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Executive team faultlines, business diversification, and corporate substantive innovation

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  • Zhang, Qiang
  • Lou, Mingyu

Abstract

This study examines the impact of executive team faultlines on substantive innovation and the moderating roles of business diversification and environmental uncertainty using 2010–2022 data from China's A-share listed companies. Key findings reveal that: Surface-level faultlines inhibit innovation while deep-level faultlines promote it; Business diversification amplifies the negative effect of surface-level faultlines but enhances the positive effect of deep-level faultlines; Environmental uncertainty strengthens the inhibitory effect of surface-level faultlines while weakening the promotive effect of deep-level faultlines; and these effects are more pronounced in non-regulated industries and high social-trust firms. The study provides new theoretical insights into how executive team structures influence innovation quality and offers practical implications for team optimization.

Suggested Citation

  • Zhang, Qiang & Lou, Mingyu, 2025. "Executive team faultlines, business diversification, and corporate substantive innovation," International Review of Economics & Finance, Elsevier, vol. 103(C).
    • Handle: RePEc:eee:reveco:v:103:y:2025:i:c:s1059056025006987
    DOI: 10.1016/j.iref.2025.104535
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    Keywords

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    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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