Essays on corporate culture and innovation

Wang, Yaopeng (2021). Essays on corporate culture and innovation. University of Birmingham. Ph.D.

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Abstract

Innovation plays an important role in firms’ success since it enhances firm profitability and boosts national economies. Although empirical evidence from prior studies has well documented different determinants that can influence innovation, it is still worth wondering whether the unknown determinants exist. Hence, the objective of this thesis is to investigate some new determinants of corporate innovation. In particular, all Chinese listed companies have been used as the sample between 2008 and 2017, and three factors have been found that can profoundly influence firm-level innovation.
I first investigate the relationship between corporate culture and innovation. As the fundamental belief in the company, corporate culture can influence the strategies in many aspects, including innovation, which has been viewed as one of the vital strategies in the long term. Results in Chapter 2 suggests corporate creation culture that can influence innovation positively. Further analysis indicates the creation culture has more influential power on low-level cultural groups. In addition, this study shows that a strong creative culture is more likely to spur innovation for firms in a more competitive market where firms are subject to higher managerial career concerns. The empirical provides evidence that corporate culture is an important driver in enhancing innovation, showing clear implications for directors and shareholders.
Apart from corporate culture, the CEO can be another factor that can significantly affect innovation as well. In particular, CEOs attitudes toward innovation are different. Hence, the company innovation status can be different when the firm chooses to replace the CEO. Under this circumstance, I choose CEO turnover as the second determinants and analysis its effects on innovation in Chapter 3. I find corporate innovation can be enhanced when a firm experiences a CEO turnover event after controlling the turnover reasons (exogenous only). Further analysis indicates that male, especially younger incoming CEOs with overseas experience (education or work), are more appreciated by their companies. In addition, they tend to produce a higher percentage of company stock. These unique characteristics contribute to increasing companies’ innovation.
Regarding the CEO, an important factor that should not be ignored is his/her general managerial skills, which reflects his/her professionalism. As a key person in the company, CEO decisions should reflect his/her managerial skills and follow company culture. Therefore, in the final empirical chapter (chapter 4), I investigate the influential power of the CEO general managerial skills and innovation under different corporate culture types. Results suggest generalist CEO can increase corporate innovation under the create-oriented culture, while a negative relationship is detected under the compete-oriented culture. Further analysis suggests that corporate culture is a channel between CEO managerial skills and innovation itself. That is, the corporate culture can be affected by the CEO managerial skills and consequently influences innovation. The findings imply that generalist CEOs can enhance innovation by influencing the culture within their organisations.

Type of Work:

Thesis (Doctorates > Ph.D.)

Award Type:

Doctorates > Ph.D.

Supervisor(s):