Management Quality and Innovation in Private Firms and the IPO Market Rewards to Innovative Activity
Entrepreneurship Theory and Practice, forthcoming
61 Pages Posted: 21 Jun 2016 Last revised: 24 Apr 2020
Date Written: September 5, 2018
Using hand-collected data on top management team human capital (“management quality”) of a large sample of private firms, we analyze the effect of top management quality on pre-IPO innovativeness and the innovation strategies of these firms. We also analyze how management quality and pre-IPO innovation relate to these firms’ IPO characteristics. We hypothesize that firms with higher quality management teams invest in a greater proportion of long-term (innovative) projects, select better innovation projects, and manage innovation resources more efficiently, resulting in higher innovation productivity. We also hypothesize that such firms reap greater IPO market rewards. The evidence supports these hypotheses.
Keywords: Corporate Innovation; Private Firms; Initial Public Offerings (IPOs); Top Management Human Capital
JEL Classification: G31, O31, O32
Suggested Citation: Suggested Citation