Board's informal hierarchy: influences on enterprise innovation quality
Abstract
Purpose
Utilizing the expectation states theory in sociology, this study probes into the influence of the board's informal hierarchy on the quality of enterprise innovation, originating from the perspective of internal directorial interactions, while analyzing the boundary effects exhibited by the nature of property rights and the intensity of geo-culture.
Design/methodology/approach
The study selects China's A-share listed companies from 2008 to 2021 as the research sample, employing the Tobit regression analysis method to scrutinize the hypotheses presented in the text.
Findings
The regression results demonstrate a positive correlation between the board's informal hierarchy and the enterprise innovation quality (EIQ). Upon introducing variables specific to property rights and geographical culture, the authors found that in comparison to non-state-owned enterprises (non-SOEs), the influence of the board's informal hierarchy on the quality of corporate innovation is diminished in SOEs. Conversely, the intensity of geo-culture across Chinese provinces enhances their mutual positive influence. In the additional analysis, the authors also found that the elevation of corporate risk tolerance is a significant pathway for the positive effect of the board's informal hierarchy on EIQ. Moreover, this positive influence is more profound in high-tech enterprises, businesses implementing equity incentive plans and companies that have subscribed to director and officer liability insurance.
Originality/value
The findings not only deepen the understanding of how the board's internal status characteristics influence corporate decision-making but also enrich the application scope of expectation states theory. Furthermore, this study offers valuable guidance for optimizing innovation decision-making by adjusting the personnel structures of corporate boards.
Keywords
Acknowledgements
The authors thank the editors and two anonymous reviewers for their valuable comments and constructive suggestions. This work was supported by the Key Program of National Social Science Foundation of China (No. 18ZDA095) and the National Social Science Fund Youth Project (No. 22CJY049).
Citation
Meng, D., Li, Y. and Wang, L. (2023), "Board's informal hierarchy: influences on enterprise innovation quality", Management Decision, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/MD-06-2023-1059
Publisher
:Emerald Publishing Limited
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