Innovation and governance

Saurav Roychoudhury (), Anuj Bhowmik () and Srobonti Chattopadhyay ()
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Saurav Roychoudhury: Capital University, 1 College & Main
Anuj Bhowmik: Indian Statistical Institute
Srobonti Chattopadhyay: Rabindra Bharati University

Journal of Economics and Finance, 2024, vol. 48, issue 1, No 4, 78-106

Abstract: Abstract Innovation is a key driver of long-term economic growth and has significantly improved living standards. Corporate innovation efforts are at the forefront of this process. We propose a two-period career concern model to better understand the factors that influence a corporation’s decision to undertake risky innovation. In this model, a corporation’s manager is influenced by the company’s corporate governance structure and the level of competition in the product market. Our research shows that strong corporate governance positively impacts a manager’s decision to innovate due to career concerns. However, we also found that firms in industries with low competition benefit more from good governance than those in highly competitive industries. This conclusion is supported by our analysis of a panel data set from the 1990s, which contains information on time-varying patent citations in the US.

Keywords: Career concerns; Innovation; Corporate governance; Patents; Competition (search for similar items in EconPapers)
JEL-codes: G34 O31 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s12197-023-09632-z

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