The Effect of CEO Social Capital on Corporate Innovation – Evidence from Chinese Listed Companies

Abstract

Using a sample composed of all the non-financial firms listed on the Shanghai and Shenzhen Stock Exchanges in China between 2007 and 2016, this study explores the effect of CEO social capital on corporate innovation. To properly grasp this effect, we have dissected the effects of CEO social capital into its internal and external dimensions. Rooting our study in social capital theory, we propose and provide empirical evidence that the internal and external social capital of CEOs plays a crucial role in the innovation of firms. In addition, we have also explored the boundary conditions of these effects, considering the way CEO duality and state ownership moderate the effects of CEO internal and external social capital on corporate innovation. In so doing, we contribute to social capital theory by breaking down the role CEO internal and external social capital plays in firm innovation. Moreover, our findings expand understanding regarding the boundary conditions in which CEO social capital may benefit firm innovation.