Exploring the impact of corporate governance evaluation on innovation and operating performance: Evidence from R&D-intensive industries in Taiwan

Taiwan prioritizes the development of innovation-oriented, R&D-intensive industries, which hold global advantages and competitiveness. For such enterprises, a sound corporate governance mechanism and strong R&D capabilities are critical factors in business performance and overall success. This study explores the relationships among corporate governance performance, innovation capability, and business performance in Taiwan's R&D-intensive industries, focusing on whether innovation capability plays a mediating role. Extensive research discusses the direct relationships between corporate governance and innovation and between governance and performance; however, studies examining the mediating role of innovation in the governance–performance relationship remain lacking. To address this research gap, this study developed a triadic framework to investigate whether innovation capability mediates the relationship between corporate governance evaluation rankings and firm performance, measured by Tobin's Q. Additional analyses indicate that during the COVID-19 pandemic (2018–2020), innovation capability exhibits a significant mediating effect between corporate governance and firm performance. This finding suggests that environmental shocks may strengthen the role of innovation in this relationship. The findings offer theoretical and practical implications for managers in R&D-driven industries, government agencies, and academic researchers.