Embracing paradox: The digital innovation strategy and corporate value—The moderating role of CEO-TMT cognitive complementarity and executive equity incentives

Overcoming the tension between exploration and exploitation in digital innovation is critical for realizing firm value. Although existing research recognizes this tension as a major obstacle to value creation, long-term empirical studies on strategies to address it remain scarce. To bridge this gap, we draw on paradox theory, ambidextrous innovation, and strategic flexibility and leverage a panel of non-financial A-share listed firms in China to examine how synergistic yet flexible digital innovation strategies contribute to firm value. Our findings indicate that these strategies effectively manage the innovation paradox and enhance value creation, with particularly strong effects when the chief executive officer and top management team exhibit high cognitive complementarity and are motivated by long-term equity incentives. Moreover, the value-enhancing impact of digital innovation strategies is more pronounced for firms operating in regions with strong intellectual property protection and for those subject to high analyst coverage.