Beating the post-IPO innovation slump: the role of board network structure in China

This study investigates whether and how board interlocks enable firms to beat the post-IPO innovation slump, a persistent obstacle to sustaining long-term value creation. Using a panel of 1,858 Chinese manufacturing firms from 2006 to 2019 and a two-stage least squares identification strategy, we provide causal evidence that greater board interlocking significantly improves post-listing innovative performance. However, this beneficial effect is critically contingent on the structural configuration of the interlock network. When external ties are concentrated among a small number of highly connected directors, the advantages of interlocks diminish markedly; conversely, networks with diffuse and broadly distributed connections substantially amplify their positive impact. Moreover, firms with stronger pre-IPO innovative performance – reflecting greater absorptive capacity – derive disproportionately larger gains from their board networks. Collectively, these findings demonstrate that post-IPO governance efficacy depends not simply on the existence of board interlocks, but on network architectures that distribute information channels widely and align with firms’ internal knowledge-processing capabilities.