Managerial Ability and Innovation Performance: Empirical Evidence from Chinese Manufacturing Listed Companies

Abstract

[Purpose] Enterprise innovation is a necessary condition for enterprises to survive and develop in the increasingly fierce competition. However, as an important human resource, there has been a lack of relevant empirical research on the impact of managerial ability on enterprise innovation. This study investigates how managerial ability affects innovation level and innovation efficiency, and further examines the relationship between managerial ability and innovation performance in manufacturing enterprises from the aspects of patent type, property rights and industry nature.
 [Methodology] This study selects A-share manufacturing listed companies in China from 2007 to 2019 as the research sample, uses the DEA-Tobit two-stage model proposed by Demerjian et al. (2012) to measure the managerial ability, and empirically tests the impact of managerial ability on enterprise innovation performance from two aspects of enterprise innovation output and enterprise innovation efficiency.
 [Findings] We discover that the stronger the managerial ability, the lower the innovation output and the higher the innovation efficiency. Moreover, by distinguishing the patent type, property right nature and industry nature, we further find that high-ability management can improve enterprise innovation efficiency in state-owned enterprises, but it has no significant impact on enterprise innovation output. The positive effect of managerial ability on enterprise innovation efficiency is not significant in high-tech enterprises, which is inconsistent with previous experience.
 [Implications] First, taking the managerial ability as the starting point, we not only study the impact of managerial ability on enterprise innovation output, but also on innovation efficiency, which supplements and improves the existing literature on the influencing factors of enterprise innovation performance. Secondly, combined with China's institutional background, this study further discusses the influencing factors of enterprise innovation output and innovation efficiency, so as to provide empirical evidence from emerging markets for relevant research. Thirdly, with the integration of psychology, behavior, financial accounting and other disciplines, managerial ability is introduced into the research field of financial accounting, and this study provides new empirical evidence for the research on the economic consequences of managerial ability. Finally, this study can provide suggestions and decision support for manufacturing enterprises to improve innovation performance, and help to further standardize the professional manager market.