Saturday, November 6, 2021

Using hand-collected data on birthplaces of US-born CEOs, we provide robust evidence that CEOs born in frontier counties with a higher level of individualistic culture promote innovation performance

Gao, Lei and Han, Jianlei and Pan, Zheyao and Zhang, Huixuan, Individualistic CEO and Corporate Innovation: Evidence from U.S. Frontier Culture (October 27, 2021). SSRN: http://dx.doi.org/10.2139/ssrn.3950964

Abstract: This paper examines the relation between CEO’s individualistic cultural background and corporate innovation. Using hand-collected data on birthplaces of US-born CEOs, we provide robust evidence that CEOs born in frontier counties with a higher level of individualistic culture promote innovation performance. Firms led by such CEOs increase both quantity and quality of innovation outputs, measured by the number of patents, citation-weighted patents and the market value of patents. Besides innovation performance, we further show that CEO’s individualistic background causes a change in the innovation style, leading the firm to focus more on breakthrough innovation. Our extended analysis suggests that CEOs’ individualistic background promotes corporate innovation through building an innovation-orientated corporate culture and accumulating human capital by increasing the inflow of inventors.

Keywords: Innovation; Culture; Individualism; Frontier History

JEL Classification: G30; O31; O32; M14; N9


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