Translating Innovation into Performance: Understanding Role of the Board

Q3 Business, Management and Accounting

Indian Journal of Corporate Governance Pub Date : 2021-05-05 DOI:10.1177/09746862211007032

Shital Jhunjhunwala, S. Sharda, J. Sharma

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引用次数: 1

Abstract

Innovation enables firms to face increasing competition in the global environment, but there is variation in innovation investments across firms due to the inherent uncertainty involved in innovative activities. The strategic role of board, therefore, becomes crucial in overseeing innovation decisions. This study, hence, examines whether the relation between R&D investment and firm’s performance would vary based on the board characteristics of the company. It empirically explores this interrelationship in publicly listed Indian companies, by assessing the moderation effect of board using fixed effect regression analysis and conditional effects on a panel data of 9,031 firm years across twelve years. Board size, board meetings, proportion of women director and board leadership are found to negatively moderate the relationship between innovation and financial performance (ROE), however none of them moderates the relation between innovation and firm value (Tobin’s Q). It signifies that though board characteristics play an important role in relationship between innovation and ROE, investors fail to recognise it. Companies should focus on creating the right kind of board, investors must appreciate board’s influence in the success of R&D investments without being driven by mere compliance. Policy makers should deliberate upon the desirability of present structure of stringent laws.

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将创新转化为绩效:理解董事会的角色

创新使企业能够在全球环境中面对日益激烈的竞争，但由于创新活动中固有的不确定性，企业之间的创新投资存在差异。因此，董事会的战略角色在监督创新决策方面变得至关重要。因此，本研究考察了研发投入与企业绩效之间的关系是否会因公司董事会特征而变化。本文通过对12年9031家公司的面板数据使用固定效应回归分析和条件效应来评估董事会的调节作用，实证地探讨了印度上市公司的这种相互关系。董事会规模、董事会会议、女性董事比例和董事会领导层对创新与财务绩效(ROE)之间的关系有负向调节作用，但对创新与企业价值之间的关系没有调节作用(Tobin’s Q)。这表明，尽管董事会特征在创新与ROE之间的关系中发挥了重要作用，但投资者并未意识到这一点。公司应该专注于创建合适的董事会，投资者必须重视董事会对研发投资成功的影响，而不是仅仅受合规的驱使。决策者应该仔细考虑现行严格法律结构的可取性。

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Indian Journal of Corporate Governance Business, Management and Accounting-Business and International Management

CiteScore

2.00

自引率

0.00%

发文量

期刊介绍： Indian Journal of Corporate Governance is a bi-annual refereed journal that provides a forum for discussions and exchanging views on a wide range of corporate governance issues ranging from board practices, independent directors, whistle blower policies and shareholder activism on one hand to media’s role in corporate governance, corporate social responsibility and sustainability reporting on the other. It comprises of research articles, concept papers, case studies and reports providing a blend of theory and practices of corporate governance globally to cater to the interests of practitioners, academics, researchers and policy makers.