What Drives Firms to Explore New Technological Fields? An Investigation on the Technological Entry Effect of CEO Decision Horizon and Board Governance

This study aims to examine the direct and moderating effects of the chief executive officer's (CEO) decision horizon and the board governance on a firm's entry into new technological fields, respectively. In a sample of 1727 firm-year observations for 156 Taiwanese firms in the semiconductor and optoelectronics industries for the period of 2003-2014, we found that the longer the CEO decision horizon, the more eager the focal firm is to enter new technological fields. Such a relationship is also strengthened by board power characterized by boards dominated by more outside directors, but weakened by board homogeneity of industry background. The configurational analysis further reveals that board homogeneity outweighs board power in reducing the positive influence of the CEO decision horizon on technological entry. This study not only contributes to the behavioral agency theory by infusing and testing CEO decision horizon to enhance predictions of the incidence of entering into new technological fields, but also reveals the contextual influences of board governance on executive risk taking. In addition, this study cautions against drawing a simple governance solution in support of a firm's technological entry. We point out different governance arrangements in which the CEO decision horizon will encourage more active technological entries in an environment of incessant changes.