The effects of board competence on operational innovation: tests of universal, contingency and configurational models

Although the nature and extent of agency conflicts have been extensively addressed in terms of their performance implications for firms, the impact of board effectiveness on firm risk-taking behaviour remains largely unexamined. This study uses managerial risk taking as a lens to examine the efficacy of board competence for operational innovation in a sample of 201 Taiwanese firms. Furthermore, it extends the governance-innovation relationship to the contingency and configurational perspectives and thereby shows how board competence, in concert with technological opportunity and/or a low-cost posture, codetermines the firm's operational novelty. The results reinforce the critical role of board competence in operational innovation and suggest the governance conditions that give rise to more corporate risk preparedness.