Exploring novel technologies through board interlocks: Spillover vs. broad exploration

We draw upon insights from social networks and organizational learning to argue that board interlocks not only affect technological exploration (technological innovations that explore new technological domains) but also bring about different outcomes based on the various primary roles of the individuals creating them. We also advance the knowledge-spillover literature by arguing that interlocks are more influential in affecting spillover exploration (imitating technologies from interlocked firms) than in influencing broad exploration (exploring novel technologies beyond interlocked firms). Moreover, we predict that interlocks created by focal executives (or executive-created interlocks) affect spillover and broad exploration of the focal firm more strongly than those created by outside directors (or non-executive-created interlocks). We test these hypotheses by analyzing information from multiple resources, including historical records of board appointments and data on technological innovations by U.S. public companies. Empirical analyses provide some support for our hypotheses. Specifically, our findings suggest that an increased number of board interlocks improves the likelihood of technological exploration. Results also indicate that board interlocks are more influential in generating spillover exploration than broad exploration. Finally, empirical evidence reveals that executive-created interlocks are more important than non-executive-created interlocks in promoting spillover exploration.