Engineer executives, corporate innovation, and firm value

Innovation activities involve substantial technological uncertainty and require effective managerial allocation of financial and human capital resources. While prior studies emphasize the role of managerial characteristics in shaping firms' innovation strategies, relatively little is known about how executives' engineering expertise affects corporate innovation outcomes. Using a sample of Chinese A-share listed firms from 2009 to 2022, this paper examines whether engineer executives promote firm innovation. We find that firms led by executives with engineering expertise generate significantly more patent output. The results remain robust after a series of robustness checks and an instrumental variable approach based on the historical regional distribution of engineers in the 1930s. Mechanism analyses show that engineering executives improve innovation performance by increasing R&D investment, expanding technical hiring, and allocating more high-skilled labor to innovation-related activities. Further analyses indicate that engineering executives particularly promote invention and utility model patents, while ownership participation by engineer executives is also associated with higher innovation output. Moreover, we find that engineer executives are associated with higher firm value, suggesting that the innovation gains translate into improved corporate performance. This study contributes to the literature on managerial human capital and corporate innovation by highlighting engineering expertise as an important managerial trait affecting firms' innovation resource allocation and innovation performance.