Prior literature has identified a strong direct effect of financial slack on the intensity of firm innovation activities. In this study, we examine the moderating effect of board composition on the relationship between financial slack and innovation behavior. Based on agency and stewardship theory, and drawing on the explorative vs. exploitative learning distinction introduced by Cyert and March (1963) and March (1991), we argue that different types of board members (those representing insider vs. outsider shareholders) are likely to have different moderating effects on the relationship between financial slack and different kinds of innovation activities (explorative vs. exploitative innovation). We found empirical support for our predictions using longitudinal data on 311 publicly listed Taiwanese electronic firms over the period 2000 to 2008. In particular, we found that insider board members who represent the ultimate owners have a positive moderating effect on the relationship between financial slack and explorative innovation, but a negative one for exploitative innovation. In contrast, outsider board members (institutional investors and individual directors) have a negative moderating effect with financial slack on explorative innovation. Our findings contribute to the innovation literature by showing that the corporate governance structure of firms has implications on not only the aggregate level of their innovation activities, but also the composition of their innovation activities. In addition, our findings highlight the potentially beneficial effect of insider board members on explorative innovation activities of firms in the context of newly industrializing economies of Asia.