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Managerial incentives, CEO characteristics and corporate innovation in China's private sector

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  • Lin, Chen
  • Lin, Ping
  • Song, Frank M.
  • Li, Chuntao

Abstract

We use a unique World Bank survey of 1088 private manufacturing firms from 18 Chinese cities over the period 2000-2002 to empirically examine the roles of managerial incentives and CEO characteristics in a firm's innovation activities. We look at both innovation effort (R&D intensity) and innovation performance measures such as new product sales. We obtain the following main results: (1) the presence of CEO incentive schemes increases both corporate innovation effort and innovation performance; (2) sales-based performance measures in the incentive scheme, as compared with profit-based performance measure, are more conducive to firm innovation; and (3) CEO education level, professional background and political connection are positively associated with firm's innovation efforts. The main results are robust to endogeneity tests with instrumental variables. We also discuss some important policy implications.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Comparative Economics.

Volume (Year): 39 (2011)
Issue (Month): 2 (June)
Pages: 176-190

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Handle: RePEc:eee:jcecon:v:39:y:2011:i:2:p:176-190

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Web page: http://www.elsevier.com/locate/inca/622864

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Keywords: Corporate innovation Managerial incentives CEO characteristics;

References

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Citations

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Cited by:
  1. Evangelos Mitrokostas & Emmanuel Petrakis, 2014. "Organizational structure, strategic delegation and innovation in oligopolistic industries," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 23(1), pages 1-24, January.
  2. Victor LAVRIC, 2013. "The Dynamics Of R&D Human Resources In Romania Within The European Context," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 7(1), pages 259-267, November.
  3. Victor Lavric, 2012. "The Dynamics Of R&D Activities In Romania Within The European Context," Proceedings of the INTERNATIONAL MANAGEMENT CONFERENCE, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 6(1), pages 648-654, November.
  4. Popa Ion & Lavric Victor, 2013. "Highly Important Objectives For Innovation In Romania Within The European Context," Annals of Faculty of Economics, University of Oradea, Faculty of Economics, vol. 1(1), pages 1588-1594, July.

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