Abstract
In this study, we employ firm-level panel data from China to study how the human capital characteristics of a firm's leadership affect R&D investment. One novel feature of this study is that we include human capital traits of both the CEO and the Board of Directors, as well as their interplay. Human capital is measured with various experiences to capture observed and unobserved traits. Using various econometric techniques, we find that both CEO's and BOD's human capital characteristics have a significant impact on R&D investment. CEOs’ innovation experience and overseas experiences promote innovation, while their production experience hinders it. The education and government experiences of board directors show different impacts on R&D investment. Moreover, the human capital traits of CEO and BOD influence each other and thus jointly affect innovation. The effects of leadership human capital on R&D investment are more profound in tech-intensive and smaller firms than in traditional or larger firms.
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