Right person for the right job: the impact of top management's occupational background on Chinese enterprises' R&D efficiency

Abstract

The research on the influence of personal attributes of top management on a firm's innovative behavior has recently gained much traction in the corporate finance literature. However little is known about the role of professional background of top management in influencing corporate R&D efficiency. The present research employs data of China's A-share listed firms during the period of 2008-2016 to explore this association. Empirical outcomes reveal that top management with an R&D background significantly enhance Chinese firms' R&D efficiency. Moreover, equity incentives for the core R&D team, lesser pay disparity between senior management and employees, and the appointment of directors with R&D background play a mediating role between R&D-savvy top management and firm's innovation capacity. The study findings establish a link between top management's human capital and an enterprise's technological capability and show that adopting appropriate innovation strategies and R&D management practices is conducive to achieving the R&D efficiency in Chinese enterprises. Our results are robust to alternate econometric specifications and alternate variable specifications.