Ownership structure and innovative behavior: Testing the mediatory role of board composition
Abstract
Purpose
The purpose of this paper is to expand understanding of the determinants of adoption innovation in SME context by empirically examining the effect of corporate governance structure on manager's innovative behavior. This was done through exploring whether ownership structure affects managers’ innovative behavior and if so, whether the effect is mediated by board composition.
Design/methodology/approach
Using a sample of 197 managers within Tunisian SMEs, hypotheses were tested through structural equation modeling and especially using covariance structure analysis (or LISREL method) with Analysis of Moment Structures (AMOS) 18.0 software and maximum likelihood estimation method.
Findings
The paper found that ownership structure is significantly associated with manager's innovative behavior. Further analysis arising from introducing outsiders’ representation on the board as a mediating variable reveals that the relationship is fully mediated by this variable.
Practical implications
This study gives insights to policy makers who are interested in improving board efficacy in emerging economies such as Tunisia. Indeed, the study results should encourage nominating committees and seniors to reflect warily on an effective structuring of board composition by ensuring a certain priority for innovation activities in the firm.
Originality/value
This paper extends the understanding of how ownership structure shapes strategic decisions such as innovation in emerging markets. In addition, it fills the literature void by introducing the board composition as a mediating concept between ownership structure and innovative behavior, which was neglected by previous researchers.
Keywords
Acknowledgements
The authors thank the anonymous reviewers, and particularly Dr Gerrit Sarens, the editor of the Journal of Accounting in Emerging Economies for their valuable and timely comments and suggestions.
Citation
Omri, W., Becuwe, A. and Mathe, J.-C. (2014), "Ownership structure and innovative behavior: Testing the mediatory role of board composition", Journal of Accounting in Emerging Economies, Vol. 4 No. 2, pp. 220-239. https://doi.org/10.1108/JAEE-07-2012-0033
Publisher
:Emerald Group Publishing Limited
Copyright © 2014, Emerald Group Publishing Limited