The effect of long-term incentives of CEO on exploration
0
조회
0
다운로드
0
인용
0
참고문헌
키워드
초록
This study investigates the effect of long-term incentives for CEOs in promoting innovation in firms. CEOs are less likely to take risks due to their less diversified wealth portfolios compared to stockholders. Long-term incentives, such as stock ownership and stock option pay, provide a financial reward for taking risks that could pay off in the future and encourage CEOs to invest in riskier innovation, such as exploration. The study also examines the moderating effects of organizational characteristics, such as firm size and slack resources, and external environment, such as competitive intensity, on the relationship between long-term incentives for CEOs and exploration. The results suggest that long-term focus incentives for CEOs can positively influence exploration efforts within a firm. In addition, we found that firm size and slack resources positively moderate the relationship between long-term incentives for CEOs and exploration and competitive intensity negatively moderates such relationship. This study helps managers understand the conditions when long-term incentives become stronger or weaker.
Abstract
This study investigates the effect of long-term incentives for CEOs in promoting innovation in firms. CEOs are less likely to take risks due to their less diversified wealth portfolios compared to stockholders. Long-term incentives, such as stock ownership and stock option pay, provide a financial reward for taking risks that could pay off in the future and encourage CEOs to invest in riskier innovation, such as exploration. The study also examines the moderating effects of organizational characteristics, such as firm size and slack resources, and external environment, such as competitive intensity, on the relationship between long-term incentives for CEOs and exploration. The results suggest that long-term focus incentives for CEOs can positively influence exploration efforts within a firm. In addition, we found that firm size and slack resources positively moderate the relationship between long-term incentives for CEOs and exploration and competitive intensity negatively moderates such relationship. This study helps managers understand the conditions when long-term incentives become stronger or weaker.
참고문헌 (27)
- Ibrahim A. Shaikh, "What motivates directors to pursue long-term strategic risks? Economic incentives vs. fiduciary duty", Journal of Business Research, 101, pp.218~228 (2019), Elsevier BV[DOI]
- Geoffrey P. Martin, "Executive Stock Options as Mixed Gambles: Revisiting the Behavioral Agency Model", Academy of Management Journal, 56(2), pp.451~472 (2013), Academy of Management[DOI]
- Geoffrey P. Martin, "Going short-term or long-term? CEO stock options and temporal orientation in the presence of slack", Strategic Management Journal, 37(12), pp.2463~2480 (2015), Wiley[DOI]
- Dovev Lavie, "Exploration and Exploitation Within and Across Organizations", Academy of Management Annals, 4(1), pp.109~155 (2010), Academy of Management[DOI]
- Datar, S., "Advantages of time-based new product development in a fast-cycle industry", Journal of Marketing Research, 34(1), pp.36~49 (1997)[DOI]
- Jensen, M. C., "Theory of the firm : Managerial behavior, agency costs and ownership structure", Journal of financial economics, 3(4), pp.305~360 (1976)[DOI]
- Makri, M., "CEO incentives, innovation, and performance in technologyintensive firms : a reconciliation of outcome and behavior-based incentive schemes", Strategic Management Journal, 27(11), pp.1057~1080 (2006)[DOI]
- Alessandri, T. M., "Drivers of R&D investment : The interaction of behavioral theory and managerial incentives", Journal of Business Research, 67(2), pp.151~158 (2014)[DOI]
- Crossan, M. M., "A multi-dimensional framework of organizational innovation : A systematic review of the literature", Journal of management studies, 47(6), pp.1154~1191 (2010)[DOI]
- Hambrick, D. C., "Upper echelons : The organization as a reflection of its top managers", Academy of management review, 9(2), pp.193~206 (1984)[DOI]
- Frese, M., "Handbook of industrial and organizational psychology", pp.271~340 (1994)
- Papadakis, V. M., "How much do CEOs and top managers matter in strategic decisionmaking?", British Journal of management, 13(1), pp.83~95 (2002)[DOI]
- Harley E. Ryan, "The Interactions between R&D Investment Decisions and Compensation Policy", Financial Management, 31(1), pp.5~ (2002), Wiley[DOI]
- Sharfman, M. P., "Antecedents of organizational slack", Academy of Management review, 13(4), pp.601~614 (1988)[DOI]
- Lawler III, E. E., "Rethinking organization size", Organizational Dynamics, 26(2), pp.24~35 (1997)[DOI]
- Crozier, M., "The bureaucratic phenomenon (Vol. 280)" (2009), Transaction Publishers
- Nohria, N., "Is slack good or bad for innovation?", Academy of management Journal, 39(5), pp.1245~1264 (1996)[DOI]
- Greve, H. R., "Exploration and exploitation in product innovation", Industrial and corporate change, 16(5), pp.945~975 (2007)[DOI]
- Bourgeois III, L. J., "On the measurement of organizational slack", Academy of Management review, 6(1), pp.29~39 (1981)[DOI]
- William P. Barnett, "The Dynamics of Competitive Intensity", Administrative Science Quarterly, 42(1), pp.128~ (1997), JSTOR[DOI]
- Porter, M. E., "Industry structure and competitive strategy : Keys to profitability", Financial analysts journal, 36(4), pp.30~41 (1980)[DOI]
- Daniel A. Levinthal, "The myopia of learning", Strategic Management Journal, 14(S2), pp.95~112 (1993), Wiley[DOI]
- Quintana-García, C., "Innovative competence, exploration and exploitation : The influence of technological diversification", Research policy, 37(3), pp.492~507 (2008)[DOI]
- Wang, H., "Untangling the effects of overexploration and overexploitation on organizational performance : The moderating role of environmental dynamism", Journal of Management, 34(5), pp.925~951 (2008)[DOI]
- Shimizu, K., "What constrains or facilitates divestitures of formerly acquired firms? The effects of organizational inertia", Journal of Management, 31(1), pp.50~72 (2005)[DOI]
- Wolfe, R. A., "Organizational innovation : Review, critique and suggested research directions", Journal of management studies, 31(3), pp.405~431 (1994)[DOI]
- Julia Porter Liebeskind, "Knowledge, strategy, and the theory of the firm", Strategic Management Journal, 17(S2), pp.93~107 (1996), Wiley[DOI]