Entrepreneurship Allocation and Corporate Innovation:<br>Evidences from Founder-managed Firms

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Journal of Central University of Finance & Economics ›› 2023, Vol. 0 ›› Issue (3) : 68-79.

Entrepreneurship Allocation and Corporate Innovation:
Evidences from Founder-managed Firms

LU Jun, LI Wen-gui, SHAO Yi-ping

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Abstract

Entrepreneurs may allocate their efforts to innovation activities or rent-seeking activities. Different from regional entrepreneurship levels used in macroscopic studies, we analyze whether the presence of a founder-CEO or a founder-chairperson fosters innovation in Chinese private listed companies.Our main results show that the existence of a founder CEO/chairperson is positively correlated with the company's R&D expenditures and the number of patent applications, suggesting that founder-managed firms are more effective innovators than other firms.Further research shows that managerial risk-taking behaviors, long-term oriented managerial behaviors, and government supports play important intermediary roles in the process of innovation improvements brought by the founder managers.In addition, the positive impact of founder management on corporate innovation is more prominent in companies with less innovation incentives, such as companies that have been established for a long time and companies that registered in areas with low levels of marketization. And these results show founder management can make up some shortcomings in corporate governance.Our research supplements and expands the literature related to enterprise innovation from the perspective of founder management, it also expands and deepens the research on founder management from the angle of enterprise innovation.Meanwhile it has important policy implications for the innovation and entrepreneurship strategy implemented by our government.

Key words

Entrepreneurship allocation / Corporate innovation / Risk-taking / Long-term orientation / Resource acquisition

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LU Jun, LI Wen-gui, SHAO Yi-ping. Entrepreneurship Allocation and Corporate Innovation:
Evidences from Founder-managed Firms[J]. Journal of Central University of Finance & Economics, 2023, 0(3): 68-79

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