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CEOs' Multicultural Experience, Firm Networks and Performance: Evidence from Firm-to-firm Transaction Data in Japan

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  • ITO Tadashi
  • NAKAMURA Ryohei

Abstract

This paper postulates a hypothesis that the more diverse background a firm CEO has, the more extended firm-to-firm networks the firm constructs, which in turns leads to higher firm performance. Using the firm level data of firm CEOs' backgrounds and firm-to-firm networks, this paper corroborates the hypothesis by showing that firms whose CEOs are non-local-born are more likely to have more extended firm-to-firm transaction networks and consequently have better firm performance. Aside from this main finding, it also finds that the CEOs' graduated schools' level in terms of difficulty of entrance exams, which we consider as a proxy for CEOs' innate ability, has a strong positive nexus with the firm performance. The finding suggests an importance of human resource mobilization for growth.

Suggested Citation

  • ITO Tadashi & NAKAMURA Ryohei, 2019. "CEOs' Multicultural Experience, Firm Networks and Performance: Evidence from Firm-to-firm Transaction Data in Japan," Discussion papers 19037, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:19037
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    References listed on IDEAS

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    1. TODO Yasuyuki & SATO Hitoshi, 2011. "Effects of CEOs' Characteristics on Internationalization of Small and Medium Enterprises in Japan," Discussion papers 11026, Research Institute of Economy, Trade and Industry (RIETI).
    2. Berliant, Marcus & Fujita, Masahisa, 2012. "Culture and diversity in knowledge creation," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 648-662.
    3. Bogers, Marcel & Foss, Nicolai J. & Lyngsie, Jacob, 2018. "The “human side” of open innovation: The role of employee diversity in firm-level openness," Research Policy, Elsevier, vol. 47(1), pages 218-231.
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