Individualistic CEO and Corporate Innovation: Evidence from U.S. Frontier Culture

Abstract

This paper examines the relationship between CEOs’ individualistic cultural background and corporate innovation among firms in the United States. Using hand-collected data on birthplaces of US-born CEOs, we provide robust evidence that CEOs born in frontier counties with a higher level of individualistic culture promote innovation performance. Firms led by such CEOs increase both quantity and quality of innovation outputs, measured by the number of patents, citation-weighted patents, and the market value of patents, and focus more on breakthrough innovation. Our extended analysis suggests that CEOs with an individualistic background tend to build an innovation-oriented corporate culture and to accumulate human capital by increasing the inflow of inventors, thus promoting corporate innovation.

Keywords: Innovation; Culture; Individualism; Frontier History

JEL Classification: G30; O31; O32; M14; N9