THE MODERATING EFFECT OF DIRECTORS’ NETWORK TOWARDS TECHNOLOGICAL INNOVATION AND FIRMS’ PERFORMANCE: A CONCEPTUAL PAPER

Abstract

Scholars have given increased attention to seek for a solution to improve firms’ performance. The literature demonstrated that technology innovation is considered the most powerful means of firms’ performance for modern companies. Empirical findings showed, however, that the relationship between technological innovation and firms’ performance continues to be inconclusive as it has a negative, positive or no impact on firms’ performance. In order to address such gap, this paper proposes a theoretical framework to describe the moderating effect of directors’ network on technological innovation and firms’ performance. It shows that the effectiveness of business innovation can be enhanced through direct or indirect use of each network of directors. The firm still neglects the significant capacity of the board of directors' network in a firm. In short, the crucial discussion found in this paper will lead to improving the information on innovation, networking and organizational studies as well as act as a reference to study in other countries. This study is a promising field. The business will benefit from a large social network of directors. Thus, the company is proposing to fully utilize the function of directors’ network to leverage the innovation activities and firm’s performance.