Working paper
R&D Subsidies, TMT Diversity and Innovation. Academy of Management Proceedings. Vol. 2024. No. 1. Valhalla, NY 10595: Academy of Management, 2024 (with Cornelia Storz).
Strategy research increasingly recognizes the impact of industrial policies on firm performance and innovation. While economic research has focused extensively on how governments can select the right firms, strategy research has offered limited insights into what drives the effective utilization of subsidies at the firm level. Given the established role of executives in shaping firm outcomes, we argue that executives’ knowledge diversity enhances the effective conversion of research and development (R&D) subsidies into innovation, because it addresses the idiosyncratic nature of subsidies: It aligns with the objective of subsidies to encourage innovation through increased exploration, and it addresses potential inefficiencies through enhanced scrutiny. Using data from publicly listed Chinese firms and a difference-in-differences design, we find that executives’ breadth of external and internal knowledge boosts innovation from R&D subsidies. Our study highlights the critical role of executive characteristics in industrial policy effectiveness.
Work in Progress
No Way Out - The Impact of Passive Institutional Ownership on Green Innovation (Job Market Paper, single-authored)
Institutional investors increasingly claim to leverage their influence within public companies to reduce greenhouse gas emissions and align business models with a net-zero economy. Yet, it is also questioned whether a large subgroup of these investors is actually capable to influence managerial decisions, given that they are passively invested in these companies, which prevents them from selling their shares and exerting additional pressure on the management. This paper contributes to this debate by examining whether and how passive investors promote green innovation within their portfolio firms. For that purpose, this paper uses an instrumental variable approach for a sample of Russell 3000 constituents between 2003 and 2021. The findings reveal that a 1% increase in passive institutional ownership is associated with a 1.8% rise in green patent activity. Notably, this effect arises less from direct monitoring by passive investors and more from their ability to curb the influence of short-term-oriented shareholders through strategic voting in favor of long-term initiatives at shareholder meetings. These results contribute to studies at the nexus between corporate finance and strategic management by underscoring the vital role of long-term oriented investors in influencing green innovation strategy.
Losing or gaining the edge: How political connections shape green innovation (with Na Zou)
What motivates firms to engage in green innovation? Drawing on social identity theory, we argue that a firm's corporate political connections reflect its political identity and strategic incentives, which subsequently influences its green innovation strategies. Additionally, the local political landscape plays a crucial role in shaping the regulatory environment and moderating these relationships. Using a panel of US publicly listed firms from 2001 to 2022, we employ a difference-in-differences strategy that leverages exogenous board resignations to establish causality. Our findings indicate that firms that lose liberal political connections tend to decrease their focus on green innovation, particularly in climate adaptation technologies. Conversely, the loss of conservative connections is associated with an increase in green innovation, especially in climate mitigation technologies. Notably, the impact of losing liberal connections is more pronounced in Republican-governed states, while firms in democratic-governed states that lose conservative connections experience an uptick in green innovation. These results underscore the significance of political connections and local context in shaping corporate green innovation strategies, contributing to both the literature on green innovation and upper echelons theory.
Early-stage work
From Crisis to Opportunity: The Role of Stakeholder Engagement in Scaling Green Start-Ups During Environmental Crises (with Linus Büttner)