Public Governance, Corporate Governance, and Firm Innovation: An Examination of State-Owned Enterprises

By Nan Jia, K. G. Huang, Cyndi Man Zhang. Academy of Management Journal, 2019

442 citations recorded by the source corpus.

Innovation activities create substantial firm value, but they are difficult to manage owing to agency risk which is commonly thought to result in shirking, hence underinvestment in innovation. However, agency risk can also create inefficient allocation of resources among innovation activities, on which the literature provided limited understanding. We examine an important outcome created by agency risk—that agents pursue the quantity of innovation at the expense of the novelty, and investigate how it is influenced by corporate and public governance. We theorize that improved corporate governance tools, including better alignment of agents’ private incentives and stronger monitoring, and high-quality public governance reduce such agency risk in state-owned enterprises (SOEs). Furthermore, higher-quality public governance enhances the functioning of corporate governance tools in further reducing such agency risk in innovation. We test our theory in the context of Chinese SOEs that responded to state’s pro-i...

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/481620d53f096deb5f9d04618226713642806182

How researchers see this paper

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In Accounting

1. Jonathan P. Doh
2. Aldo Musacchio
3. Mike Wright
4. Yongjia Lin
5. Xiaolan Fu
6. G. Wood
7. X. Fu
8. Mike W. Peng

In Economics and Econometrics

1. Yongjia Lin
2. Xiaolan Fu
3. Ilya Okhmatovskiy
4. Jonathan P. Doh
5. Aldo Musacchio
6. G. Wood
7. Mike Wright
8. X. Fu

Citations in the corpus

• Varieties in state capitalism and corporate innovation: Evidence from an emerging economy (2021, background): “…reforms affect firm innovation performance in emerging economies (Ayyagari et al., 2012; Fang et al., 2017; Zhou et al., 2017; Li et al., 2018; Jia et al., 2019; Cao et al., 2020; Tan et al., 2020, among others), relatively less attention has been paid to how the underlying modes of control…”
• State capitalism in international context: Varieties and variations (2020, background): “Newly available data also allowed scholars to explore different outcomes of state ownership such as innovative activities (Jia et al., 2019; Wang, Kafouros, Yi, Hong, & Ganotakis, 2020, this Special Issue; Zhou et al., 2017; Lazzarini et al., 2020).”