Board Social Capital and the Innovation Balancing Act

In today’s volatile business landscape, companies are increasingly challenged to innovate on two fronts: refine existing products or services by making improvement and engaging in efficiency activities (exploitative innovation), and simultaneously develop breakthrough and creative products and services for new markets and business models (exploratory innovation). This dual mandate that pursues both exploitative and exploratory innovations, known as “ambidextrous innovation,” has emerged as a cornerstone strategy for organizations seeking sustainable growth and competitive resilience.

At the heart of this strategic balancing act lies the board of directors. As the top decision-making body in corporate governance, boards are instrumental in shaping innovation trajectories. Yet, although the influence of board composition and oversight has been widely studied, the nuanced role of board social capital remains underexplored. Board social capital is the relationships among directors (internal social capital) and between the board and external stakeholders (external social capital). These networks can serve as conduits for information, trust and resource exchange, all of which are critical to innovation.