When a CEO settles into the corner office for a decade or more, something curious happens: the company's appetite for risk often shrinks. New research from the University of East London reveals a pattern worth watching—long-serving executives, despite their deep knowledge and stability, tend to become cautious about investing in innovation unless their boards push back hard.
Dr. Igbekele Sunday Osinubi and his team at the Royal Docks School of Business and Law spent 11 years tracking 215 FTSE 350 companies between 2010 and 2021, watching how CEO tenure and board independence shaped what they call "R&D knowledge stock"—the accumulated research expertise and technological capability that gives companies competitive edge. The findings, published in Corporate Governance: The International Journal of Business in Society, suggest that innovation is shaped as much by who sits around the boardroom table as by laboratories and budgets.
The data tells a striking story. CEOs who remain in office for many years often become more cautious, less willing to back the risky research and development projects that build tomorrow's industries. These companies were more likely to reduce investment in innovation and long-term technological growth, retreating from bold bets precisely when they should be doubling down. Yet the research also uncovered a counterforce: firms with stronger independent boards—directors from outside the company who bring fresh perspective—continued building innovation capacity even with experienced, long-tenured CEOs at the helm. The most innovative companies weren't those with new leaders every few years, nor those with long-serving CEOs left unchecked. They were those where experienced executives partnered effectively with independent directors willing to challenge them.
"Long-serving CEOs can bring valuable experience and stability, but there is also a risk that leaders become too cautious or too attached to existing ways of thinking," Osinubi explained. The real insight, though, is that this isn't inevitable. Strong governance acts as a guardrail, encouraging companies to continue investing in innovation especially during difficult periods when firms might otherwise retreat from research and development.
This matters far beyond individual balance sheets. Innovation drives productivity, competitiveness and economic growth—the fuel of modern economies. If companies systematically reduce their innovation investments as their leaders grow more settled, the ripple effects could be substantial. Regulators and policymakers are already taking note. The findings suggest that governance reforms and incentives encouraging long-term innovation strategies deserve serious consideration, particularly in firms led by experienced executives who may face pressure to prioritize short-term financial results over long-term technological investment.
For boards themselves, the research offers a quiet but powerful message about CEO succession planning. It's not about forcing leadership changes on arbitrary timelines. It's about ensuring that wherever innovation investment decisions are made—whether under new leadership or long-serving stewardship—there's enough outside challenge in the room to keep companies reaching forward. When experienced leaders and independent directors work together as true partners, combining deep company knowledge with outside perspective, companies continue building the knowledge and technologies that shape future industries. That balance, it turns out, is everything.