Communications of the ACM
Companies With Tech Expertise on the Board See Higher Revenue Growth, MIT Study Finds
Companies with seasoned technologists on their boards have better revenue growth, return on assets, and market capitalization expansion, compared to others, according to a study by the Massachusetts Institute of Technology.
Credit: John Gress/Reuters
The Massachusetts Institute of Technology (MIT) found enterprises with seasoned technologists on their boards have superior revenue growth, return on assets, and market capitalization expansion, compared to others.
MIT's Stephanie Woerner said, "Directors on digitally savvy boards have an understanding, tested by experience, of how digital technologies impact the way that companies will succeed in the next decade."
About 24% of 1,233 publicly traded companies with revenues exceeding $1 billion had board members classified as technology experts, including those with experience as a chief information officer or chief technology officer, and skills in areas including software, digital platforms, big data, and innovation.
Three-year revenue growth for boards with three or more tech-oriented directors was 17.6%, versus 12.8% for boards lacking tech experts.
Three-year market capital growth for the former was 31.3%, compared with 23.3% for the latter, while the former also saw a 34% higher return on assets.
From The Wall Street Journal
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Abstracts Copyright © 2019 SmithBucklin, Washington, DC, USA
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