INNOVATION EFFORT AND CEO’S CHARACTERISTICS

Abstract

The current study analyses how CEO’s attributes could influence innovation. It is drawn on all listed firms on the SBF120 1 index between 2001 and 2013. Proxies for innovation effort are the ratio of R&D spending and the number of researchers/scientists per R&D team. First, we find that the CEO’s education background could influence innovation effort. Specifically, when CEOs have a science or an engineering degree, unlike business and management educated CEOs, they are more inclined to increase R&D spending. These effects are pronounced in innovative firms operating in sectors where innovation is not the heart core of their businesses. Also, we show that CEOs’ profile influence firms’ innovation investment only in non-technological industries. In high technological firms, attributes’ differences between CEOs are very small which may be due to high competition between firms listed on the SBF120 index. Finally, our results on the influence of gender diversity on boardrooms in Tech firms are consistent with the risk-avoidance hypothesis according to which women are risk averse agents.