Do CEOs matter? Divergent impact of CEO power on digital and non-digital innovation

Digital innovation is ubiquitous across a wide range of industries, blurring the boundary between traditional and technology industries. An increasing number of firms in traditional industries such as manufacturing, retail, or service now regard themselves as technology companies. In this study, drawing on corporate governance literature, we develop a theoretical framework for the relationship between CEO power and digital innovation. We posit that a more powerful CEO more effectively directs risky digital innovation, leads change management, and resolves conflicts within a firm’s digital and business sides. We find that a more powerful CEO can drive digital innovation to a greater extent. Interestingly, this relationship is weakened by a board of directors’ external social capital but strengthened by the board’s internal social capital. Surprisingly, CEO power is negatively associated with the firm’s non-digital innovation. Our research significantly contributes to the literature on strategic information systems (SIS) on multiple fronts and offers meaningful managerial insights for organizations aiming to innovate using digital technologies.