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Innovation and governance

Author

Listed:
  • Saurav Roychoudhury

    (Capital University, 1 College & Main)

  • Anuj Bhowmik

    (Indian Statistical Institute)

  • Srobonti Chattopadhyay

    (Rabindra Bharati University)

Abstract

Innovation is a key driver of long-term economic growth and has significantly improved living standards. Corporate innovation efforts are at the forefront of this process. We propose a two-period career concern model to better understand the factors that influence a corporation’s decision to undertake risky innovation. In this model, a corporation’s manager is influenced by the company’s corporate governance structure and the level of competition in the product market. Our research shows that strong corporate governance positively impacts a manager’s decision to innovate due to career concerns. However, we also found that firms in industries with low competition benefit more from good governance than those in highly competitive industries. This conclusion is supported by our analysis of a panel data set from the 1990s, which contains information on time-varying patent citations in the US.

Suggested Citation

  • Saurav Roychoudhury & Anuj Bhowmik & Srobonti Chattopadhyay, 2024. "Innovation and governance," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 48(1), pages 78-106, March.
    • Handle: RePEc:spr:jecfin:v:48:y:2024:i:1:d:10.1007_s12197-023-09632-z
    DOI: 10.1007/s12197-023-09632-z
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    References listed on IDEAS

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    More about this item

    Keywords

    Career concerns; Innovation; Corporate governance; Patents; Competition;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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