Abstract
Using a sample of 113 Chinese new ventures, this study examines different mechanisms through which moral awareness and ethical behavior of entrepreneurs affect product innovation of new ventures. Findings indicate that a low level of moral awareness of entrepreneurs promotes product innovation through entrepreneurs’ individual creativity while a high level of ethical behavior of entrepreneurs promotes product innovation through enhancing group creativity of founding teams. The study suggests that entrepreneurs commonly show inconsistent moral awareness and ethical behavior; superior product innovation comes from firms led by “hypocritical” entrepreneurs with low moral awareness but high ethical behavior. Theoretical and practical implications are discussed.
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