Outside directors on the board and innovative firm performance

Benjamin Balsmeier, Achim Buchwald and Joel Stiebale

Research Policy, 2014, vol. 43, issue 10, 1800-1815

Abstract: We investigate how outside directors on supervisory boards influence innovative activities of the firms they advise and monitor. Based on panel data on the largest German companies, the econometric analysis shows a positive influence of external executives on innovative firm performance, measured by patent applications. Differentiating between outside directors from innovative and non-innovative companies reveals that only outside directors from innovative firms increase patenting activities at the firms they advise and monitor. This effect increases with the technological proximity between the appointing firm and the outsider's home firm. Outside directors from non-innovative firms are negatively associated with the appointing firm's innovativeness. The results indicate that external executives with an appropriate professional background can provide valuable specific knowledge and expertise to the board.

Keywords: Corporate governance; Innovation; Patents; Board composition; Outside directors (search for similar items in EconPapers)
JEL-codes: G34 L14 L25 M21 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (50)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0048733314001073
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:respol:v:43:y:2014:i:10:p:1800-1815

DOI: 10.1016/j.respol.2014.06.003

Access Statistics for this article

Research Policy is currently edited by M. Bell, B. Martin, W.E. Steinmueller, A. Arora, M. Callon, M. Kenney, S. Kuhlmann, Keun Lee and F. Murray

More articles in Research Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().