Board of Directors and Innovation Behaviour for Sustainable Value Creation

Innovation activities are essential for long term competitiveness of firms. However, they represent very risky investments with payoffs associated to a longterm horizon. Features of this kind of investment can push managers of listed firms not to reach an optimal level of innovation investments. This chapter focuses on board of director attributes that avoid R&D underinvestment and, conversely, can stimulate innovation investments. After describing the risk of suboptimal level of R&D investment, the several roles of board of directors and its main characteristics are illustrated and are linked to innovation policies. The final section analyses the corporate governance model adopted in an Italian public company-Brembo spa-whose innovation capabilities make it one of the leader companies in the automotive braking systems.