Chief executives may dominate the conversation around corporate innovation, but new research shows the real power to drive or derail digital transformation often lies elsewhere: with non-executive directors. A 25-year study of 75 U.S. retail companies demonstrates that board composition can decisively shape the pace of technological adaptation, challenging long-held assumptions about where innovation leadership truly begins.
Research from TU Dortmund University and the University of Passau tracked e-commerce adoption across 1,111 observations over a quarter century. It reveals that outside directors can set, or stall, their companies’ technological trajectory.
The study focused on major technological leaps that disrupt established business models. E-commerce served as the primary case study, illustrating why some organisations adapt swiftly to technological change whilst others struggle to keep pace.
Network Connections Accelerate Change
The findings highlight the power of social capital. Directors with deep, high-level business and industry connections often become the catalysts for bold technological initiatives. Their credibility enables them to legitimise unfamiliar concepts, build investor confidence and mobilise internal support, making bold, disruptive ideas essential to the company’s strategy.
This challenges the common belief that established networks resist change. The evidence shows that well-connected directors frequently use their influence to champion innovation rather than protect the status quo.
When Expertise Becomes a Liability
Paradoxically, the study reveals that directors who know a lot about old technologies can find it harder to embrace new ways of working. Deep knowledge of traditional business models and systems can make their existing expertise feel less relevant, slowing adaptation.
Such directors often focus on limitations rather than possibilities, which can hinder the organisation’s ability to respond quickly to market disruption. Entrenched thinking reinforces existing approaches instead of enabling the change that’s needed.
Companies gain more from directors who bring cognitive flexibility and a willingness to reimagine the business, rather than deep technical knowledge of outdated systems.
Balancing Networks and Mindsets
Network influence and technical expertise can interact in unexpected ways. When a director has both wide-ranging connections and deeply rooted knowledge of legacy systems, the advantages of one can be weakened by the limitations of the other. Strong networks may offset outdated thinking, but entrenched expertise can also dull the benefits of social capital.
‘We show that in times of disruptive change, outside directors are much more than formal monitors. Depending on their personal backgrounds, they can either promote or hinder transformation.’ Prof. Dr. Lorenz Graf -Vlachy, Senior Research Fellow at ESCP & International Research Fellow at the Oxford University Centre
Boards navigating digital transformation need directors who combine influential, trusted networks with the flexibility to embrace new technologies and approaches.
Rethinking Board Selection
These findings have clear implications for how boards are chosen and structured. The research suggests that selection should prioritise adaptability of thought as much as traditional qualifications. Companies preparing for technological change need directors who combine influential networks with the flexibility to embrace new ways of working.
The study also challenges the common belief that chief executives alone drive innovation. While senior management remains vital, the evidence shows that the composition of the board plays a major role in how organisations respond to technological disruption. Successful digital transformation depends on alignment across multiple levels of leadership, not just the top.
With a 25-year perspective, the study provides strong confidence in its conclusions. By tracking the pace and scale of e-commerce adoption, such as online shop launches, strategic alliances and other key milestones, the research offers compelling evidence that board dynamics are central to navigating technological change effectively.