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Top Management Team Quality and Innovation in Venture-Backed Private Firms and IPO Market Rewards to Innovative Activity

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  • Thomas J. Chemmanur
  • Manish Gupta
  • Karen Simonyan

Abstract

Using hand-collected data on top management team human capital (“top management quality†) of a large venture-backed private firm sample, we analyze the relation between top management team quality and pre-initial public offering (IPO) innovation productivity and the relation between pre-IPO innovation productivity and IPO market valuations. We hypothesize that firms with higher quality top management teams invest more in innovative projects and select better projects, yielding higher innovation productivity; pursue explorative rather than exploitative innovation strategies; and hire more high quality inventors. Finally, we hypothesize that IPO market rewards more innovative private firms with higher IPO firm valuations. The evidence supports these hypotheses.

Suggested Citation

  • Thomas J. Chemmanur & Manish Gupta & Karen Simonyan, 2022. "Top Management Team Quality and Innovation in Venture-Backed Private Firms and IPO Market Rewards to Innovative Activity," Entrepreneurship Theory and Practice, , vol. 46(4), pages 920-951, July.
    • Handle: RePEc:sae:entthe:v:46:y:2022:i:4:p:920-951
    DOI: 10.1177/1042258720918827
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