Board recruitment as a strategic answer: Do companies' strategies for innovation influence the selection of new board members?

• Author: Isabelle Allemand,Fabrice Galia,Emmanuel Zenou,Bénédicte Brullebaut
• Date: 01 January 2020
• Published date: 01 January 2020
• DOI: http://doi.org/10.1002/jsc.2316

RESEARCH ARTICLE

Board recruitment as a strategic answer: Do companies'

strategies for innovation influence the selection of new board

members?

Emmanuel Zenou | Isabelle Allemand | Bénédicte Brullebaut | Fabrice Galia

CEREN, EA 7477, Burgundy School of

Business, Université Bourgogne

Franche-Comté, Dijon, France

Correspondence

Emmanuel Zenou, Burgundy School of

Business, 29 rue Sambin, 21000 Dijon, France.

Email: emmanuel.zenou@bsb-education.com

Abstract

Different strategies for innovation lead to specific profiles of new board members in

terms of human and social capital, which shows that board selection is a strategic

answer for innovation. Studying 735 French companies, we show the influence of

four types of innovation strategies on the human capital (education and experience)

and social capital (relationships) of new board members. Results show that specific

strategies for innovation require specific profiles on board, which emphasizes the

importance of board capital requirements for supporting innovation strategies.

1|INTRODUCTION

While long regarded as a homogeneous group of people with the

same prestigious career, boards of directors have become more diver-

sified in the last 20 years (Zhu, Shen, & Hillman, 2014). Changes in the

way to recruit directors have several explanations: increased aware-

ness of diversity contribution, improvement of boards' role thanks to

governance codes, and emphasis on skills and knowledge. The factors

determining the composition of boards of directors are not entirely

known (Boone, Field, Karpoff, & Raheja, 2007). There is a consensus

on the existence of a relationship between required profiles and role

expectations in governance literature. As an illustration, in 2012, to

support its new strategy of openness to all cultures, including advising

populations on nutrition, Danone appointed three new independent

directors, including one selected for his experience and knowledge of

Internet communication.

1

Whether a firm decides to develop its activity on new markets,

launch new innovative products, or build alliances, this should lead to

new needs of skills and networks both for employees and governance

actors. Researchers and inventors obtain greater results when they

are well managed, when executives and boards support innovation

and creativity by a relevant monitoring (Byrne, Mumford, Barrett, &

Vessy, 2009). To achieve this, managers need to have congruent

knowledge and expertise. How do innovative firms choose their direc-

tors to support their projects? According to the innovative strategies

decided by firms, which characteristics should they look for regarding

their new directors? This issue is crucial for all firms, but probably

more particularly for innovative firms. Innovation is necessary to stay

competitive, but innovation is risky: “nearly 50% of the new products

that are introduced in the marketplace fail each year”(Sivadas &

Dwyer, 2000:31). To avoid this, innovative firms invest in networks

and skills. “Intellectual capital works closely with innovation manage-

ment”(Mignon & Walliser, 2015:6). Therefore, board composition may

be a strategic answer for innovative firms: changes in board composi-

tion are part of the necessary organizational changes to master com-

plexity (Boeker & Goodstein, 1991; Desai, 2016). Board members can

contribute to reducing uncertainty because they bring expected

resources (Mizruchi & Stearns, 1988).

In this article, we study the relationship between strategic deci-

sions for innovation and the recruitment of board members. This will

allow us to verify whether different strategic decisions concerning

innovation lead to different profiles for new directors. Mobilizing the

resource approach of governance, our target is to capture changes in

board composition due to strategic decisions of innovation. This issue

is original by the direction of the studied relationship, since most

research has focused on board's influence on strategic decisions and

not the opposite. As developed by Torchia, Calabrò, and Morner

(2015), the literature on board diversity mostly uses demographic

characteristics such as age, gender and nationality, but more rarely

what the authors call “deep level diversity”: experience, personal pro-

files, or other human capital dimensions which are more difficult to

identify (see also Harrison, Price, Gavin, & Florey, 2002). Our study

JEL classification codes: G3, O30.

DOI: 10.1002/jsc.2316

Strategic Change. 2020;29:127–139. wileyonlinelibrary.com/journal/jsc © 2020 John Wiley & Sons, Ltd. 127