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CEO Values, Firm Long-Term Orientation, and Firm Innovation: Evidence from Chinese Manufacturing Firms

Published online by Cambridge University Press:  26 December 2019

Wei Zheng ,
Rui Shen ,
Weiguo Zhong Open the ORCID record for Weiguo Zhong [Opens in a new window]  and
Jiangyong Lu
Wei Zheng
Affiliation:
University of International Business and Economics, China
Rui Shen*
Affiliation:
Zhejiang University, China
Weiguo Zhong
Affiliation:
Peking University, China
Jiangyong Lu
Affiliation:
Peking University, China
*
Corresponding author: Rui Shen (ruishen@zju.edu.cn)
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Abstract

Innovation contributes to a firm's long-term competitive advantages but also involves significant risk and uncertainty. As agency theory predicts, CEOs are self-interested and risk-averse, and thus are reluctant to engage in innovation investments. However, the extent to which CEOs are self-interested and the mechanisms through which self-interested CEOs affect firm innovation have not been empirically tested. To fill this gap, we propose that CEOs possess a mix of both self-preserving and other-regarding motives, and build a mediation model in which CEO values affect firm innovation via firms’ long-term orientation. Based on a three-phase (from 2014 to 2016) survey of 436 Chinese manufacturing firms, we find that CEOs with high self-regarding values reduce innovation efforts and performance by damaging a firm's long-term orientation. Moreover, CEO tenure, CEO duality, and environmental uncertainty weaken the relationship between CEO values and firm innovation via long-term orientation. Our study enriches the innovation literature by extending the basic assumptions of agency theory and by providing empirical evidence to determine whether and how self-regarded CEOs affect firm innovation.

摘要

摘要

创新是企业竞争优势的重要来源，同时也是一种高风险、高不确定性的活动。代理理论普遍认为，CEO出于保护个人利益及规避风险的考虑在创新投资上往往较为慎重。然而，CEO在利己程度上是否存在差异、该差异通过何种机制影响企业创新却并未得到实证检验。针对上述研究不足，本文提出，CEO可能兼具利己/利他主义两种价值观，CEO价值观会通过影响企业长期导向战略来影响企业创新。基于对中国436家制造业企业持续三轮的跟踪调查数据，我们发现，CEO利己主义价值观会阻碍企业创新，企业长期导向在CEO价值观与企业创新之间起到了中介作用，即CEO利己主义价值观通过削弱企业长期导向阻碍创新；同时，CEO任期越长、CEO职务双重性、环境不确定性越高，CEO利己主义价值观对企业创新的间接影响越小。本文丰富了创新领域的相关研究，拓展了代理理论的基本假设，同时提供了CEO价值观与企业创新间关系的实证证据。

Аннотация

АННОТАЦИЯ

Инновации вносят большой вклад в долгосрочные конкурентные преимущества компании, но также содержат в себе значительный риск и неопределенность. Согласно теории агентских отношений, генеральные директора действуют исходя из личных интересов и не склонны к риску, и поэтому неохотно способствуют инвестициям в инновации. Тем не менее, до сих пор не существует эмпирических исследований того, в какой степени генеральные директора действуют под руководством личных интересов, а также механизмов, посредством которых корыстные директора влияют на инновации в компании. Чтобы заполнить этот пробел в научной литературе, мы предполагаем, что генеральные директора действуют под влиянием мотивов самосохранения и внимания к окружающим, и строим модель посредничества, в которой ценности генерального директора влияют на инновации в компании посредством долгосрочной ориентации. На основании трехэтапного (с 2014 по 2016 гг.) опроса, в котором участвовали 436 китайских производственных компаний, мы обнаружили, что директора с высокой степенью эгоизма снижают эффективность инноваций, нанося ущерб долгосрочной ориентации компании. Более того, срок пребывания в должности генерального директора, двойственная роль генерального директора и неопределенность во внешней среде ослабляют влияние ценностей генерального директора на инновации в компании посредством долгосрочной ориентации. Наше исследование обогащает литературу по инновациям, расширяя основные положения теории агентских отношений и предоставляя эмпирические данные для исследования того, каким образом корыстные директора влияют на инновации в компании.

Resumen

RESUMEN

La innovación contribuye a las ventajas competitivas de largo plazo pero también implica riesgo e incertidumbre considerables. Como la teoría de la agencia predice, los CEO tienen intereses propios y son adversos al riesgo, y por esto son reacios a participar de inversiones en innovación. Sin embargo, el alcance del cuál los CEO tienen intereses propios y los mecanismos mediante los cuales los CEO interesados en sus propios intereses afectan la innovación de la empresa no han sido probados empíricamente. Para llenar este vacío, proponemos que los CEO poseen una mezcla de auto-preservación y motivos respecto a otros, y construimos un modelo de mediación en el cual los valores del CEP afectan la innovación empresarial mediante la orientación de la empresa de largo plazo. Con base en una encuesta en tres fases (de 2014 a 2016) a 436 empresas manufactureras chinas, encontramos que los CEP con altos valores respecto a si mismos reducen los esfuerzos de innovación y desempeño al dañar la orientación de largo plazo de la empresa. Por otra parte, la titularidad del CEO, la dualidad del CEO, y la incertidumbre ambiental debilitan la relación entre los valores del CEO y la innovación de la empresa a través de una orientación a largo plazo. Nuestro estudio enriquece la literatura de innovación al extender los supuestos básicos de la teoría de la agencia y al proporcionar evidencia empírica para determinar si y cómo los CEO centrados en si mismos afectan la innovación de la empresa.

Keywords

CEO dualityCEO tenureCEO valuesenvironmental uncertaintyfirm innovationlong-term orientationCEO价值观长期导向企业创新CEO任期CEO职务双重性环境不确定性двойственная роль генерального директорасрок полномочий генерального директораценности генерального директоранеопределенность во внешней средеинновации в компаниидолгосрочная ориентацияdualidad del CEOtitularidad del CEOvalores del CEOincertidumbre ambientalinnovación empresarialorientación de largo plazo
Type
Article
Information
Management and Organization Review , Volume 16 , Issue 1 , February 2020 , pp. 69 - 106
Copyright
Copyright © 2019 The International Association for Chinese Management Research

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Footnotes

Accepted by: Senior Editor Jing Li

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