The Roles of Directors from Related Industries on Enterprise Innovation

Abstract

To remain agile in response to market dynamics, foster innovation, and effectively manage potential risks, companies draw upon information from both their upstream and downstream sup-ply chain collaborators to enhance their core competitiveness. This research, conducted on A-share listed companies in Shanghai and Shenzhen from 2010 to 2021, empirically investigates the influence of directors from upstream or downstream supply chain collaborators, referred to as Directors from Related Industries (DRIs), on corporate innovation activities. This study reveals that DRIs significantly boost the innovation activities of enterprises, irrespective of their position within the operational structure. When there is considerable information asymmetry in the related industries of the industry chain, the impact of DRIs on enterprise innovation is evident in both input and output aspects. Conversely, when management has serious concerns about their career, the impact is primarily on the input side. This underscores the role of DRIs in providing relevant information about upstream and downstream industries and alleviating management’s career anxieties, enhancing their effectiveness in consulting and supervising innovation. By examining the economic consequence, corporate innovation emerges as a potential mechanism through which industry chain directors can enhance corporate value. This research delves into the effects of DRIs on enterprise innovation, offering valuable theoretical and practical insights for advancing innovation within the context of value chain integration.