Board structure and intellectual capital efficiency: does the family firm status matter?
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Board structure and intellectual capital efficiency: does the family firm status matter? Vincenzo Scafarto1 · Federica Ricci2 · Elisabetta Magnaghi3 · Salvatore Ferri4 Accepted: 24 September 2020 © Springer Science+Business Media, LLC, part of Springer Nature 2020
Abstract Building on the argument that corporate boards are responsible for the creation and leveraging of a firm’s intellectual capital (IC), this study empirically examines the relation between boardroom characteristics—namely board size, director independence, leadership structure and gender diversity—and IC efficiency. Additionally, we propose that the family firm (FF) status is a specific condition that moderates the effect of board features on IC efficiency. We test the above propositions using data on 113 nonfinancial firms continuously listed on the Italian stock exchange over the period 2011–2016. The empirical results indicate that (1) IC efficiency is significantly lower in FFs, which challenges previous research claiming that FFs have some performance advantages over non-FFs and (2) that board size and director independence have an opposite effect in FFs and non-FFs (positive and negative, respectively), suggesting that the role of individual board mechanisms as drivers of (or brakes on) IC efficiency is contingent on firm characteristics. This paper extends the empirical literature supporting the link between board composition and IC efficiency, which has been scant and inconclusive. Furthermore, the literature has seldom considered the firm contingencies potentially affecting this relation. Regarding practical implications, our findings indicate that there is no one best way of structuring corporate boards that can fit all firm conditions; specifically, the results call into question conventional ‘best practices’ of board composition that emphasise director independence, suggesting that this governance mechanism may not have a consistent effect on organisational outcomes such as IC efficiency. * Vincenzo Scafarto [email protected] 1
Department of Human, Social and Health Sciences, University of Cassino and Southern Lazio, Viale dell’Università, 03043 Cassino, FR, Italy
2
Department of Law and Economics of Productive Activities, ‘Sapienza’ University of Rome, Via del Castro Laurenziano, 00161 Rome, Italy
3
Faculté de Gestion, Economie & Sciences (FGES), Catholic University of Lille, 60 bd Vauban, CS 40109, 59016 Lille Cedex, France
4
Department of Accounting, Management and Economics, University of Neaples ‘Parthenope’, Via Generale Parisi, 80132 Naples, Italy
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Keywords Board of Directors · Intellectual Capital Efficiency · Family Firm · VAIC
1 Introduction Intellectual capital (IC) has long been recognised as an important strategic resource for firms that are operating within the knowledge-based economy (Bontis 1998, 2001; Edvinsson and Malone 1997; Roos et al. 1998; Stewart 1997; Sveiby 1997). Hence, much attention has been—and still is—devoted to issues regarding the measurement
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