The Market for Innovation Leadership

Abstract

In an increasingly technology-driven economy, CEOs' innovation leadership forms an essential part of companies' human capital. We find CEOs with superior innovation leadership, measured by their proven on-the-job innovation performance, are more popular on the directorship market. Through the directorship market, superior innovation leadership is matched to the boards of firms that are more innovative or have deeper technology overlap with the CEO's firm. The appointing firms improve their innovation and operating performance subsequently. Our results suggest that the benefit of CEO innovation leadership diffuses across firm boundaries through a subsection of the labor market.