Barbarians at the gate? Institutional investors and firm innovation Investment: The moderating role of female executives

Ximing Yin, Yaxin Su, Ryan Coles and Victor Cui

Technovation, 2025, vol. 147, issue C

Abstract: Innovation financing plays a vital role in firms' technological advancement, yet how institutional investors affect firm innovation remains a subject of debate. To reconcile the inconsistent findings in existing literature, this paper establishes a unified framework and demonstrates that institutional investors exert a curvilinear effect on firm innovation investment. The initial funding provided by institutional investors serves as a catalyst for innovation spending through an influx of resource-based positive net effect into the firm. However, with institutional shareholding goes up, there is a turning point where the negative myopia effect exceeds the positive resource effect and takes dominance, thereafter more excessive institutional investment leads to a decline in innovation investment due to the net negative effect of institutional invest on the focal firm's strategic decision-making. We also postulate that gender-specific management styles could moderate this effect such that excessive institutional holdings reduce innovation investment at a slower rate. We test our arguments using a multiple-sourced panel dataset covering 2066 Chinese publicly listed firms from 2011 to 2019. Results show that (1) institutional investors have a curvilinear impact, taking an inverted U-shape, on firm innovation investment, and (2) the presence of women executives in top management teams moderates this curvilinear relationship. This study contributes to a holistic scholarly understanding on the double-edged effect and how to leverage the positive role of gender to make the best of external institutional investment.

Keywords: Innovation financing; Institutional investors; Innovation; R&D female executives; Upper echelons (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0166497225001518
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:techno:v:147:y:2025:i:c:s0166497225001518

DOI: 10.1016/j.technovation.2025.103319

Access Statistics for this article

Technovation is currently edited by Jonathan Linton

More articles in Technovation from Elsevier
Bibliographic data for series maintained by Catherine Liu ().