Director networks and firm innovation investment: Evidence from China

Innovation investment is crucial for the sustainable development and competitive advantage of firms. Increasing attention is given to how to improve the efficiency of firm innovation investment in the academic field. This paper investigates the impact of director networks on firm innovation investment from the perspectives of information advantage, control advantage, and resource advantage. The results show that the position of director networks (centrality and structural holes) can enhance firm innovation investment. Agency costs and corporate governance exert an intermediary effect. The moderating effect indicates that environmental dynamism and redundant resources reinforce the role of director networks in promoting firm innovation investment. An examination of innovation segments and director types reveals that director networks exert a stronger positive influence on exploratory innovation. Director networks composed of independent directors and non-executive directors demonstrate a greater capacity to promote firm innovation. Heterogeneity analysis indicates that the impact of director networks on firm innovation is influenced by firm heterogeneity in digitalization, firm size, and marketization. This paper enriches and supplements the relevant research on director networks and innovation investment by providing evidence from Chinese listed companies and has important practical value and management implications.