The Influence of Board Human Capital and Social Capital on the Core Competitiveness of Chinese Firms: An Empirical Study of the Automotive Industry
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Universiti Malaysia Sarawak
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As a cornerstone of China’s manufacturing and technological innovation driver, the Chinese automotive industry is pivotal to transitioning to high-end manufacturing and an innovation-oriented economy. Despite significant scale growth, it faces challenges like insufficient independent core technologies amid intensified competition, industrial transformation and dual carbon goals, making core competitiveness enhancement critical. Existing board governance research focuses on short-term financial outcomes, isolates board human and social capital, and overlooks executive incentives’ moderating role in emerging markets, which are gaps this study addresses. This study employs a balanced panel dataset comprising 3,923 firm-year observations from 173 A-share listed automotive companies in China, covering the period from 2018 to 2023. After eliminating anomalous data retrieved from the Guotaian database, the analysis investigates the influence of board human capital and board social capital on corporate core competitiveness, while further exploring the moderating role of executive incentive mechanisms in these relationships. Specifically, the objectives are to test: i) To examine the positive impact of human capital on corporate core competitiveness; ii) To examine the positive impact of social impact on corporate core competitiveness; iii) To examine the moderating effect of board compensation on the relationship between human capital and corporate core competitiveness; and iv) To examine the moderating effect of board compensation on the relationship between social capital and corporate core competitiveness. Utilizing STATA 17, descriptive statistics, Pearson correlation analysis, Hausman tests, fixed-effects regression, interaction analyses, and robustness checks excluding data from the COVID-19 period are employed. The key findings indicate that the proportions of female directors and independent directors, their financial backgrounds, and their service in other companies significantly enhance core competitiveness, while overseas experience plays a relatively minor role; management shareholding chiefly amplifies the effects of education and director ownership, independence, financial expertise, and international perspective; all (iv) results remain robust after pandemic exclusions. From a theoretical standpoint, this study further refines the explanatory framework of the Upper Echelons Theory by incorporating incentive mechanisms. Practically, it offers empirical guidance for optimizing board composition and tailoring incentive schemes in the Chinese automotive sector. Future research should validate our framework in other industries or cross-country settings and explore the mediating and dynamic mechanisms through which board capital delivers value.