An Empirical Study Of The Board Capital And Corporate Operating Performance

BACKGROUNDWith the increasing growth of economic globalization, the rapid development of science and technology, and the importance of human capital, the company is more and more complex and also Increasingly international. And then, the company will join into different international markets and touch various cultures, customers and competitors. The environment of external competition to the company will be also complicated, especially for the companies which compete in several international markets. So the companies attach importance to the strategy of the Board of Directors. They rely on the Board of Directors to guide their decisions and let it to become the main mechanism for the company to deal with problems. For this, we can through the Board of Directors capital to see the effect. In recent years, some researchers pointed out that the Board human capital features lead to different strategic ideas, such as to carry out related diversification or non-related diversification, directors’social network determines their abilities which they devote in strategic decision-making."Visibly, the Board of Directors capital plays an important role in corporate strategy formulation and implementation process.With our Chinese reform in the last century and open policy and the knowledge economy’s coming in the21st century, Chinese economy rises rapidly, the socialist market economic system becomes more perfect and, human capital and innovation capability gradually become a key factor for companies to maintain market position and competition. And now, machine equipment and raw materials’ extent is no longer important to the company’s competition in today’s knowledge economy period. The core strength to the company’s development is the knowledge and skill level of staff, company’s knowledge and innovation capability. And Board capital is one of the core capitals of the company’s human capital, is one of the sources of the company’s core strengths; according to the company resource advantage theory, we find that corporate Boards capital can be classified as a firm-specific human capital, which is rare, valuable and cannot be copied. In today, society advocates the ability of independent innovation, so the Board of Directors capital plays a significant role in the company’s profit and innovation capability. Due to the few resources about exploring the relationship between board capital and corporate operating performance, especially domestic research is rarely involved in this field. In addition, most of our enterprise has not attracted enough attention to the functions of its Board resources. Therefore, this article has an important theoretical significance and practical significance to the research of the Board capital and corporate operating performance.PURPOSEThe study purpose of this article is to explore that how the Board capital affects corporate operating performance, whether the effect is obvious. Based on it, this paper will research our Chinese IT industries and find the evidence to prove the effect. Also, we will see whether the Board capital can help to improve the corporate operating performance, and thus it can provide some useful suggestions in order to contribute to the development of the company, to establish and maintain a competitive edge in the industry.MAIN CONTENT AND VIEWThe main content of the thesis contains following parts:The first chapter is an introduction, which introduces the background and significance of research, content, study method and the overall framework of this article, innovation and shortcomings.The second chapter is the depiction of the paper. It first gives the definition of the Board capital and the scope of the Board of Directors function, and divides the Board capital into the Board human capital and the Board social capital, and points out that the Board’s resources-providing function. Secondly, it studies the effect of the Board of Directors to the corporate operating performance from three aspects: the human capital theory, the resource dependence theory and the resource-based theory. Finally, it is from the two aspects, human capital and social capital, to generalize the Board of Directors capital’s impact on corporate operating performance, and all of this lead the foundation for the below.The third is analysis to the related theory of the Board capital on corporate operating performance. This chapter first introduces the theoretical basis of capital on enterprise business performance of the Board and its applications in the Board capital research. Secondly, this chapter analyzes the effect of the Board human capital on corporate operating performance, mainly from the average age of the Board members, the average education level of the Board members as well as members’occupational background. Finally, this chapter analyzes the effect of the Board social capital on corporate operating performance, mainly from two aspects: the political background of the members of the Board, the Board members of the banking background.Chapter four is to confirm the research. This chapter begins to put forward study assumptions on the basis of theoretical analysis:Suppose1:There is a negative correlation between Board members’average age and corporate operating performance; Suppose2:There is a positive relationship between Board members’ education level and corporate operating performance; Suppose3:the occupational background the of Board members has a positive effect on the corporate operating performance; Suppose4:Board members’political associate degrees is a positive correlation to corporate operating performance; Suppose5:Board members’ banking background is positively related with corporate operating performance. Secondly, based on the assumptions, this article selects the data of Chinese listed companies in IT industry from2009to2011. Finally, showing the detailed analysis of the empirical findings, we find that expect suppose2, all other supposes can be confirmed in the results.The fifth part is the conclusion and recommendation. Firstly, according to the assumptions and the regression results, we draw conclusions of this paper, and put forward policy recommendations. In this paper, we collect more than400listed companies in China’s IT industry in Shanghai and Shenzhen, prove the assumptions, confirm them and get the results.Secondly, combined with the actual situation of China’s listed companies, as well as the special context of Chinese political and economic systems, the paper analyzes the practical significance of the empirical results and from two aspects, the Board\capital human capital and social capital, we put forward constructive suggestions to improve the mechanism of our Board of Directors and the selection mechanism of the Board members, further in order to provide practical suggestions in the capital construction of the listed companies’Board of Directors in China.The end is prospect. This article is just from the perspective of human capital theory, resource dependence theory and the resource base theory to study the relationship of the Board capital and enterprise business performance. However, due to the time of the author’s limited capacity, this study is also deficient and in the future you can conduct more and deep. You can continue to study in those aspects:First, the choice of the samples of the study; second, Board capital measurement problems; Third, the Board of Directors capital field research.CONTRIBUTIONSThe capital of the Board and its impact on corporate operating performance is becoming the focus which attracts the attention of foreign theorists and practitioners, and we just have few domestic literature. The main contribution of this paper is manifested in the following aspects:1. In this paper, we main use the human capital theory, resource dependence theory and the resource-based theory to research the relationship between the Board capital and corporate operating performance. Few scholars from the perspective of resource dependency theory to study the impact of the capital on corporate operating performance of the Board, therefore, it is a certain contribution for us using the resource dependency theory and resource-based theory to study the Board issues in the future.2. This article is from the angle of the Board capital to study the Board’s impact on corporate operating performance. Most of the domestic scholars study corporate operating performance from the board features, few scholars study the problems based on human capital theory, resource dependence theory and the resource-based theory, so this article can provide some contribution to this field of study.3. This paper use the empirical methods to prove the relationship of the capital and corporate operating performance, and this result provide a new perspective for the construction of the Board of Directors of listed companies in China. In the future, China’s listed companies can strengthen and improve the construction of the Board of Directors by raising the level of the capital of the Board.