Board industry expertise and innovation input: evidence on the curvilinear relationship and the moderating effect of CEO

Fabrizia Sarto and Sara Saggese

European Journal of Innovation Management, 2022, vol. 25, issue 6, 775-803

Abstract: Purpose - The study empirically investigates whether the board of directors' expertise in the focal firm's industry has implications for innovation input. Additionally, it explores how this relationship is shaped by the CEO's educational level and background in the technology area. Design/methodology/approach - The article tests the hypothesized relationships through the Arellano–Bond generalized method of moment estimators, proxying innovation input by R&D to total sales. Moreover, it analyses a sample of privately-held Italian medium and large high-tech companies observed over four years by relying on a unique hand-collected dataset. Findings - The research documents an inverted U-shaped relationship between board industry expertise and innovation input and shows that such curvilinear effect is moderated by the CEO's educational level and technology background. Specifically, while the curvilinear slope is less steep for highly educated CEO, it becomes steeper in the presence of technology trained CEO. Practical implications - The paper recommends how to shape the board human capital as a meaningful driver of board effectiveness and innovation. Additionally, it calls the managerial attention towards the interaction and the interplay between board industry expertise and CEO education as able to influence the above-mentioned outcome. Originality/value - While previous studies have focused on the linear and positive effect of board industry expertise on innovation, this research advances current knowledge in innovation management literature by testing the presence of a curvilinear relationship. Moreover, by exploring the moderating effect of CEO education, the paper provides a comprehensive picture on the interplay among board industry expertise, CEO educational training and innovation input.

Keywords: Innovation input; Board of directors; CEO; Industry expertise; Education; U-shaped relationship (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eme:ejimpp:ejim-07-2021-0372

DOI: 10.1108/EJIM-07-2021-0372

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