Managerial R&D hands-on experience, state ownership, and corporate innovation

Abstract

In this paper, we investigate how management team R&D experience affects corporate innovation. A finer-grained empirical analysis supports that firms led by managers with R&D hands-on experience are associated with high innovation productivity. Using the mediation effect models, we uncover three underlying economic mechanisms that possibly explain the relation between R&D experience and innovation; the transformation effect, the information effect, and the resource effect. Furthermore, we find that R&D experience is critical for senior managers (CEO and co-CEO) and junior managers (other executives) in spurring corporate innovation and their combination substantially contributes to increased innovation productivity; however, our findings suggest junior managers play a more fundamental role while senior managers play a leadership role. We also find that managerial R&D experience enhances more innovation in state-owned enterprises (SOEs) than in non-SOEs. Our conclusions are consistent with the learning by doing theory that specialist managers with hands-on experience are more critical for technological innovation.