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