From pixels to profits: examining the impact of digital board expertise on corporate financial performance

This study examines how the digital expertise of the board of directors (BoD) is related to the successful implementation of digital transformation for better financial performance. BoDs, who are crucial in guiding strategic changes such as the digital transformation, need relevant expertise. Nevertheless, whether BoDs possess digital expertise and how it influences firm performance is unknown. Drawing on Resource Dependence Theory (RDT) and the Resource-Based View (RBV), this study conceptualizes digital board expertise and explores its (contingent) effects on the financial performance of German Prime Standard firms. We find that directors with digital expertise take an important resource-providing role and are valuable in (1) accessing information from the external environment and (2) implementing the crucial knowledge in internal capabilities for superior financial performance. In relation to these two mechanisms, we argue that the external and internal context matter for the relationship between digital board expertise and financial performance. We find support for our arguments.