Top executive tournament incentives and corporate innovation output

2021 ◽  
Author(s):  
Xianjun Cai ◽  
Huifeng Pan ◽  
Chengcheng Gao ◽  
Chunyang Wang ◽  
Liping Lu
Keyword(s):  
Corporate Innovation ◽  
Innovation Output ◽  
Top Executive

Corporate innovation in a world of common ownership

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Cheng-Huei Chiao ◽  
Bin Qiu ◽  
Bin Wang
Keyword(s):  
Protective Role ◽  
Least Square ◽  
Content Type ◽  
Ordinary Least Square ◽  
Corporate Innovation ◽  
Common Ownership ◽  
Regulatory Perspective ◽  
Innovation Output ◽  
The Difference ◽  
The Impact

PurposeThe purpose of this paper is to examine the impact of common ownership on corporate innovation, including innovation input, innovation output and postgrant patents.Design/methodology/approachThis paper uses the ordinary least square model and the difference-in-differences technique to evaluate the effect of institutional interlocking shareholdings on the life cycle of corporate innovation.FindingsThe results show that common ownership impedes innovation measured by patent grants and citations through reduced R&D expenditures. However, common ownership protects postgrant patents by lowering the likelihood that a co-owned firm gets involved in patent litigation and by accelerating the settlement of lawsuits between co-owned firms.Practical implicationsFrom a regulatory perspective, common ownership in younger firms that rely heavily on R&D investment to produce innovation outputs is detrimental and needs to be regulated. However, common ownership in mature firms, which hold a big pool of patents or rely on acquiring patents to compete, is of less concern because of the protective role detected.Originality/valueThe paper provides a first comprehensive look into how same-industry common ownership affects innovation input, innovation output and postgrant patents. The research also reconciles the anticompetitive effect and the coordinative effect of common ownership documented in the literature.

Corruption and Corporate Innovation

2019 ◽  
Vol 55 (7) ◽  
pp. 2124-2149 ◽  
Author(s):  
Jesse Ellis ◽  
Jared Smith ◽  
Roger White
Keyword(s):  
Social Welfare ◽  
Ethnic Diversity ◽  
Fixed Effects ◽  
Political Corruption ◽  
The State ◽  
Negative Relation ◽  
Corporate Innovation ◽  
Innovative Firms ◽  
Innovation Output

We examine whether political corruption impedes innovation. Using a comprehensive sample of U.S. firms, we find that corruption has a substantial, negative relation with the quantity and quality of innovation. These results are robust to using various fixed effects, proxies for corruption and innovation, and subsamples. To establish causality, we employ 2 instruments for corruption: local ethnic diversity and the corruption of the state a firm’s founder grew up in. Corruption appears to reduce innovation output both on average and for the most innovative firms. Overall, this evidence is consistent with the notion that corruption reduces social welfare by impeding innovation.

DO CEOS WITH SHARE PLEDGE SUPPRESS THE FIRMS’ INNOVATION?

2021 ◽  
pp. 1-44
Author(s):  
FANG JIA ◽  
XINPING XIA ◽  
XICHAN CHEN ◽  
CHENLIN YANG ◽  
LIHONG CAO
Keyword(s):  
Market Value ◽  
Agency Cost ◽  
Value Management ◽  
Common Phenomenon ◽  
Good Corporate Governance ◽  
Corporate Innovation ◽  
Corporate Insiders ◽  
Negative Effect ◽  
Robust Tests ◽  
Innovation Output

It is a common phenomenon for corporate insiders to pledge their stock as collateral for personal loans in China. Using Chinese data, this paper examines the effects of CEOs’ share pledge on the firms’ future innovation output. Evidence suggests that the existence of CEOs with share pledge has a significantly negative effect on firms’ innovation output. The baseline results are consistent with a variety of robust tests. Furthermore, we propose the effect of CEOs’ share pledge works on the corporate innovation through the market value management channel. Finally, we find that the good corporate governance is a possible channel to relieve the agency cost on CEOs.

Top Management Human Capital, Inventor Mobility, and Corporate Innovation

2018 ◽  
Vol 54 (6) ◽  
pp. 2383-2422 ◽  
Author(s):  
Thomas J. Chemmanur ◽  
Lei Kong ◽  
Karthik Krishnan ◽  
Qianqian Yu
Keyword(s):  
Factor Analysis ◽  
Important Determinant ◽  
Common Factor ◽  
Quality Measures ◽  
Top Management ◽  
Management Quality ◽  
Input And Output ◽  
Corporate Innovation ◽  
Innovation Output ◽  
Innovation Strategies

Using panel data on top management characteristics and a management quality factor constructed using common factor analysis on individual management quality measures, we analyze the relation between top firm management quality and corporate innovation input and output. We show that top management quality is an important determinant of corporate innovation, with individual aspects of management quality affecting innovation in younger and older firms differently. Further, firms with higher top management quality engage in more risky (“explorative”) innovation strategies. Finally, hiring more and higher-quality inventors is an important channel through which firms with higher management quality achieve greater innovation output.

Pay gap, inventor promotion and corporate technology innovation

2019 ◽  
Vol 9 (2) ◽  
pp. 154-182 ◽  
Author(s):  
Qifeng Zhao ◽  
Yongzhong Wang
Keyword(s):  
Technology Innovation ◽  
Estimation Method ◽  
Feedback Mechanism ◽  
Pay Gap ◽  
Content Type ◽  
Positive Effects ◽  
Corporate Innovation ◽  
Innovation Output ◽  
Positive Feedback Mechanism ◽  
D Investment

Purpose The purpose of this paper is to investigate how the pay gap between the management and ordinary employees influence corporate technology innovation. Design/methodology/approach This study built a tournament model based on inventor innovation and career promotion. In addition, the authors use IV-GMM estimation method to address the possible endogeneity issue in the regressions. Findings Based on the unbalanced panel data of patents and pay gap in 1,501 Chinese listed manufacturing firms during 2001-2015, this paper finds that the pay gap could lead inventor innovation and improve technology innovation. The pay gap could encourage corporate innovation significantly: 1 percent increase in pay gap may increase the number of patents by 2 percent in the next year. The pay gap between the management and ordinary employees facilitates corporate innovation via two possible channels. First, inventor innovation and career promotion. Inventors are selected into the management mainly based on their innovation output. The larger the pay gap, the more innovation incentives and patents would gain. Second, investment increase in technology innovation. The pay gap and more patents that inventors gain would increase the ratio of inventors promoted to the management, who tend to pour more resources into R&D activities and absorb more inventors to the management due to their sectionalism and R&D preference. The above two channels constitute a positive feedback mechanism among technology innovation, inventor promotion and increase in R&D investment. Research limitations/implications This paper highlights that pay gap between the management and ordinary employees is an important issue that could encourage corporate innovation. The conclusions imply that pay gap could encourage inventors to work hard and produce more patents, which could help them to enter into the management such as executives or directors. Originality/value This study contributes to the current literature by implying that pay gap could have positive effects on innovation through theoretical and empirical analysis. Also, this study finds that inventor promotion due to the pay gap is a critical channel to stimulate corporate technology innovation.

Bond liquidity, risk taking and corporate innovation

2019 ◽  
Vol 16 (1) ◽  
pp. 101-119
Author(s):  
Ha D. Nguyen ◽  
Huong T.H. Dang
Keyword(s):  
Risk Taking ◽  
Fixed Effects ◽  
Market Liquidity ◽  
Standard Deviation Increase ◽  
Exogenous Shock ◽  
Content Type ◽  
Corporate Innovation ◽  
Liquidity Cost ◽  
Innovation Output

Purpose The purpose of this paper is to investigate how market liquidity condition of corporate bonds can affect firm investment policy, specifically its risk taking, via the disciplinary function of trading. Design/methodology/approach The paper uses fixed-effects OLS and Poisson regression for the baseline specifications. It also employs the introduction of TRACE in 2002 as an exogenous shock to bond trading infrastructure in a difference-to-difference framework to address endogeneity concerns and establish causality. Findings The paper documents a positive relationship between bond illiquidity and firms’ risk taking, specifically a one standard deviation increase in Amihud illiquidity measure is associated with nearly 20 percent increase in exploratory investments compared to CAPEX. The shift in risk taking in turn increases firms’ innovation output to some extent. Research limitations/implications The findings have important implications on firm’s risk taking and growth. The paper identifies a new channel through which firm’s choice of risk can be influenced, namely, bondholder disciplining. The study also has implications about externalities of trading beyond liquidity cost for regulators in designing market microstructure. Originality/value This is the first to study the disciplinary role of bond trading. Conventional wisdom holds that bondholders are passive creditors who do not engage in costly monitoring such as banks. The findings in this paper imply that this may not be the case.

scholarly journals Stock option, contract elements design and corporate innovation output – an analyse based on risk-taking and performance-based incentives

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Qi Shi ◽  
Shufang Xiao ◽  
Kaiwen Chang ◽  
Jiaying Wu
Keyword(s):  
Risk Taking ◽  
Stock Options ◽  
Dominant Role ◽  
Critical Factor ◽  
Stock Option ◽  
Technological Advancement ◽  
Content Type ◽  
Corporate Innovation ◽  
Innovation Output ◽  
The Impact

Purpose With the accelerated technological advancement, innovation has become a critical factor, which affects the core competitiveness of a company. However, studies about the relationship between internal stock option mechanisms and innovation productivity remain limited. Therefore, this paper aims to examine the impact of stock options and their elements design on innovation output from an internal mechanism perspective. Design/methodology/approach Using a sample of 302 stock option incentive plans announced and implemented between 2006 and 2016, this study uses the propensity score matching and difference-in-difference model to find out whether the implementation of stock options improves the innovation outputs of enterprises. Findings Based on the statistical analysis, it is concluded that: stock options can stimulate corporate innovation; a stock option may drive innovation outputs through two ways, performance-based incentives and risk-taking incentives, with the latter one playing a more dominant role and the risk-taking incentives of stock options, could be optimised when the non-executives granting proportion is larger, the granting range is limited, the incentive period is longer, the exercisable proportion is increasing, the price-to-strike ratio is lower and relatively loose performance assessment criteria are applied. Originality/value The conclusion reached in the study may provide valuable information to listed firms in designing and implementing the stock option plans.

Informal institution and corporate innovation: From the perspective of social trust

2021 ◽  
pp. 2142005
Author(s):  
Ling Zhao ◽  
Huang Hao
Keyword(s):  
Social Trust ◽  
Patent Application ◽  
Influence Factors ◽  
Innovation Activity ◽  
Firm Innovation ◽  
Informal Institution ◽  
Informal System ◽  
Corporate Innovation ◽  
Innovation Output

Purpose: This study examines how social trust, as an informal institution, creates a cooperative and honest atmosphere to improve managers’ willingness for firm innovation. This study also addresses that the informal system may substitute for the formal institutions in promoting corporate innovation. Design/methodology/approach: This study opts a sample of Chinese listed firms over the period of 2007–2014. We obtain the detailed patent application information from the official website of China Patent and Intellectual Property Office. The social trust information is based on the results of Chinese Enterprise Survey System. Findings: The results indicate that firms located in regions of high social trust tend to have more innovation output, and is robust to a battery of sensitivity tests. The authors further document that this effect is more pronounced for firms with poor short-term financial performance, which are located in regions with weak legal environments and firms having lower information transparency. In addition, the authors also demonstrate that social trust can help firms to get adequate funds to reduce financial pressure and encourage firms to pay more attention to long-term benefits, alleviating investors as well as management myopia. Research limitations/implications: Limited by the data sources, when measuring innovation activity, the authors only use patent numbers represent for innovation output. Then, this study measures the patent quality through classifying patent categories (invention patent or others), since in China, the citation data are imperfect and inadequate. Practical implications: The results suggest that social trust means a good culture of honesty and cooperation can promote firm’s innovation engagement. Especially, in emerging markets, where formal mechanisms are relatively less effective, informal institutions can serve as an alternative system for alleviating information asymmetry. Originality/value: This study contributes to the literature in two ways. First, this study finds the positive effect of social trust on corporate innovation, which provides a new perspective for deepening the understanding of the influence factors of innovation. Second, this study further clarifies the mechanism of social trust promoting firm innovation, indicating that social trust can effectively alleviate outsiders’ concern about moral hazard risk. Then the stakeholders are more willing to provide financial support and pay more attention to the firm’s long-term performance.

IC & OI The impact of intellectual capital on organizational innovation

2020 ◽  
Vol 6 (7) ◽  
pp. 1257-1265
Author(s):  
Fouad El-Gamal
Keyword(s):  
Intellectual Capital ◽  
Middle Managers ◽  
Organizational Innovation ◽  
Sustainable Competitive Advantage ◽  
Dominant Dimension ◽  
Structural Capital ◽  
Corporate Innovation ◽  
Research Findings ◽  
The Impact ◽  
Depth Interviews

Intellectual capital can generate value for organizations and improve organizational innovation. This study aims to investigate the effects of intellectual capital on corporate innovation. Mixed research methodology approach has been used by combining both qualitative and quantitative analysis to explore and empirical examine the research model. The targeted population of interest is the licensed pharmaceutical manufactures, 90 organizations in the Egyptian pharmaceutical industry throughout its three main sectors (11 public, 70 local private and 9 MNCs). Statistical analyses are employed based on the questionnaires gathered from 39 pharmaceutical manufactures’ companies (44% response rate). In addition, sixty-three “63” in depth interviews have been conducted with both top and middle managers. The research findings indicate that all dimensions of intellectual capital (human, structural, and relational capital) have positive significant effects on organizational innovation of pharmaceutical manufactures’ companies. The study clarifies that the most dominant dimension is structural capital, which provides the largest and strongest support to pharmaceutical manufactures’ companies. The deep realization of the importance intellectual capital and its impact on innovation helps leaders to adopt accurate system to run organizational innovation in a better way, which lead to sustainable competitive advantage for organizations.

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