When does internal governance make firms innovative?

Using managerial risk-taking as a lens to explore firm innovativeness, this study addresses the risk alignment effects of firm-level governance and its context-dependent nature. On the basis of the contrasting theoretical predictions of agency and stakeholder theories, the investigation shows how internal governance, in terms of managerial ownership and board competence, shapes the performance of new product introduction in a sample of 194 Taiwanese firms. These relationships are also conditioned separately by industry-wide technological opportunity and within-firm resource slack. This study enriches the body of knowledge in the strategic outcomes of corporate governance by demonstrating the general efficacy of two distinct governance arrangements and their contingent value when subject to different environmental and organizational munificence.