Board Interlocks And Corporate Innovation:A Perspective Based On Board Interlocks With R&D-intensive Companies

Innovation is not only an important way for enterprises to gain market competitive advantages,but also a source of power for countries to achieve long-term development.China is currently implementing the innovation-driven development strategy,where stimulating the innovation vitality of enterprises is a key link to promote high-quality development and economic transformation and upgrading.Under such circumstances,this paper focuses on the innovation and development of Chinese enterprises,based on theoretical cognition of social networks,which systematically examines whether board interlocks between a general company and R&D-intensive companies can serve as a channel for both innovation-related information and resources,and then promote the innovation activities of the former;that is,the innovation spillovers from R&D-intensive companies to general companies could be achieved within such board interlocks.Specifically,this paper uses the data of the A-share listed companies during the period of 2007-2017 to establish the database of board interlocks manually,which refers to board interlocks between general companies and R&D-intensive companies.Straight after,the database is used to capture the impacts of such board interlocks on corporate innovation.The study finds that when a general company shares board interlocks with R&D-intensive companies,its own R&D intensity is improved significantly.The result maintains consistent after performing the PSM-DID method and removing those noisy datum which may cause reverse causality.The mechanism shows that board interlocks with R&D-intensive companies contribute to the acquisition of innovation-related information,and help mitigate financing constraints resources in innovation activities,thus promote corporate innovation.In further study,the impacts of board interlocks with R&D-intensive companies are discussed in detail according to differences in the feature of board ties,industry categories and property rights.The findings are as follows:(1)since the chairmen often have the highest decision-making power,they have greater influences on corporate innovation when they serve as a director in R&D-intensive companies,compared to other board members.(2)The more R&D-intensive companies that one shares interlocking directors with them,or the more interlocking directors one shares with a certain R&D-intensive company,the better the improvements on one's corporate innovation.(3)Compared with non-technology-intensive industries,board interlocks with R&D-intensive companies improve corporate innovation more significantly in technology-intensive industries.(4)State-owned enterprises have always been more conservative in their innovation activities compared with private enterprises.Therefore,board interlocks with R&D-intensive companies promote corporate innovation more significantly in state-owned enterprises,since such ties could help get more high quality information and resources needed to reduce fears for innovation failures.This paper not only enriches the research literature related to board interlocks and corporate innovation,but also helps to understand the specific path of innovation spillovers more comprehensively.At the same time,it also provides a practical reference for implementing the innovation-driven development strategy and stimulating the innovation vitality of enterprises(especially state-owned enterprises).