Can Executives with Environmental Expertise Promote Open Innovation?

This paper examines whether executives’ environmental expertise shapes firms’ engagement in open innovation. Open innovation requires long-term, uncertain, and relationship-specific investments, yet such investments are often underprovided due to manage rial short-termism. Based on stewardship theory, we argue that environmental expertise embeds a long-horizon cognitive orientation in executives and alleviates managerial myopia. Based on the upper echelons theory, we posit that executives with environmental expertise could significantly influence corporate strategies, specifically enhancing corporate open innovation activities. Using a panel of 40,133 firm–year observations from Chinese listed firms over 2002–2022, we find that firms led by environmentally expertised executives exhibit significantly greater open innovation, measured by co-patenting activities. To address endogeneity concerns, we implement a stacked difference-in-differences design and propensity score matching. Our results remain robust in a battery of robustness tests. Consistent with the managerial myopia alleviation argument, we show that the effect of executives with green expertise on open innovation is stronger in settings where short-term pressures are more pronounced, including firms with weaker governance and higher capital market pressure. This study highlights and provides micro-level evidence on how environmental human capital enables firms to adopt sustainability-oriented business models through open innovation. Overall, our findings contribute to the literature on sustainable entrepreneurship and open innovation and offer practical implications for firms and policymakers seeking to support long-term, innovation-driven sustainability transitions.