| ID | 182715 |
| Title Proper | Does top management quality promote innovation? Firm-level evidence from China |
| Language | ENG |
| Author | Li, Zhen ; Yu, Yihua ; Zhao, Qifeng |
| Summary / Abstract (Note) | The human capital in management teams plays an increasingly important role in firms' governance and policies. We construct a comprehensive index of top management quality using a principal component analysis to empirically prove top management quality's positive impacts on corporate innovation. This study finds that higher-quality management teams tend to invest more in research and development projects and apply for more and higher-quality of patents. These results are consistent after conducting a series of robustness checks. We control for potential endogeneity using a firm fixed-effects model, the instrumental variable approach, and the propensity score-matching method. Three main channels are tested through which higher-quality top management teams will lead to higher innovation: higher tolerance for failure, easing of financial constraints, and more hiring of high-quality inventors. Finally, further analyses reveal that the positive effects of top management quality on innovation are more obvious for high-tech, state-owned, and growing enterprises. |
| `In' analytical Note | China Economic Review Vol. 65, Feb 2021: p.101562 |
| Journal Source | China Economic Review 2021-01 65, 65 |
| Key Words | Innovation ; Financial Constraints ; Management Quality ; Failure Tolerance |