The Impact of Board of Directors’ Characteristics on Firm Performance through Innovation in Finnish and Swedish Corporate Sector

In the modern world, many corporations rely on innovation as the crucial component of organizational success. Companies which are unable to stay innovative enough are forced to either leave the market completely or experience a considerable downturn. The composition of the board of directors is one of the main factors which influence the level of innovations within a company. The aim of the study was to examine whether corporate innovativeness is affected by characteristics of firm directors and to investigate to what extent innovativeness has an effect on firm performance. Secondary quantitative data of 24 Finnish and 36 Swedish publicly traded companies were acquired from their financial statements, annual reports and NASDAQ OMX Nordic database for the period from 2012 to 2018 and analysed in terms of descriptive, correlation and multivariate OLS regression analyses with the use of IBM SPSS software. The descriptive analysis presented a general overview of the data. The level of the relationship between the variables was demonstrated by correlation analysis, whereas regression results showed the strength of the impact that independent variables had on the dependent ones. These methods along with the deliberately chosen research methodology allowed to test each hypothesis asserted and answer all research questions. The empirical findings revealed that firm performance is influenced by corporate innovativeness, which, in turn, is found to be affected by characteristics of the directors. The results can be used in determining the optimal board composition for Finnish and Swedish public companies. Moreover, recommendations for future studies were given and limitations of the present research were discussed