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Management Capability and Innovation

In: Empirical Research in Banking and Corporate Finance

Author

Listed:
  • Bill B. Francis
  • Iftekhar Hasan
  • Gokhan Yilmaz

Abstract

This chapter investigates whether core competence of managers and their expansive (vs. specialized) managerial style affects firms' innovative ability, capacity, and efficiency. Using exogenous CEO departures as a natural experiment, it establishes a causal link between managerial capability and innovation. Importantly, it reveals that firms with talented managers receive significantly more nonself citations; make significantly lower self-citations and lesser citations to the others, indicating novel and explorative innovation achievements. Also, managers with higher general (specialized) ability are cited more (less) by patents from a wider range of fields. Lastly, career concern is identified as a mechanism linking higher ability and innovation.

Suggested Citation

  • Bill B. Francis & Iftekhar Hasan & Gokhan Yilmaz, 2022. "Management Capability and Innovation," Advances in Financial Economics, in: Empirical Research in Banking and Corporate Finance, volume 21, pages 29-74, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:afeczz:s1569-373220220000021002
    DOI: 10.1108/S1569-373220220000021002
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    More about this item

    Keywords

    Managerial ability; innovation; innovative efficiency; R&D; patents; core competence; G34; O31; O32; O34;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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