Corporate governance, innovation and firm performance: evidence from India

Shital Jhunjhunwala and Shweta Sharda

International Journal of Business Innovation and Research, 2023, vol. 32, issue 2, 226-251

Abstract: Innovation is crucial in determining the competitive position in the global market; however, management finds it difficult to allocate resources towards these investments due to uncertainty of returns in the future. Given that the board of directors monitor managerial decisions and encourage them to pursue innovative strategies for enhancing firm performance, this study examines the moderating effect of corporate governance on the relationship between innovation and firm performance in a panel of 599 Indian listed companies from 2015 to 2019 by employing fixed-effect regression analysis and conditional effects. Results signify the negative moderating impact of nomination and remuneration committee (NRC) busyness and NRC participation on the relationship between innovation and market indicator (Tobin's Q); however, none of them moderate the relation between innovation and financial performance (ROE). The findings also indicate the indirect influence of board independence on the strength of the R&D-performance relationship. Companies and regulators should develop measures to reduce management's influence in the nomination process to achieve the desired outcome from the mandatory composition of NRC.

Keywords: board; committees; governance; innovation; India; moderation; performance; R&D investment; returns; risk. (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.inderscience.com/link.php?id=134655 (text/html)
Access to full text is restricted to subscribers.

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:ids:ijbire:v:32:y:2023:i:2:p:226-251

Access Statistics for this article

More articles in International Journal of Business Innovation and Research from Inderscience Enterprises Ltd
Bibliographic data for series maintained by Sarah Parker ().