Effect of Board Interlocking on Firm Performance through Innovation: Moderating Role of Firms’ Slack Resources and Gender Diversity

Abstract

This study examines the impact of board interlocking on firm performance through innovation as a mediator and slack resources and gender diversity as the moderators influencing the association between board interlocking and innovation. The sample uses panel data consisting of non-financial firms from 2008 to 2021 listed on the Pakistan Stock Exchange (PSX). The study evaluates the sample size of 148 non-financial firms and uses the Hayes moderation-mediation model 7 to test the hypothesis. The finding of this study is that there is a positive mediating role of innovation on the board interlocking and FP. The moderator's firms’ slack resources have a negative effect whereas gender diversity has a positive impact on the association of board interlocking and innovation that leads to performance. Stock owners may increase their capital by organizing effective CG (corporate governance) through the appointment of interlocks among the board members. This enhances FP by transforming other companies' innovation and by implementing effective management controls. Board members can boost their experience and knowledge by performing concurrently at multiple companies (BI), thereby improving the efficiency of the companies. Independent practitioners enhance productivity through innovative ideas, experience, and, knowledge which benefits the whole of society.