Independent directors and patenting strategies: Evidence from China

Despite the burgeoning literature on the contribution of independent boards to innovation, little is known about their influence on patenting strategies. Relying on finer-grained patent data of Chinese listed firms, this study tests the causal effects of board independence on patenting strategies, specifically, technological scope, technological proximity, and technological concentration. We show that having more independent directors on a board leads to a narrower technological scope and more overlap between current and prior technological trajectories, but there is no material impact on technological concentration. These effects are more pronounced among firms with market and technological dominance. Moreover, patenting strategies seem to benefit firms' financial and innovation outcomes, which highlights the value of independent directors as advisors.