A Study On The Impact Of Top Management Team Faultlines On Corporate Innovation Performance

In the current global economy,the competitive market is constantly changing,and innovation is crucial to the growth and development of enterprises.As the primary decision-making center,the behavior of the top management team directly influences the level of innovation performance.While past studies have focused on the diversity of top management teams,recent research highlights the importance of exploring the impact of top management team faultlines on corporate innovation.While existing studies have examined the direct effects and moderating mechanisms of these faultlines,few have looked into the pathways between the two.Due to discrepancies in research subjects and definitions,previous empirical studies have yet to reach a definitive conclusion.This paper presents a study on the impact of top management team faultlines on corporate innovation performance in the Chinese local context,using corporate internal control quality and corporate R&D investment as potential mediators.Drawing on existing research and addressing the contradictory findings in empirical studies,this study uses data from A-share listed companies spanning from 2009 to2020,with a sample size of 13,468 unbalanced panels.The empirical analysis reveals three key findings:(1)Top management team faultlines significantly inhibit corporate innovation performance,supported by robustness and endogeneity tests;(2)Corporate internal control quality and corporate R&D investment play a partial mediating role in the relationship between top management team faultlines and corporate innovation performance;(3)The negative effect of top management team faultlines on innovation performance is more pronounced in firms with low equity concentration,high shareholding of institutional investors,high analyst attention,and auditors from non-Big 4 audited firms.This study presents theoretical analysis and empirical research that contributes two important points.Firstly,it provides a new perspective on the internal structural characteristics of top management teams,based on the top echelon theory,and explains how it contributes to the realization of corporate innovation performance in the context of China.This supplements existing research on top management team faultlines and corporate innovation performance.Secondly,the study integrates social identity theory,principal-agent theory,and information decision theory to explain the micro-level mechanism for corporate innovation performance.The study introduces two mediating variables,the quality of corporate internal control and corporate R&D investment,and explains how these variables influence the impact of top management team faultlines on corporate innovation performance.Overall,this paper offers a powerful explanation of the relationship between top management characteristics and corporate innovation performance.