| Innovation is the driving force behind the development of political,economic and cultural aspects of a country,and it is also an indispensable part of a company’s sustained competitive advantage.In recent years,with China’s continuous advocation for innovation,companies are encouraged to embark on the road to innovation to a high degree.In the environment of comprehensive innovation,it is clear that there is a need to focus on different types of innovation.Innovation can be divided into exploration innovation and exploitation innovation,and different types of innovation have different effects on corporate performance.When rational executives make decisions about the choice of innovation types,of course they choose the one that will help them achieve better corporate performance.However,as the development of behavioral corporate finance,the hypothesis of rational men is overturned,and it is considered that people including executives are bounded rationality and apt to own the characteristics of overconfidence and some other cognitive deviations.So,considering executive overconfidence,what is the preference ofthe innovation types of a company?How does this choice of preference for innovation types affect corporate performance?This article answers the above questions from the perspectives of theory and practice,respectively.Using the unbalanced panel data of A-share listed companies from 2011-2015 in manufacturing industry who have disclosed data about R&D completely,this article examines the relationships among senior executive overconfidence,innovation types and corporate performance with the method of OLS regression of fixed effect.The results of the empirical research show that senior executive overconfidence is correlated with the choice of innovation types,and the proportion of exploitation innovation is relatively high and the proportion of exploration innovation is relatively low in a company which has overconfident senior executives,that is,overconfident senior executives prefer exploitation innovation.However,the higher the proportion of exploitation innovation,the worse corporate performance of a company,and the higher the proportion of exploration innovation,the better corporate performance of a company,indicating that the preference of high proportion of exploitation innovation of overconfident senior executives has a negative impact on corporate performance.At the same time,the companies whose senior executives are overconfident have worse corporate performance,and we find that innovation types play the role of mediating variable in the negative correlation relationship between senior executive overconfidence and corporate performance through the mediation test.In addition,considering the special background the ownership of companies in China,we divide the whole samples into two groups by whether it is a state-owned company or not.Finally we find that for state-owned companies the above conclusions are not necessarily established,and for non-state companies the correlations are significantly stronger.It also shows that it needs to consider more factors and conditions in the study of state-owned companies.The main innovations and contributions of this article are as followed.First,it broadens the research on R&D and innovation investment and corporate performance by adding the behavioral corporate finance,and it considers senior executive overconfidence in the relationship between R&D and innovation investment and corporate performance.Second,we introduce innovation types into the relationship between senior executive overconfidence and corporate performance,and examine the mediation effect of innovation types.Third,we improve and optimize the conceptual definition and measurement of senior executive overconfidence which make our results more reliable. |
