Abstract
When is the parental leave taken by top management team (TMT) members beneficial or detrimental for the innovation performance of SMEs? Drawing from upper-echelon theory and role theory, we advance a model that proposes that smaller TMTs and TMTs with longer tenures have a better potential for leveraging the benefits and reducing the shortcomings of parental leave-taking by their members. We test this model using unique data on a large sample of Swedish SMEs. We find that TMT members’ parental leave has a weak positive impact on SMEs’ innovation outputs. Conversely, the effect is strongly positive when TMT size is small and/or TMT tenure is high. Theoretical and practical implications of parental leave policies for SME intonation are discussed.
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