Cogent Business & Management (Dec 2024)
Managerial ownership and corporate innovation: evidence of patenting activity from Chinese listed manufacturing firms
Abstract
AbstractCorporate innovation plays a crucial role in maintaining competitiveness and enhancing firm value. However, despite being the world’s leading manufacturing nation, the role of managerial ownership in fostering innovation within the Chinese manufacturing industry has not received adequate attention. Therefore, this research investigates the influence of managerial ownership on corporate innovation using data on patent activities from Chinese listed manufacturing firms covering the period from 2008 to 2021. Drawing on agency theory, empirical evidence confirms a positive relationship between managerial ownership and corporate innovation. This result remains robust across various tests, including the use of alternative dependent variables, the application of two-stage Data Envelopment Analysis (DEA) to control for managerial ability, correction of selection bias using Heckman two-stage estimation, and the utilization of Generalized Method of Moments (GMM) estimators. Additionally, the study clarifies the input channel and efficiency channel through whic-h managerial ownership positively influences corporate innovation. This paper contributes to the literature on corporate innovation by offering evidence for the role of managerial ownership on the innovation output. It also offers valuable governance insights for policymakers in emerging economies who are exploring corporate governance mechanisms for innovation systems, aiming to facilitate a systemic shift toward an innovative manufacturing economy.
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