Board of Director’s influence on Innovation in Established Firms : An Exploratory Study

Abstract

This thesis aims to explore how boards of directors in established firms facilitate innovation through exerting specific activities. We explore this phenomenon by conducting interviews with key informants who serve as board members in various established companies in Norway. Through in-depth semi-structured interviews with 18 informants, we find and present board members’ activities aiming to facilitate innovation within the organization. Our primary research question is: “Through what activities do board members aim to facilitate innovation within established firms”? We identify eleven activities that the board members who are closely involved in innovation adopt to facilitate innovation within the organization. These activities can be grouped into the three pillars of the dynamic capability framework, namely sensing, seizing, and transforming, which according to existing research are necessary organizational-level capabilities for innovation and to sustain competitive advantage. While previous research has focused on the role of top management, our findings show how board members can assist firms to develop these capabilities with their specific activities. Moreover, our research shows that some of the boards of directors have limited involvement in innovation and we identify internal and external factors hindering them from active involvement. We develop two models that show an overview of two types of board involvement with specific activities to foster innovation and contextual factors behind limited involvement. This study contributes to the existing literature by shedding light on the role of a new set of actors at the very top of the organizational hierarchy – the board of directions. Our study offers a set of empirically based activities practiced by board members that can enable organizational dynamic capabilities, aiming to ultimately result in enhanced innovation. Moreover, the study sheds light on various external and internal factors that can explain limited involvement of boards. In terms of practical implications, the research puts forth various activities that can be embraced by boards of directors seeking to enhance the established firms’ engagement in innovation. Additionally, the identification of factors behind limited involvement offers practitioners new perspectives to explore, with the aim of investigating and resolving this issue.