Abstract:
Purpose- Following the resource dependence and optimism theory,
the study explored whether Chief Executive Officer (CEO)
optimism moderates the link between board leadership and firm
innovation in the financial sector.
Design/Methodology- 130 financial institutions in Kenya were
surveyed using cross-sectional and explanatory designs. Hypothesis
testing utilized both moderated hierarchical regression models and
mod-graphs.
Findings- The results revealed that the board member’s openness
and independence positively influence firm innovation. The
moderated hierarchical regression results and figures in the mod-
graphs reveal that CEO optimism enhances the association
between the board member’s openness, independence, and firm
innovation.
Practical Implications- The results suggested that for financial
institutions to be innovative, board members should be open to
each other in terms of the private ideas as well as being independent
about decisions made to spur the growth of the firms. Additionally,
such boards should appoint CEOs who are optimistic about being
innovative.