Which kind of board benefits more from the relationship between entrepreneurial orientation and radical innovation? The asymmetric roles of board characteristics in China

Abstract

AbstractRadical innovation is necessary for firms to transform existing markets or create new ones, which has critical impact on firm performance. Therefore, there is a need to explore how radical innovation can be successfully achieved. Entrepreneurial orientation reflects a firm’s willingness to be innovative, proactive and risk-taking, which has been recognized as a key factor contributing to firm innovation. However, the specific focus on the relationship between entrepreneurial orientation and radical innovation is very limited. This paper therefore investigates how entrepreneurial orientation affects radical innovation by considering the contingency effects of board characteristics. Using the panel data of listed manufacturing firms in China from 2013 to 2019, this paper found that entrepreneurial orientation has a significant positive impact on radical innovation. Furthermore, different board characteristics play asymmetric moderating roles in that relationship in such a way that CEO duality and board independence play positive moderating roles, while board ownership and board size play negative moderating roles. This paper contributes to the entrepreneurial orientation literature by providing a finer-grained understanding of the role of entrepreneurial orientation on radical innovation. This paper also contributes to the corporate governance literature by revealing the asymmetric contingency effects of different board characteristics.