Effects of CEO duality and tenure on innovation. Issue 4 (18th October 2019)

• Record Type: Journal Article
• Authors: Li, Mengge; Yang, Jinxin
• Is Part Of: Journal of strategy and management. Volume 12:Issue 4(2019)
• Page Start: 536
• Page End: 552
• Publication Date: 2019-10-18
• Subjects: Innovation -- CEO -- Board of directors -- Exploitative innovation -- Exploratory innovation -- Duality; Management -- Periodicals; Strategic planning -- Periodicals; 658.401205
• DOI: 10.1108/JSMA-04-2019-0049
• Languages: English
• ISSNs: 1755-425X

Abstract

Abstract : Purpose: As the primary decision makers, chief executive officers (CEOs) play pivotal roles in firm innovation. However, little is known regarding how CEOs influence the exploitation and exploration paradox. To advance theory and research, the purpose of this paper is to investigate the joint effects of CEO tenure and CEO–chair duality on a firm's shifting emphasis between exploitative and exploratory innovation. Design/methodology/approach: This paper takes the approach of a longitudinal sample of 81 US pharmaceutical firms. Findings: As CEOs' tenure advance, their firms' percentage of exploitative innovation increases. Furthermore, non-duality (separation of board chair and CEO) further strengthens the positive relationship between CEO tenure and the percentage of exploitative innovation. Research limitations/implications: This study integrates upper echelons theory and behavioral agency theory to juxtapose the effects of CEOs on technological innovation. This study extends knowledge of strategic leadership and innovation by showing that CEOs influence the balance between exploitative and exploratory innovation. Furthermore, this study also contributes to the corporate governance literature by demonstrating that monitoring vigilance could inhibit capable CEOs from pursuing more exploratory innovation. Practical implications: Boards of directors should allow CEOs to have greater discretion over innovation, and vigilant monitoring and control may force CEOs to focus less on exploration. Originality/value: This is one of the few studies that explicitly investigate how CEO influences a firm's emphasis on exploitative innovation and exploratory innovation.