Do venture capital-driven top management changes enhance corporate innovation in private firms?

Qianqian Yu

Journal of Banking & Finance, 2025, vol. 171, issue C

Abstract: Using hand-collected data from Form Ds on executives in venture capital (VC)-backed private firms, I show that VC-driven top management changes lead to a significantly greater quantity and quality of innovation, which potentially occurs through new management teams hiring more and higher quality inventors. My evidence demonstrates that both founder replacements and non-founder management changes are associated with enhanced innovation. Further, adding top managers with general managerial skills enhances innovation, whereas changing managers with a prior technical background does not. Finally, top management changes lead to the adoption of an exploitative (rather than explorative) innovation search strategy by private firms.

Keywords: Entrepreneurial finance; Corporate innovation; Private firms; Venture capital; Top management changes; Inventor mobility; Innovation search strategy (search for similar items in EconPapers)
JEL-codes: G24 G30 O31 O32 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbfina:v:171:y:2025:i:c:s037842662400267x

DOI: 10.1016/j.jbankfin.2024.107353

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