 Does top management quality promote innovation? Firm-level evidence from ChinaQifeng Zhao, Zhen Li and Yihua Yu () China Economic Review, 2021, vol. 65, issue C Abstract: 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. Keywords: Innovation; Management quality; Failure tolerance; Financial constraints (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:65:y:2021:i:c:s1043951x20301590 DOI: 10.1016/j.chieco.2020.101562 Access Statistics for this article China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu More articles in China Economic Review from Elsevier |
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