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Top Management Human Capital, Inventor Mobility, and Corporate Innovation

Published online by Cambridge University Press:  15 November 2018

Thomas J. Chemmanur Open the ORCID record for Thomas J. Chemmanur [Opens in a new window] ,
Lei Kong ,
Karthik Krishnan  and
Qianqian Yu
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Abstract

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.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 54 , Issue 6 , December 2019 , pp. 2383 - 2422
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2018 

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Footnotes

1

We thank Paul Malatesta (the editor) and an anonymous referee for several valuable comments that helped to greatly improve this paper. We are grateful for comments and suggestions from Kee H. Chung, Marcia Millon Cornett, Michael Ewens, Chinmoy Ghosh, Joseph Golec, Shantaram Hegde, Sahn-Wook Huh, Brad Jordan, Andrew Karolyi, Mark Liu, Gustavo Manso, Alan Marcus, Kristina Minnick, Kartik Raman, Bob Taggart, Hassan Tehranian, Brian Wolfe, and Zhaoxia Xu; seminar participants at Boston College, Bentley University, the University of Kentucky, SUNY Buffalo, the University of Calgary, the University of Connecticut, and Hong Kong Polytechnic University; and conference participants at the 2015 PBC-RFS conference on “Entrepreneurial Finance and Innovation around the World,” the 2015 Financial Management Association Annual Meeting, and the 2016 American Finance Association Meetings in San Francisco.

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