AI Insight
A study from the University of East London analyzed 215 FTSE 350 companies over an 11-year period (2010-2021) to examine the relationship between CEO tenure, board independence, and innovation output. The findings suggest that companies led by long-serving CEOs tend to show reduced innovation capacity over time, measured through R&D knowledge stock, which encompasses research investment, expertise, and technological capability. However, the presence of strong independent boards appears to counteract this decline by providing oversight and challenging entrenched leadership behaviors.
Why it matters
These findings have direct implications for corporate governance policy, suggesting that board composition is a meaningful lever for sustaining long-term innovation competitiveness. Organizations and regulators may use this evidence to reconsider term limits for executives or strengthen requirements for board independence in publicly listed companies.
A new study from the University of East London has found that companies led by long-serving chief executives may become less innovative over time unless challenged by strong independent boards. The research examined 215 FTSE 350 companies over an 11-year period between 2010 and 2021. It explored how CEO tenure and independent directors influence a company’s “R&D knowledge stock,” which is the research, expertise and technological capability built through investment in innovation.
Source: Long-serving CEOs may weaken innovation, study finds