Top Management Team Quality and Innovation in Venture-Backed Private Firms and IPO Market Rewards to Innovative Activity

Thomas Chemmanur, Manish Gupta and Karen Simonyan

Entrepreneurship Theory and Practice, 2022, vol. 46, issue 4, 920-951

Abstract: Using hand-collected data on top management team human capital (“top management quality†) of a large venture-backed private firm sample, we analyze the relation between top management team quality and pre-initial public offering (IPO) innovation productivity and the relation between pre-IPO innovation productivity and IPO market valuations. We hypothesize that firms with higher quality top management teams invest more in innovative projects and select better projects, yielding higher innovation productivity; pursue explorative rather than exploitative innovation strategies; and hire more high quality inventors. Finally, we hypothesize that IPO market rewards more innovative private firms with higher IPO firm valuations. The evidence supports these hypotheses.

Keywords: private firms; initial public offerings (IPOs); corporate innovation; top management human capital; G31; O31; O32 (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:sae:entthe:v:46:y:2022:i:4:p:920-951

DOI: 10.1177/1042258720918827

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