Corporate Governance and Innovation Ability: Empirical Study of Taiwanese Electronics Manufactures

Abstract

Since corporate scandals in the last decade, corporate governance system has been highly focused, besides, now under knowledge-based economy the innovation ability of enterprises is a key factor to enterprise's success. However, how the board of directors effects firms' innovation ability has been rarely explored. Generally, it is thought that corporate governance could provide functions to bring stakeholders the greatest profit and have better operating efficiency. Precious study proved that corporate governance is related to corporate performance. This study discusses the relationship between board of directors and the firm's innovation ability, including size of board directors, proportion of shareholding and traits of board of directors. By using patent counts as an index to measure a firm's innovation ability, this study examined 255 public listed electronic firms in Taiwan by using unbalanced 5 year panel data. This study adopts one way fixed effect model to evaluate parameters of model, and use F-test to examine the explanatory power of a model. Finally, this study shows how the corporate governance system affects firms' innovation ability, and provides suggestion that how corporate governance system, board directors and other traits are effective in firms innovation ability.

The effect of board of directors on R&D intensity: board tenure and multiple directorships

“…Particularly, the literature fails to provide conclusive evidence on the link between directors' characteristics and decisions regarding R&D investments (Dalziel et al, 2011;Dong and Gou, 2010;Tseng et al, 2013;Chen, 2013Chen, , 2014. Prior research indicates that the level of R&D investments is extremely valuable for companies, irrespective of the industry in which these firms operate (Bae and Kim, 2003;Eihe and Olive, 2010).…”

Translating Innovation into Performance: Understanding Role of the Board

“…Miller and Triana (2009) found a positive relationship between gender diversity and innovation; they stated that women bring different perspectives and working styles, and ideas which helps to identify new innovative opportunities. Torchia et al (2011) argued that presence of women directors enhances organisational innovation, but Tseng et al (2013) found no effect of women directors on firm’s innovative activities. According to researchers, female directors have inadequate management experience (Peterson & Philpot, 2007), are more sensitive, more risk averse (Eckel & Grossman, 2008), and less competitive than men in general (Croson & Gneezy, 2009), which could have adverse effect on allocation of funds for innovation.…”

Presenting a model of corporate entrepreneurship with corporate governance approach

“…The governance team comprises of the board of directors, CEO and senior management. The major conception of these is the same as those are achieved through legislation to control and monitoring the company and preventing inefficient operations and realizing social responsibilities (Tseng et al, 2013). The task of corporate governance as observed by Solomon is to bring about necessary changes which are responsive to the long-term positive outcomes of all stakeholders.…”

“…In this situation, corporate governance is not only involved in the relationship between the company and its shareholders but also between the company and a large number of beneficiaries including staff, customers, sellers and so on that is expressed in the format of stakeholders theory. According to Tseng et al (2013), corporate governance implies corporation management, board members and shareholders, and company can achieve its operational goals via this mechanism. Corporate governance is also defined as structures and processes to control and lead the company.…”